In "The Ascent of Money: A Financial History of the World," Niall Ferguson explores the complex nature of collateralized debt obligations (CDOs) and their role in the financial system. CDOs package various types of debt into single securities, allowing investors to gain exposure to a diversified set of loans. While they can enhance liquidity and investment opportunities, they also obscure risk and complicate financial assessments, contributing to increased volatility and uncertainty in markets.

Ferguson underscores that the rise of CDOs showcases a broader trend in financial innovation, driven by the pursuit of profit. This innovation has often outpaced regulatory frameworks, leading to significant systemic risks. The book highlights the implications of such financial products for both individual investors and the global economy, particularly during financial crises, where their complexity can lead to widespread ramifications.