Liaquat Ahamed Explores the History of Money, Power and Politics in Wide-Ranging Multi-Format Episode

The latest episode featuring economist and author Liaquat Ahamed comes packaged in multiple formats—audio, video, and a full transcript—and ranges widely across the history of money, politics, and ideas, before ending on unexpectedly personal terrain.

The conversation opens with a historical puzzle and then quickly moves into the 19th century’s high-stakes entanglement between finance and statecraft. Among the early stops: William Gladstone’s surprising wager on Egyptian debt, and Otto von Bismarck’s part in dismantling bimetallism—an act the discussion links to a prolonged global deflation that helped shape economic conditions for roughly two decades. The episode also revisits competing monetary counterfactuals, asking whether an international silver-based system, or some form of “symmetallic” compromise, might have offered a workable alternative to a single-metal gold regime.

From there, the dialogue jumps forward to the interwar period. Britain’s decision to return the pound to gold at the prewar parity in 1926 is treated as a pivotal—and costly—choice. The story then follows Hjalmar Schacht, whose career arc is framed as a transformation from the technocrat credited with steadying Weimar Germany’s currency into an opportunistic figure who collaborated with the Nazi government. There is room, too, for character: Montagu Norman, the influential governor of the Bank of England, appears not only as a central banker but also as a man drawn to spiritualism.

One thread ties these disparate episodes together: what distinguishes financial disruptions that permanently scar societies from those that pass without derailing long-run growth. Host Tyler Cowen presses this point directly by contrasting Ahamed’s two best-known books. Lords of Finance, Cowen says, left him persuaded that crises can be decisive, because the events it chronicles contributed to the Great Depression. Yet Ahamed’s newer book, 1873, almost suggests the opposite—despite turmoil, the world economy continued expanding.

Ahamed’s answer is to separate the immediate economic damage from the slower political and distributional aftershocks. The 1873 crisis, he argues, did not trigger a depression on the scale of the 1930s. But it set off a chain of consequences that weakened the global political economy for the next 20 years. He even offers an alternate framing: the book could just as well have been called The First Great Deflation.

Cowen notes that deflation is often portrayed as especially harmful when wages are slow to adjust. Ahamed counters that in the late 19th century prices and wages proved more flexible than modern observers might assume: nominal pay could fall. The deeper harm, he says, came through shifts in who gained and who lost—and the political reaction those shifts produced.

That reaction, in Ahamed’s telling, was not outright political collapse, but it was far from benign. He points to U.S. populism, a revival of protectionism across Europe, a pullback from liberal economic thinking, and a renewed imperial posture—highlighting Britain’s invasion of Egypt—as signs of a harder, more anxious age after 1873.

The episode also ranges into the late 20th and 21st centuries, drawing lessons from IMF experience, including Ireland’s housing boom and bust, Pakistan’s “two dozen” bailouts, and the failures that turned the eurozone crisis into a prolonged ordeal. It then lands on Britain’s contemporary stagnation—presented as a genuine puzzle—and finally on Ahamed’s own winding professional path, from the World Bank to an unsuccessful film project about Iraq and, ultimately, to religion and identity.

In a closing exchange, Cowen asks about Ismaili Muslims—Ahamed is described as non-practicing—and why that community is often seen as unusually oriented toward education and progress. Ahamed attributes much of it to the community’s leadership structure: Ismailis follow the Aga Khan, viewed as a direct descendant of the Prophet Muhammad and vested with substantial moral authority. While Ahamed says earlier generations sometimes believed the Aga Khan possessed a divine spirit—a belief he suggests is now less common—the leadership role remains powerful enough to coordinate communal change at scale. Ismailis, he adds, number roughly two to three million worldwide. Cowen summarizes one implication: a non-hidden imam can serve as a continuing source of adaptation—a point Ahamed connects to Shiism’s original rationale.

Why it matters

The episode uses monetary history to show how financial shocks can reshape politics even when headline growth continues—an argument with clear relevance for policymakers weighing today’s inflation, debt, and exchange-rate choices. It also links distributional stress to backlash movements, suggesting that “recovery” metrics may miss the forces that destabilize institutions. Watch for how these historical parallels are applied to current debates over global currency arrangements, crisis management, and Britain and Europe’s economic direction.