Wednesday, May 13, 2009

The credit crunch of 1294

This is fascinating.

Basically, there was an incident in the Middle Ages that closely matches the current banking crisis.  The article is easy to read, and I;d recommend it to anyone interested in history.

The story also shows why the Italians were able to become so wealthy and powerful.  They, like the Dutch, English, and modern USA, basically built an empire on the basis on financial shenanigans*.  Anyone who claims that finance does not generate real wealth is ignorant of both history and economics.  Yes, it is possible for the process to get corrupted, but a healthy financial sector is a huge asset for any country.

*Yes, this is a simplification.  Lots of things are needed to make a world power.  But knowing, as a society, how to manage money is right at the top of the list.

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