Having spent about ten years, a lot of time and money pushing the case for full reserve, I’m pleased to see the above book, which was the Financial Times economics book of the year in 2013, also supports the idea.
However, arguing the case for full reserve is not the central objective of the book: as the title implies, the book is a history of money, and it goes right back to the beginning. I.e. it covers ancient Mesopotomia, ancient China, Greece, Rome, etc. It then moves on to Europe in the Middle Ages and on up to the present day.
It’s only near the end that the author, having considered the numerous problems associated with money, concludes that the best system is full reserve – quoting in particular (far as I remember) Milton Friedman, Irving Fisher and Lawrence Kotlikoff.
The book is brilliant: it combines readability with scholarship. For example there are about 200 items in the bibliography / references section. The book (at about 120,000 words) is also (at a guess) a bit longer than the average book.
Ancient Rome’s credit crunch.
If you want a taste of the author’s style before buying, here is a short passage describing Rome’s credit crunch.
“In such an extensively monetised economy, it is hardly surprising that the Romans were also well acquainted with another familiar feature of modern finance: the credit crisis. Occasionally, the simi¬larities with the modern age are nothing short of eerie. In AD 33, the Emperor Tiberius' financial officials were persuaded that the recent boom in private lending had become excessive. It was decided that regulation must be tightened in order to extinguish this irrational exuberance. After a brief review of the statutes, it was dis· covered that none other than the father of the dynasty, Julius Caesar, had in his wisdom instituted a law many decades before specifying strict limits on how much of their patrimony wealthy aristocrats could farm out in loans. He had, in other words, introduced a rigorous capital adequacy requirement for lenders. The law was clear enough: but not for the first time in history, industrious lenders had proved remarkably skilled at circumventing it. Their ingenious evasions, the historian Tacitus reported, 'though continually put down by new regulations, still, through strange artifices, reappeared.
Now the emperor decreed the game was up: the letter of the old dictator's law would be enforced. The consequences were chaotic. As soon as the first ruling was made, it was realised with some embarrassment that most of the Senate was in breach of it. All the familiar features of a modern banking crisis followed. There was a mad scramble to call in loans in order to comply. Seeing the danger, the authorities attempted to soften the edict by relaxing its terms and announcing a generous transitional period. But the measure came too late. The property market collapsed as mortgaged land was fire-sold to fund repayments. Mass bankruptcy threatened to engulf the financial system. With Rome in the grip of a credit crunch, the emperor was forced to implement a massive bailout. The Imperial treasury refinanced the overextended lenders with a 100-million sesterces program of three-year, interest-free loans against security of deliberately overvalued real estate. To the Senate's relief, it all ended happily: credit was thus restored, and gradually private lending resumed."