Modern Finance Is Seeing Historic Levels of Speculation
Why study financial history? For historical context that helps to make sense of the current world.
Not surprisingly, the 2008–2009 global financial crisis sent many financial professionals looking to history for a sense of appropriate context and perspective to understand the magnitude of such a catastrophic financial shock. This, in turn, sparked a general interest in financial history but with few professional sources to turn to. At the 2014 Middle East Investment Conference, professor Adrian R. Bell, head of the ICMA Centre at the University of Reading’s Henley Business School, considered the question of whether modern finance existed in the Middle Ages.
Bell hesitated, but nonetheless conceded, that finance seems to be as old as the agricultural revolution in Mesopotamia more than 3,000 years ago. It was then that forward contracts carved into cuneiform tablets — one for barley (at an interest rate of 33.33%) and the other for silver (at an interest rate of 20%) — were entered into between a person and a god (at least the god’s intermediary, a priest). Put another way, finance seems to be an inevitable consequence of human activity, and its invention was predetermined.
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