Erdman was born in Stratford, Ontario, Canada, on 19 May 1932 to American parents. He graduated from Georgetown University’s Edmund A. Walsh School of Foreign Service. He received his PhD from the University of Basel. In 1958 he worked as a financial analyst for the European Coal and Steel Community. Between 1959 and 1961, he worked as an economist at the Stanford Research Institute at Menlo Park.

Erdman returned to Switzerland where in 1965, he founded and was the president of a Swiss bank - the Salik Bank. In 1969, the United California Bank in California bought a majority stake and renamed it the United California Bank in Basel. The bank collapsed after making large losses speculating in the cocoa market. Erdman and other board members were accused of fraud and Erdman spent time in prison awaiting trial. Several officers of his bank were convicted and served prison terms, much to the surprise of American readers, who were unaccustomed to seeing corporate executives jailed for the activities of their companies. In television interviews, Erdman has observed that Swiss prisons had better food (he could have meals sent in by hotels and restaurants of his choice) but Swiss laws did apply to the "privileged classes" as well as to ordinary mortals. The whole episode has been well-documented in Chapter 4: How My Swiss Bank Blew $40 Million and Went Broke of the book Supermoney by George Goodman written under his pseudonym Adam Smith.

While in jail, he wrote his first novel - The Billion Dollar Sure Thing (1973). It received a 1974 Edgar Award from the Mystery Writers of America for Best First Novel and was published in the UK as The Billion Dollar Killing. He was released on bail and fled from Switzerland. He was subsequently convicted in absentia. His second novel, the The Silver Bears (1974) was turned into a 1978 movie of the same name, starring Michael Caine. His books were well researched and contain convincing details. Despite the underlying complexity of his novels, his lucid writing style had enabled readers to learn complex concepts such as interest rate swaps, and his novels had often been bestsellers. The information in The Swiss Account is credited with providing a basis for helping track down the assets of Jewish victims of the holocaust.

Erdman also regularly wrote financial columns for www.marketwatch.com. He was a leading expert in the international economics field and has published non-fictional works, such as Tug of War, which set out his views on exchange rates and the international financial system.

Erdman was married to Helly Boeglin and they had two daughters. After the collapse of the Swiss bank, they moved to England and subsequently California. He maintained a Northern California residence since 1973 and lived in Healdsburg, California.

Erdman died from cancer at his ranch in Healdsburg, California on 23 April 2007.