In Defense of Finance

Link post

I’m sharing the link instead of a full cross-post because this essay has:

  • 5,300 words

  • 2 footnotes, with links that actually work

  • 1 GIF, 2 charts, 5 expanding brains

  • 30+ lively comments

This is a “much more than you wanted to know” type post on the financial industry:

  • Why everyone hates it, except for people in positions of power.

  • The value of finance in coordinating trade across space and time, told via the parable of Banksy and the corn cobs.

  • Are mortgage-backed securities a scam or a brilliant innovation?

  • The stupid arguments about bailouts, and the smarter arguments for/​against bailouts.

  • Economists writing books about bank equity ratios without googling what those equity ratios actually are.

  • What is up with equity ratios? Is making banks hold 50% capital the solution to financial crises?

  • What banking regulations actually make banks do.

  • The inextricable romance between finance and government.

  • A final request for incrementalism and humility.

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