Despite the fact that almost all productive human activity is tied up in commerce, we as a society go to great lengths to look the other way, particularly in our educational system. Niall Ferguson’s The Ascent of Money helps to remedy the situation by looking at history through the lens of finance.
Episode 1 is online now — but not available to embed, it would appear.
I highly recommend it, but I do have a couple quibbles.
In simplifying the history of banking, Ferguson describes the Medici family as moving banking out of the Jewish ghetto by inventing a clever means of disguising usurious interest: they hid interest payments in foreign exchange contracts as a commission. The Templars were doing this a couple hundred years earlier. They would take local currency in return for a demand note, which was good at any one of their castles spread from Europe to the Holy Land. Because they were performing a service — safely moving your money a great distance without losing it to bandits — they could charge a hefty commission.
Later in the episode, Ferguson describes the rise of bond markets and how city-states would issue bonds to fund mercenary armies. If a city-state’s odds seemed slim, their bonds would trade at a deep discount, perhaps yielding 50 percent. So far, so good, but he then implies that these rates would set the rate for the whole market, and all borrowers would then need to pay high interest rates — which doesn’t make much sense unless all borrowers are facing the same risk as the city-state. If they are, the problem is that the city-state can’t protect its people and their businesses, not that it’s somehow setting rates too high.