Library:Lying for Money
| Lying for Money: How Legendary Frauds Reveal the Workings of the World | |
|---|---|
| Author | Dan Davies |
| First published | 2018 |
| ISBN | 978-1-78816-217-3 unverified |
| Role | Analysis |
| Domains | Business, Finance & Scams |
| Tactics | Fraud or Scam Imposture |
Lying for Money: How Legendary Frauds Reveal the Workings of the World is a 2018 book by Dan Davies.
Summary
Dan Davies, a former economist at the Bank of England and longtime financial analyst, offers an analytical guide to white-collar fraud. Rather than tell one story, he classifies frauds by how they work and uses famous examples to explain the mechanics. His central argument is that fraud is a natural byproduct of a modern economy that depends on trust: because checking everything would be prohibitively expensive, societies accept a certain level of fraud as the price of efficiency.
Types of fraud
Davies groups frauds into categories. Long firms build a good credit record with suppliers and then order large amounts of goods on credit and disappear. Counterfeits create fake documents, assets or products. Control frauds are committed by people who run organizations, such as executives who manipulate accounts. Market crimes include manipulation and insider trading. He also discusses Ponzi schemes and other structures that require constant growth.
Trust as a resource
Davies explains that every economic system relies on trust in documents, signatures, auditors, banks and reputations. Fraudsters exploit these points of trust. Because the cost of eliminating fraud entirely would be enormous, organizations make tradeoffs, and a certain amount of fraud becomes almost inevitable. This produces what he calls a "fraud-equilibrium," in which the level of fraud adjusts to the level of checking.
Lessons from history
The book draws on cases from Victorian Britain to Enron, Parmalat, Bernie Madoff and the LIBOR scandal, as well as less famous frauds, including the salad oil swindle. Davies emphasizes that frauds tend to grow, because concealing an initial deception requires ever larger new ones, and that they are often uncovered when growth stops.
Relevance to Bullshitopedia
Lying for Money gives readers a framework for understanding how frauds work across different contexts. Its insight that trust is both essential and exploitable helps explain why fraud recurs and where to look for it.
Related entries
- The Great Salad Oil Swindle
- Enron's reported profits
- Charles Ponzi's postal reply coupon scheme
- The Confidence Game (Konnikova)