2600 Years Of Financial Innovation

Earlier we mused whether in a world in which the central banks have failed to stimulate the money multiplier, and thus GDP…

… the only possible way out, now that the epic stock of global debt makes an inflationary outcome improbable, is war.

Perhaps there is another way. DB’s Jim Reid points out something interesting:

Financial innovation is a major positive driver of the money multiplier as it determines, among other things, the amount of leverage the banking system runs.

Of course, the main reason the world is in the current predicament is precisely due to financial innovation. In fact, some 2600 years of financial innovation. The list below summarizes the key milestones in leverage enabling “financial innovation” starting with the creation of coinage in Ephesus in 600 BC, to the 401(k), to CDOs and culminating with Basel III.

So while we invited readers to regale just what the key events were that the world’s “best and brightest” could come up with over 26 centuries of human evolution just to make themselves richer, we ask: what is the next, perhaps final, can-kicking “financially innovative” milestone? If any.


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