The Confidence Game.

• Author: Thomas, Michael M.

In the summer of 1993, I found myself at a cocktail party on the island republic of Jamaica. Among the other guests was a young man who had just left a job at the Ministry of Finance. I asked him about a story in that morning's Gleaner (Jamaica's newspaper of record) which reported that the Bank of Jamaica was considering taking a $24 million loan from the World Bank to defend the declining Jamaican dollar on the foreign exchange markets.

Before he could answer, I blurted out, "Are you people crazy? Do you know how long $24 million will last on the computer screen of some 20-year-old foreign exchange trader in New York? About 10 seconds! You'd be better off borrowing the money and giving $5 to every inhabitant of this island!"

I still think this was sound, if impolitely delivered, advice. The question it addresses--who controls the world's currencies?--is the subject of two excellent, readable, and wide-ranging books about the brave new world of globalized finance.

The first, by Steven Solomon, concerns itself with the central bankers. He begins with what Hollywood script people call "the inciting incident"--namely, the October 1987 market crash--and then he circles back through history. His focus, though, is what might be called finance's postmodern era, the origin of which must surely be dated back to August 1971, when Richard Nixon took the dollar off the gold standard. The book is engrossing; Solomon's research is meticulous and he presents his case gracefully.

The second work, by Gregory Millman, looks at the currency speculators. Admittedly journalistic and anecdotal, The Vandals' Crown spends much of its time on the personalities behind the new trading strategies and financial instruments that have radically accelerated the rate at which capital can be deployed. Millman takes the reader a very long way toward knowing how a handful of anonymous currency speculators can, in an instant, wreak havoc on international finance. This is a fine book as well, and a splendid complement to Solomon.

So complementary are the two books, in fact, that the provocative subtitles on their jackets pose a contradiction. "How Rebel Currency Traders Overthrew the World's Central Banks" trumpets the cover of The Vandals' Crown. The Confidence Game, meanwhile, placards, "How Unelected Central Bankers Are Governing the Changed World Economy." If the central bankers have indeed been overthrown, as per Millman, how can they be governing the world economy, as...