Man vs Money

by Stewart Cowley

In Man vs Money, Stewart Cowley provides a basic introduction to various economic ideas and vehicles that make up our economy, but that more importantly are defined by the common man. Each chapter breaks down what the idea is relating to the economy, and then explains how it directly relates to us. This makes the book useful not only as a guide to economics, but also to understand how it can play a key role in each of our own lives.


The book has 12 chapters with a range of topics including compound interest, derivates and quantitative easing. Each chapter explains the concept and then how we can take advantage of it. For example, Cowley initially shows us through mathematical calculations how compound interest works. He uses the equation FV = PV+(1+(r/n))^nt. FV = Future Value. PV = Present Value. r = Interest rate. n = Months. t = Years. He relates it specifically to mortgages to show the power the compound interest can have. On a large financial asset such as a house, the interest payments and term have a great effect on the final loan amount paid. On the one hand, if you are the one receiving the compounded interest rate, you have the potential to receive many benefits. However, on the other hand, if you are the one paying the interest rate, then you expose yourself to an equally great risk.

In Quantitative Easing, he explains the role that it plays in helping our economy throughout a recession.  Quantitative Easing is a type of monetary policy where the central bank buys financial assets and produces, ‘new’ money with the hope of lowering interest rates and stimulating spending. Quantitative Easing is currently being used today in the midst of the Covid19 pandemic. Although the book was published a few years earlier, the dangers outlined with QE, including a growing inequality gap has been outlined by Cowley. These can be seen today and can be measured using the Gini index, which is a measure of financial inequality on a scale of 1 to 100. The Gini Index, or Gini Coefficient, may also be used as a measure of economic welfare.  


My opinion


Man vs Money is a useful book that acts as not only as a breakdown of various economic principles, but also a guide for your own personal understanding of money. We often use various financial tools everyday but are unaware of how they operate and how to make best use of them. Man vs Money simplifies these concepts and makes for an overall enjoyable read.

I particularly found the derivates chapter very fascinating. Cowley puts into perspective how large the derivatives market is. He states, if you project all the money in the world onto the 102 floors of the Empire State Building, the first 81 would be the derivatives market. But, as with its large size, it is equally as challenging to understand. Derivates gain their value from something that you do not own. Some examples of derivatives are a forward contract or futures, each of which can be very valuable in protecting from risk. Forward contracts are an agreement to buy a financial asset at a fixed point in the future for a fixed price. Futures are similar to forward contracts but offer less flexible terms and are more commonly used. When you buy or sell a future, a percentage of the price may be used as collateral. This is called the initial margin. If you profit, you are credited. If your losses fall below a certain level, a margin call occurs. As you put little down to gain a large position, there is a great amount of leverage. The potential and power of these derivatives forms the basis of the hedge fund industry. While there is a lot more to derivatives and it requires further reading to grasp the scale and complexity, Cowley is able to provide us with a valuable glimpse into the mysterious world of hedge funds.

Whilst the final chapter looked at the relationship between energy, inflation and debt and had a more sombre tone in regards to the current way we are looking after the planet, the afterword was particularly poignant. It was a hopeful conclusion that accepted the ‘curse of money’ that humans have lived with for as long as it has existed, but nonetheless have overcome time and time again. And in the future we can resolve these issues by considering the following values:

  • Promoting sustainability
  • Valuing long-term investment over short term gratification
  • Spreading wealth around the world more evenly
  • Sharing profits between capital and labour more evenly

Overall, Man vs Money is definitely recommended for providing an easy explanation into the world of money but also in understanding our personal relationship with money.