The way that traditional finance and even the FinTech industries are perceived by the masses is as groups of greedy, conniving, mostly old, but some young, white men, bent on making as much money as they possibly can with absolutely no regard for anyone but themselves. This perception of financiers has become an absolute juggernaut of a driving force for individuals: if you want to get rich, you have to rob, steal, and kill your way to the top, and once you’re at the top, you’re untouchable.
But it hasn’t always been this way. Let’s rewind to the beginning.
Though people often believe that human society began as “trade and barter,” what historians and anthropologists have discovered is that early human economies — those without currencies — mostly functioned through gift giving and debt. The first place to create paper money was Sichuan, China, where a private company within the Song Dynasty invented the concept because the metallic currency (called wén or 文) was incredibly heavy and difficult to carry around in large quantities.
This is to say, financiers initially created paper money to ease the burdens of the masses and themselves: they weren’t trying to pull a fast scam, they weren’t trying to institute some specific interest rate, and they weren’t trying to complicate everything. They were simply attempting to make everyone’s lives — including their own — a little bit easier.
And it worked.
The Unfortunate Effects of Simplicity
The problems with the promissory notes in China became evident very quickly: they were easy to forge, weren’t standardized, and created tax loopholes. The reason that these issues reared their heads so quickly was because of human nature — people immediately took advantage in any way possible.
Due to the mass forgeries, the 16 largest companies in the Sichuan province agreed to standardize the creation of the notes and adopt specific stamps that would make forgeries much more difficult. However, that didn’t stop crafty criminals from continuing to try.
On top of this, the companies began to issue more promissory notes than wén in existence because demand was soaring, and historic arbitrageurs would then cash these notes out in wén, gold, and silver, and take their currencies/commodities to the neighboring dynasty (the Jin Dynasty), where they could make more profitable trades and not require the use of the inflating promissory notes (thus draining the reserves of the already weakened companies and Song Dynasty).
The desire for ease-of-use began to, in turn, make the easy-to-use money nearly worthless over a period of two-three centuries, and as the currency crumbled, so too did the Song Dynasty with it.
Fade to Now
More people today are probably familiar with the Gordon Gecko “greed is good,” era of finance than they are with historical versions of finance. The basic idea that debt, equity, contracts, and fiat currency were all invented with ease-of-use and societal growth in mind has been abandoned: not only are these tools demonized, but the misuse of them has warped the fabric of what societal growth is and whether we can push forward together.
The issue, as vague as it may seem on the surface, is a fundamentally important one. People don’t just mistrust the system, they believe the only way to create their own wealth is through heinous use of the tools in place or the creation of new tools (to be used heinously). And generally, the financiers prove those cynical insights to be correct. It can often feel like the only way to acquire more wealth is by taking from those who have the least or “scheming it.”
While no one can be sure of “Satoshi Nakamoto’s” intentions, it’s fair to say that a community once viewed as overtly libertarian, with a lean toward anarcho-capitalist, has devolved into something far sadder and with a more understandable goal: get rich quick. This isn’t to say “Bitcoin maximalists” have all embraced this new modus operandi, but most skew so far toward “all government is bad government,” and “debt shouldn’t exist,” that it’s hard to take them seriously.
Meanwhile, there’s been explosive growth in what’s being termed Decentralized Finance. Stans for this truly believe it will be the next important step in the finance industry, which is bold (borderline stupid), not only because it’s so new and difficult for laymen to comprehend, but also because scams abound and even the “entrepreneurs” seem keen on ripping off retail.
Morals Exist, Whether You Like it or Not
Some people in finance really cross the line. Names that come to mind instantly are Jeffrey Epstein, Bernie Madoff, Ken Lay, and Bernie Ebbers. But these are outliers on a bell curve — the worst of the worst. If you delve back a bit on the curve, it becomes clear that much of what modern finance has created has done little to compound positive change: one needs to look no further than credit default swaps, subprime mortgages, SuperDollars, EuroDollars, or other AwEsOmE modern financial inventions to see that all of these were developed — almost exclusively — to take advantage of other people, or just outright confuse them.
It’s sad to see that what was once viewed as a powerful industry designed to help people has slowly devolved into an industry where venomous, egotistical, and cynical sociopaths are considered the cream of the crop. Why would the public hope that any of the new solutions in finance could benefit them in anyway? There’s zero logical reasons.
The Slave Dilemma
I often think of wealth disparity as still existing in such wild extremes — particularly in America — because of a mentality that ran amok during the 1800s in what would eventually become “The Confederate States of America.”
Everyone is aware of the disgusting nature of slavery and how the South defended it in a horrendous and bloody war. But few realize that most Southerners didn’t own any slaves at all, and that 1% of slaveowners owned 30% of the slaves.
This is to say that roughly 70% of the people fighting to uphold “the institution” of slavery didn’t have any slaves at all. So why fight?
The dream. Regardless of whether the soldiers fighting for the South owned slaves or perhaps even believed slavery was wrong, didn’t matter. What mattered was that people in power, people of wealth, people who effected change, were slaveowners, which meant all those in poverty or the lower middle class were going to war and **dying** for the hope that one day, maybe, they could have a slave of their own. What a despicable dream, right?
Yet, that’s the dream now. “I may not be a billionaire, but I will fight to the death to give people that ‘right.’” People dream of having billions of dollars, even though if one follows up the question of “Do you want to be a billionaire?” with “And what would you do with a billion dollars?” most people are generally at a loss for words. Buy a house? Help your family and friends? Start a company? Buy another house? Several pristine cars? Travel the world? Okay, so what do you want to do with the other $900 million? Not give it away, that’s for sure.
It’s greed for greed’s sake and it makes the finance industry feel redundant. No one needs a billion dollars, but we all strive for it because being insanely wealthy has become a signifier of import — similar to how being a big fat fatty with transparent white skin was viewed as a great sign of power in the 1400–1700s because it meant you stayed inside all day (didn’t work the fields) and remained well fed. Luckily for the rich, scientists and doctors realized never being in the sun and gaining enormous amounts of weight was part of the reason why all the monarchs were dying young.
It’s disconcerting to think that a little over a thousand years ago, when fiat was created, it was truly out of a will to make everyone’s lives a little better. Though the road to Hell is paved with good intentions, in the end, it still feels as though intention is everything. And it feels like the intention of the broader financial industry is to pass numbers back and forth for eternity, growing their own, and shrinking everyone elses.
I hope beyond hope that someone, somewhere, will be able to convince the ultra-rich and the public-at-large that having enequaled wealth is bad for everyone, including themselves. But I’m not holding my breath.
Stay skeptical, friends.