This book contains data and text description of the interest rates of different time and country of this world. But it is really just the history, the cause of the interest rate fluctuation were barely analyzed. This may be understandable because the economic policy of ancient times are hardly accessible, but as the reader you are warned not to be expecting to understand the driving forces of interest rates by reading this book.
The author states that he doesn't want to get into analysis of the why the interest rates did what they did during the last 5000 years. I agree, it would take numerous books just to explain that but I do question what value recording interest rates for the last few hundred years has and how we can benefit. It's an interesting book but it's almost written like a farmer's almanac, in the historical sense. Do you really care if it was 68 degrees this day 5 years ago? I don't want to critize anymore but it's an intesting book and the thing that I got from it was that interest rates have historically been between 2-10% for every developed nation the last 200 years. Too bad this book was written in the 1960's because the rates in the 70's would have thrown off this conclusion too. In summary, interesting but not much you can apply to today's world.
This book is big, very big at ~700 pages. It is a testimony to the idea that history doesn't repeat itself, but it often rhymes.
The book is arranged chronologically, and geographically within each time period. Time is spent on each are roughly in proportion to the amount of unique data that we have from each era. Thus, the recent past gets more pages per year. Roughly one-quarter of the book goes from ancient times to 1800, and one quarter to the 19th century. Half of the book is 1900-2005.
There are several things that the book points out, common to each time and area investigated.
1) It is very difficult to eliminate interest. Even when governments or religions try to restrict interest, either in rate charged or in entire, systems arise to create promises to pay more in the future that than full payment today.
2) The more technologically advanced economies get, the lower interest rates tend to get.
3) Boom/bust cycles are impossible to avoid.
4) Governments introduce currencies and often cheat on them (debasement, or inflation of a fiat currency).
5) Governments do sometimes fail, whether due to a lost war, civil war, or default, taking their currencies and debt promises with them.
6) The economic cycle across the world is usually more correlated than most people believe at any given point in time, even in ancient times. (How much more today... decoupling indeed...)
7) Cultures that allowed for a moderate amount of debt financing prospered the most, in general.
Those are my summary points after reading the book. Homer and Sylla drew some but not all of those conclusions. It's an ambitious book and and ambitious read. Sidney Homer did a lot of significant work researching from the past to the middle of the 20th century, and Richard Sylla did an admirable job giving the grand sweep of the increasing complexity of the bond markets as the 20th century progressed until 2005, which was an interesting point at which to end the fourth edition. The fifth edition, should there be one, will prove even more interesting as it surveys the end of the housing and credit bubbles, and the shape of the financial system in their aftermath.
This book is a must for those that like economic history. I really enjoyed it. For those without such an interest, it's a big, somewhat-expensive, show-off book that will be occasionally useful as a reference.
Many might say that a book of this subject matter would be incredibly dry and boring. But if one reads it from cover to cover, as was the case for this reviewer, one will find it to be packed with fascinating information and insights on almost three thousand years of financial history. Nearly every culture and geography is represented as the authors take the reader on a roller coaster ride over the hills and valleys of lending policies and usury in both private and public contexts. There are many surprises for the reader who is unaware of the great impact that interest rates can have on human activities, including war and pestilence, but also human discovery and adventure. For the serious researcher, there are also a multitude of tables and graphs, illustrating the behavior of interest rate time series for different cultures and governments throughout history.
The scale of importance of interest rates in the modern world is staggering if compared with the historical periods that are discussed in this book. Indeed, and this is brought out by the authors, interest rates in their words are "watched like a hawk", and millions of dollars are spent every year in interest rate modeling and analysis of fixed income securities such as bonds and mortgage-backed financial instruments. All investors, no matter which sector of the market they are involved in, have to monitor very closely the trends in interest rates.
The magnitude of interest rates can enable wars to be fought and lost, as is brought out brilliantly in this book. Legal philosophies and developments have also guided humans as to what is considered just compensation for lending, with rates in some cultures considered to be astronomical as compared to others. And the authors show that there have been periods where lending has barely occurred at all, with progress in such periods taking as expected a back seat. One cannot grow and flourish without taking risk, and lending risk is measured with the level of interest rates and their volatilities.
Many might say that economic and financial history cannot be romanticized. After all, economics is supposed to be the "dismal science". The authors do not intend to present such a romantic view, but they do so inadvertently perhaps. With all the conflicts that have been waged because of financial competition, with most of these conflicts being horrifying and in some cases completely destructive to the societies that waged them, lending encapsulates the need for humans to plan for the future. It exemplifies the attitude that the future holds promise, and solidifies a level of trust between borrower and lender. It allows both parties to assess their current position with what it will be in the future. And of course it is an axiom that it is always infinitely preferable to exchange coins rather than bullets.
This exceptionally written, highly readable volume, written by a true pioneer in bond trading and fixed income research, covers interest rate trends and lending practices spanning over four millennia of economic history. Despite the paucity of data prior to the Industrial Revolution, the book manages to present a highly detailed analysis of money markets and borrowing practices in major economies. A History of Interest Rates seeks to provide a helicopter perspective of interest rate movements, avoiding anecdotal indications if possible and applying analytical tools such as yield curves and decennial averaging of the available data.
Homer asserts that "the free market long-term rates of interest for any industrial nation, properly charted, provide a sort of fever chart of the economic and political health of that nation." Given the unprecedented rise in asset price volatility and the emergence of extraordinary inflation rates during twentieth-century episodes of economic distress--occurrences which were nearly imponderable during the nineteenth century--it would seem that we are now living in times of eschatological excess, which is actually one of the understated themes in this book's third edition.
This book should be part of the library of every investment analyst, together with such finance classics as Graham and Dodd's Security Analysis and Lefevre's Reminiscences of a Stock Operator.
Product Details :
Hardcover: 736 pages
Publisher: Wiley; 4 edition (August 29, 2005)
Language: English
ISBN-10: 0471732834
ISBN-13: 978-0471732839
Product Dimensions: 6.5 x 2.2 x 9.1 inches
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