As soon as bad loans led market crash in 2008, everyone and his grandmother started blaming too much innovation in finance field.
Now, I know economics isn’t physics or cooking. I also know that derivatives and stuff like that could lead to disasters. Even if I didn’t know, I better know after so many years of disastrous market.
However, I am listing innovations in finance that have worked. Please help me with more.
- The very concept of money is revolutionary
- The concept of interest – a kind of acceptance that money can be used to generate money
- The concept of compound interest – almost unfathomably profound
- Everything around depreciation and so on
- Paper money
- Plastic money
- Checks, banker’s checks and so on
- Stock market (I know, just calm down. It works.)
- Electronic transfers
- Insurance – man, this is the most fantastic innovation. It is a direct application of statistics. Like it or not! Think of the risk coverage of ships in 18th century
In my humble opinion, after all other fields that saw a surge, finance too saw a surge of innovation.
It is a different matter that things went into a spiral – and again in the other direction.
I don’t want to blame finance sector for attracting talent and for innovation. At least not while blogging from my Android!