Book traces debt’s evolution from warships to the Fed
Bonds have become profoundly entrenched in the financial system, making it easy to overlook their origins as a revolutionary innovation. Robin Wigglesworth, the author of Trillions and editor of the Financial Times’ Alphaville blog, has recently released a new publication titled A Fabulous Debt. The book examines the bond market’s lively history and addresses the central question: “how did we get here?”
A Fascinating History of Debt
The book is meticulously researched and genuinely fascinating. It is also extremely readable, which is a rare feat for a work that covers centuries of complex economic history. Wigglesworth steps back from modern market language—duration, spreads, ratings—to show that these financial instruments did not simply spring into being. Instead, the author distils centuries of history into thoughtful accounts that pave the path toward the financial world we recognise today.
For a Bond Vigilante who has spent nearly their entire adult life in economics, the book provided answers to questions they never knew they had. Where was the first bond market? Who was the very first issuer of corporate bonds? When were bond ratings first used? When were the first bond funds launched? When was the first instance of quantitative easing? The result is a chronological, educational tale of the evolution of the bond market, without the bland execution that such a structure implies.
Wigglesworth builds each chapter around a real-life protagonist, thereby using the titans who have shaped financial history to personify each period. The reader starts off in the 12th century with Doge Vitale II and his fleet of warships. The journey continues through centuries of global history: watching Napoleon meet his match against the bond market, riding the railway mania alongside Jay Cooke, and witnessing the rise of the first “bond king” through the Rothschild banking dynasty.
From Warships to the Fed
The narrative moves through the high-yield revolution of Michael Milken and the mortgage-backed securities era of Lewis Ranieri. It eventually deposits the reader in the modern-day Federal Reserve alongside Jerome Powell, just as Covid-19 throws markets into turmoil. These are only a handful of the characters and crises encountered along the way. Each chapter covers subject matter substantive enough to have inspired a whole book of its own, yet Wigglesworth manages to condense what feels like nineteen books’ worth of information into one volume.
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While financial history can sometimes descend into a procession of dates, facts and figures, A Fabulous Debt rarely does. Instead, the book is sprinkled with charming anecdotes. One finding is that the first bond was essentially an involuntary loan forced upon the wealthy. Another amusing story involves first-time wartime bond purchasers who thought they would have to make the interest payments and bought the bonds anyway, driven by patriotism at its finest.
Political Horse-Trading and Bond Kings
Wigglesworth also adds discernible colour to the history of the US post-independence political period. The author transports the reader back to the political horse-trading depicted in the musical Hamilton, adding detailed insight and the specifics of at least three bonds that came from it. Wigglesworth provides the most colourful description of the Bretton Woods agreement I have read, turning what has previously been a rather dry read in an economics textbook into something populated by personalities, espionage, rivalries and competing national interests.
The stories do not stop there. The reader learns why the state capital of North Dakota is called Bismarck. They discover the historical bond significance of Venice’s Rialto and the fact that Luxembourg missed out on a €40 trillion industry to Brussels’ beer and mussels. The narrative also explains how space-saving initiatives impacted futures trading forevermore and reveals that the oldest still-active bond in the world shares a birthday with the author’s daughter, albeit 398 years apart.
Why it matters beyond finance
The text explains the ancestry of the financial system. It shows the ingenuity used to create these instruments. The book highlights the economic power struggles across the Atlantic.
Who should read it
The audience is not limited to market professionals. It is interesting for anyone curious about history. It is also a good choice for general readers.
