Category: 1 – Read ASAP! (All Categories are 1 – Read ASAP!, 2 – BUY it!, 3 – SHELF it, 4 – SOMEDAY it)
Comments: This is the sort of history book I enjoy. Hot on the heels of “A Splendid Exchange” and “Guns, Germs, and Steel,” this book is fantastic for those interested in understanding the story behind the financial infrastructure that exists today. Given the increasing spotlight on financial instruments (thanks largely to their failure), this is compulsory reading for anyone interested in understanding the real “infrastructure” of our development.
Top 3 learnings:
1. The world would NOT be a better place without our financial evolution. Credit and debit are critical to the growth of economies, businesses, and are the foundation to economic progress. Finance has underlined the big shifts in our societies. For example, the era of colonialism (or the first attempt at globalization) was only made possible by financial innovation – the dutch VOC was the first “public” company with a swath of public shareholders. The British emulated the Dutch and did it better.
2. War is the mother of all things. War was the real reason behind financial innovation. The concept of the bond market was created to fund wars between Italian states, the stock market was invented for better success in colonial wars.. and finance also played it’s part by being the real cause for wartime success and failure. The British triumph against Napoleon and the defeat of the south in the American civil wars were determined more by financial causes than any other.
3. Credit is critical for growth. The biggest benefit of the modern day financial system is that a larger proportion of the population are able to escape the clutches of loan sharks who charge interest rates upto 11 million percent and thus keep the poor poor.
Book notes here
Marler's Observatory 