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Niall Ferguson examines how money evolved from a crude system of coins to a complex global financial system of credit, treasury bonds, hedge funds and credit default swaps that have shaped the course of human history.
How did money evolve from a crude system of coins that were worth
only the value of the metals they were made of to a complex global
financial system of credit, treasury bonds, hedge funds and credit
default swaps that have shaped the course of human history? Niall
Ferguson begins his journey in Bolivia, where 500 years ago, mines
built by Spanish conquistadores, using forced Incan labor, produced
so much silver coinage that the currency lost its value. In Italy,
however, the roots of the modern financial world, in which
currency's value is based on trust, began to take shape: A system
of loans and credit between Jewish lenders and Christian merchants
evolved in Venice, the Medici family developed the modern-day
banking system and wars between city states created the bond
market. In Amsterdam, the East India Company began to sell shares
of stock to the public in the early 1600s, and in Paris, a Scottish
fugitive named John Law saw in this new market an opportunity for
an unscrupulous scheme - not unlike Bernie Madoff's - that created
the world's first stock market bubble and, after its collapse,
sparked a revolution.