[Applause]
\n<\/span><\/p>\n

00:06
\n<\/span><\/p>\n

okay yeah thank you very much for the
\n<\/span><\/p>\n

00:09
\n<\/span><\/p>\n

introduction and thank thank all of you
\n<\/span><\/p>\n

00:13
\n<\/span><\/p>\n

for inviting me to give this talk as you
\n<\/span><\/p>\n

00:19
\n<\/span><\/p>\n

mentioned I have kind of a mixed
\n<\/span><\/p>\n

00:20
\n<\/span><\/p>\n

background I have a career as a finance
\n<\/span><\/p>\n

00:25
\n<\/span><\/p>\n

professor at the Yale School of
\n<\/span><\/p>\n

00:27
\n<\/span><\/p>\n

Management but I have a background in
\n<\/span><\/p>\n

00:29
\n<\/span><\/p>\n

archeology and the arts and this book
\n<\/span><\/p>\n

00:33
\n<\/span><\/p>\n

which took me about 25 years to write is
\n<\/span><\/p>\n

00:36
\n<\/span><\/p>\n

an attempt to bring those two worlds
\n<\/span><\/p>\n

00:39
\n<\/span><\/p>\n

together and so you’ll see in this
\n<\/span><\/p>\n

00:41
\n<\/span><\/p>\n

presentation it’s mostly visual but I’ve
\n<\/span><\/p>\n

00:45
\n<\/span><\/p>\n

also been mindful of the fact that
\n<\/span><\/p>\n

00:47
\n<\/span><\/p>\n

although it’s fascinating to dive into
\n<\/span><\/p>\n

00:50
\n<\/span><\/p>\n

ancient history it’s also important to
\n<\/span><\/p>\n

00:52
\n<\/span><\/p>\n

see what that tells us about today and
\n<\/span><\/p>\n

00:54
\n<\/span><\/p>\n

so I’ve chosen a subtitle for my talk
\n<\/span><\/p>\n

00:57
\n<\/span><\/p>\n

which is four thousand years of FinTech
\n<\/span><\/p>\n

01:00
\n<\/span><\/p>\n

and you’ll see what I mean by that
\n<\/span><\/p>\n

01:02
\n<\/span><\/p>\n

shortly the proposition in the book is a
\n<\/span><\/p>\n

01:07
\n<\/span><\/p>\n

very simple one but it’s important to
\n<\/span><\/p>\n

01:09
\n<\/span><\/p>\n

spell out which is that finance is not a
\n<\/span><\/p>\n

01:13
\n<\/span><\/p>\n

way of life finance is not an ethical
\n<\/span><\/p>\n

01:16
\n<\/span><\/p>\n

framework finance is a tool finance is a
\n<\/span><\/span><\/p>\n

01:19
\n<\/span><\/p>\n

technology a set of tools and just like
\n<\/span><\/span><\/p>\n

01:24
\n<\/span><\/p>\n

just like some mechanical just like
\n<\/span><\/p>\n

01:28
\n<\/span><\/p>\n

physics or the application of physical
\n<\/span><\/p>\n

01:30
\n<\/span><\/p>\n

principles finance is neither good nor
\n<\/span><\/p>\n

01:34
\n<\/span><\/p>\n

bad it’s just a way of getting things
\n<\/span><\/p>\n

01:37
\n<\/span><\/p>\n

done now what distinguishes finance as a
\n<\/span><\/p>\n

01:41
\n<\/span><\/p>\n

technology there’s one thing which is
\n<\/span><\/p>\n

01:44
\n<\/span><\/p>\n

the dimension of time finance is a
\n<\/span><\/p>\n

01:48
\n<\/span><\/p>\n

technology for moving value backwards
\n<\/span><\/p>\n

01:51
\n<\/span><\/p>\n

and forwards through time and so you can
\n<\/span><\/p>\n

01:55
\n<\/span><\/p>\n

think of a loan as the simplest form of
\n<\/span><\/p>\n

01:58
\n<\/span><\/p>\n

financial operation and of course when
\n<\/span><\/p>\n

02:01
\n<\/span><\/p>\n

you move value backwards and forwards
\n<\/span><\/p>\n

02:04
\n<\/span><\/p>\n

through time you have to deal with this
\n<\/span><\/p>\n

02:06
\n<\/span><\/p>\n

the veil of uncertainty and the risk
\n<\/span><\/p>\n

02:08
\n<\/span><\/p>\n

that’s associated with the future so if
\n<\/span><\/p>\n

02:10
\n<\/span><\/p>\n

you think about the two big
\n<\/span><\/p>\n

02:12
\n<\/span><\/p>\n

picture issues in in in finance
\n<\/span><\/p>\n

02:15
\n<\/span><\/p>\n

one is the dealing with an uncertain
\n<\/span><\/p>\n

02:19
\n<\/span><\/p>\n

with future cash flows or or and moving
\n<\/span><\/p>\n

02:23
\n<\/span><\/p>\n

them to the present that dimension of
\n<\/span><\/p>\n

02:24
\n<\/span><\/p>\n

time the other one is is is the risks
\n<\/span><\/p>\n

02:27
\n<\/span><\/p>\n

associated with that and how we ensure
\n<\/span><\/p>\n

02:29
\n<\/span><\/p>\n

against them and how we how we take
\n<\/span><\/p>\n

02:31
\n<\/span><\/p>\n

those risks okay so I promised to bring
\n<\/span><\/p>\n

02:37
\n<\/span><\/p>\n

this up to current issues one of the
\n<\/span><\/p>\n

02:39
\n<\/span><\/p>\n

things I get asked about all the time
\n<\/span><\/p>\n

02:41
\n<\/span><\/p>\n

and I’m sure all of you get asked about
\n<\/span><\/p>\n

02:43
\n<\/span><\/p>\n

this and I’m sure some of you are
\n<\/span><\/p>\n

02:44
\n<\/span><\/p>\n

experts in this room is the new
\n<\/span><\/p>\n

02:46
\n<\/span><\/p>\n

technology of blockchain and when I
\n<\/span><\/p>\n

02:50
\n<\/span><\/p>\n

think a blockchain and and what it is
\n<\/span><\/p>\n

02:52
\n<\/span><\/p>\n

good for I think about some of these
\n<\/span><\/p>\n

02:55
\n<\/span><\/p>\n

these features that that have been
\n<\/span><\/p>\n

02:58
\n<\/span><\/p>\n

proposed it is a distributed ledger
\n<\/span><\/p>\n

03:02
\n<\/span><\/p>\n

system that once a transaction has been
\n<\/span><\/p>\n

03:06
\n<\/span><\/p>\n

entered into this ledger it’s
\n<\/span><\/p>\n

03:09
\n<\/span><\/p>\n

irreversible and it’s mutually
\n<\/span><\/p>\n

03:12
\n<\/span><\/p>\n

verifiable and and and it has a
\n<\/span><\/p>\n

03:16
\n<\/span><\/p>\n

permanence to it that that is
\n<\/span><\/p>\n

03:19
\n<\/span><\/p>\n

anticipated so that you you can’t you
\n<\/span><\/p>\n

03:24
\n<\/span><\/p>\n

can you can settle disputes in the
\n<\/span><\/p>\n

03:25
\n<\/span><\/p>\n

future it’s it’s quantitative so you can
\n<\/span><\/p>\n

03:29
\n<\/span><\/p>\n

put the numbers in there and spell out
\n<\/span><\/p>\n

03:31
\n<\/span><\/p>\n

quantities and it can be used mutually
\n<\/span><\/p>\n

03:34
\n<\/span><\/p>\n

used as a record for both sides plus
\n<\/span><\/p>\n

03:39
\n<\/span><\/p>\n

it’s cheaper so lawyers are kind of
\n<\/span><\/p>\n

03:41
\n<\/span><\/p>\n

worried about disintermediation of their
\n<\/span><\/p>\n

03:43
\n<\/span><\/p>\n

tasks here is the what I would pose as
\n<\/span><\/p>\n

03:50
\n<\/span><\/p>\n

the origins of blockchain technology you
\n<\/span><\/p>\n

03:55
\n<\/span><\/p>\n

may not know what this is it looks like
\n<\/span><\/p>\n

03:56
\n<\/span><\/p>\n

a toy some of you probably do it’s
\n<\/span><\/p>\n

03:58
\n<\/span><\/p>\n

called a bula and it is about 5,000
\n<\/span><\/p>\n

04:02
\n<\/span><\/p>\n

years old and it’s a clay ball that was
\n<\/span><\/p>\n

04:06
\n<\/span><\/p>\n

used in ancient Mesopotamian cities and
\n<\/span><\/p>\n

04:10
\n<\/span><\/p>\n

inside the ball are those little things
\n<\/span><\/p>\n

04:14
\n<\/span><\/p>\n

that look like toys these little round
\n<\/span><\/p>\n

04:17
\n<\/span><\/p>\n

things so how did it work
\n<\/span><\/p>\n

04:22
\n<\/span><\/p>\n

the two parties would contract for
\n<\/span><\/p>\n

04:26
\n<\/span><\/p>\n

delivery of some future good in this
\n<\/span><\/p>\n

04:29
\n<\/span><\/p>\n

case this might be delivery of five
\n<\/span><\/p>\n

04:33
\n<\/span><\/p>\n

sheep and they would put those sheep
\n<\/span><\/p>\n

04:37
\n<\/span><\/p>\n

into this clay ball and then they would
\n<\/span><\/p>\n

04:40
\n<\/span><\/p>\n

put their signatures by rolling a little
\n<\/span><\/p>\n

04:45
\n<\/span><\/p>\n

signature stone all over the ball so
\n<\/span><\/p>\n

04:49
\n<\/span><\/p>\n

that the so that it covered the ball now
\n<\/span><\/p>\n

04:52
\n<\/span><\/p>\n

why did they do why did they roll it to
\n<\/span><\/p>\n

04:55
\n<\/span><\/p>\n

cover the ball they rolled it so that
\n<\/span><\/p>\n

04:57
\n<\/span><\/p>\n

nobody could break in poke a hole in
\n<\/span><\/p>\n

04:59
\n<\/span><\/p>\n

there and take out one of the the stones
\n<\/span><\/p>\n

05:01
\n<\/span><\/p>\n

so that was a technology that protected
\n<\/span><\/p>\n

05:04
\n<\/span><\/p>\n

against the corruption of the contract
\n<\/span><\/p>\n

05:07
\n<\/span><\/p>\n

and well why did they have these five
\n<\/span><\/p>\n

05:13
\n<\/span><\/p>\n

little pieces like this the bull they
\n<\/span><\/p>\n

05:15
\n<\/span><\/p>\n

were used before the invention of
\n<\/span><\/p>\n

05:17
\n<\/span><\/p>\n

writing and this was a financial
\n<\/span><\/p>\n

05:21
\n<\/span><\/p>\n

contract that preceded the ability to
\n<\/span><\/p>\n

05:23
\n<\/span><\/p>\n

actually write one down now is this
\n<\/span><\/p>\n

05:27
\n<\/span><\/p>\n

permanent well it’s lasted for five
\n<\/span><\/p>\n

05:29
\n<\/span><\/p>\n

thousand years so that’s a lot longer
\n<\/span><\/p>\n

05:31
\n<\/span><\/p>\n

than any blockchain is ever gonna last
\n<\/span><\/p>\n

05:33
\n<\/span><\/p>\n

in our society so this was a great
\n<\/span><\/p>\n

05:35
\n<\/span><\/p>\n

invention maybe never Minh carving it in
\n<\/span><\/p>\n

05:40
\n<\/span><\/p>\n

stone
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05:41
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this is one of the greatest permanent
\n<\/span><\/p>\n

05:43
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records of a quantitative contract now
\n<\/span><\/p>\n

05:47
\n<\/span><\/p>\n

that bull a system evolved into this
\n<\/span><\/p>\n

05:50
\n<\/span><\/p>\n

system which is a written record in
\n<\/span><\/p>\n

05:53
\n<\/span><\/p>\n

writing the writing was developed in
\n<\/span><\/p>\n

05:56
\n<\/span><\/p>\n

order to in order to record financial
\n<\/span><\/p>\n

05:59
\n<\/span><\/p>\n

contracts or business contracts I call
\n<\/span><\/p>\n

06:02
\n<\/span><\/p>\n

anything that has a dimension of a
\n<\/span><\/p>\n

06:03
\n<\/span><\/p>\n

promise today and a delivery tomorrow
\n<\/span><\/p>\n

06:06
\n<\/span><\/p>\n

finance so here is an interest rate
\n<\/span><\/p>\n

06:10
\n<\/span><\/p>\n

here’s a here’s a loan from about 1600
\n<\/span><\/p>\n

06:14
\n<\/span><\/p>\n

BC and those little marks on the outside
\n<\/span><\/p>\n

06:18
\n<\/span><\/p>\n

of the ball became cuneiform writing
\n<\/span><\/p>\n

06:23
\n<\/span><\/p>\n

impressed into a tablet it became really
\n<\/span><\/p>\n

06:27
\n<\/span><\/p>\n

kind of a pain to have to put things
\n<\/span><\/p>\n

06:30
\n<\/span><\/p>\n

inside the ball so they would they would
\n<\/span><\/p>\n

06:33
\n<\/span><\/p>\n

make marks on the outside saying
\n<\/span><\/p>\n

06:35
\n<\/span><\/p>\n

five sheep in those marks on the outside
\n<\/span><\/p>\n

06:38
\n<\/span><\/p>\n

became the written language the word for
\n<\/span><\/p>\n

06:41
\n<\/span><\/p>\n

sheep came from a little symbol for
\n<\/span><\/p>\n

06:43
\n<\/span><\/p>\n

sheep and five you had to poke little
\n<\/span><\/p>\n

06:45
\n<\/span><\/p>\n

five little holes but then they figured
\n<\/span><\/p>\n

06:46
\n<\/span><\/p>\n

out a nice system for for making bigger
\n<\/span><\/p>\n

06:49
\n<\/span><\/p>\n

and bigger numbers so if anybody asks
\n<\/span><\/p>\n

06:52
\n<\/span><\/p>\n

you why finance is important well led to
\n<\/span><\/p>\n

06:54
\n<\/span><\/p>\n

the invention of the written of written
\n<\/span><\/p>\n

06:56
\n<\/span><\/p>\n

language by the way it also was
\n<\/span><\/p>\n

07:00
\n<\/span><\/p>\n

essential when that wasn’t just a
\n<\/span><\/p>\n

07:02
\n<\/span><\/p>\n

contract between two people more than
\n<\/span><\/p>\n

07:04
\n<\/span><\/p>\n

likely it was a contract for delivery of
\n<\/span><\/p>\n

07:06
\n<\/span><\/p>\n

goods to a central temple the as cities
\n<\/span><\/p>\n

07:11
\n<\/span><\/p>\n

grew you had to have a way of planning
\n<\/span><\/p>\n

07:13
\n<\/span><\/p>\n

for getting food to people and a way a
\n<\/span><\/p>\n

07:16
\n<\/span><\/p>\n

process of Taxation so the growth of
\n<\/span><\/p>\n

07:19
\n<\/span><\/p>\n

cities was facilitated by the ability to
\n<\/span><\/p>\n

07:21
\n<\/span><\/p>\n

make these longer-term contracts and
\n<\/span><\/p>\n

07:24
\n<\/span><\/p>\n

also plans a planning accordingly over
\n<\/span><\/p>\n

07:28
\n<\/span><\/p>\n

over years and so it was the first thing
\n<\/span><\/p>\n

07:33
\n<\/span><\/p>\n

that finance made possible was was a
\n<\/span><\/p>\n

07:35
\n<\/span><\/p>\n

larger urban made cities gave them
\n<\/span><\/p>\n

07:40
\n<\/span><\/p>\n

ability to grow larger I’ll show you one
\n<\/span><\/p>\n

07:44
\n<\/span><\/p>\n

more of these tablets before we move on
\n<\/span><\/p>\n

07:46
\n<\/span><\/p>\n

because this is my favorite this is a
\n<\/span><\/p>\n

07:49
\n<\/span><\/p>\n

this is a tablet that’s about the size
\n<\/span><\/p>\n

07:51
\n<\/span><\/p>\n

of a pineapple and it’s in the Yale
\n<\/span><\/p>\n

07:55
\n<\/span><\/p>\n

library and it’s in Sumerian you the way
\n<\/span><\/p>\n

08:00
\n<\/span><\/p>\n

you could tell that is that the marks
\n<\/span><\/p>\n

08:02
\n<\/span><\/p>\n

are in these little boxes and it’s the
\n<\/span><\/p>\n

08:07
\n<\/span><\/p>\n

first record of compound interest so if
\n<\/span><\/p>\n

08:11
\n<\/span><\/p>\n

anybody’s you know asked where does
\n<\/span><\/p>\n

08:14
\n<\/span><\/p>\n

compound interest come from this thing
\n<\/span><\/p>\n

08:16
\n<\/span><\/p>\n

dates to 2600 to 2400 BC and the
\n<\/span><\/p>\n

08:23
\n<\/span><\/p>\n

compound interest part I can actually
\n<\/span><\/p>\n

08:25
\n<\/span><\/p>\n

show you something about it it was a
\n<\/span><\/p>\n

08:28
\n<\/span><\/p>\n

dispute between two city-states in now
\n<\/span><\/p>\n

08:33
\n<\/span><\/p>\n

in Iraq and if you zoom in on Google
\n<\/span><\/p>\n

08:35
\n<\/span><\/p>\n

Earth they both they look like desert
\n<\/span><\/p>\n

08:38
\n<\/span><\/p>\n

and one state conquered the other state
\n<\/span><\/p>\n

08:42
\n<\/span><\/p>\n

but in doing so it forced it to pay
\n<\/span><\/p>\n

08:45
\n<\/span><\/p>\n

reparations it said look you’ve had our
\n<\/span><\/p>\n

08:48
\n<\/span><\/p>\n

land for
\n<\/span><\/p>\n

08:49
\n<\/span><\/p>\n

eighty years and we want you to give it
\n<\/span><\/p>\n

08:53
\n<\/span><\/p>\n

back but also pay interests on the for
\n<\/span><\/p>\n

08:56
\n<\/span><\/p>\n

those eighty years interest rate for
\n<\/span><\/p>\n

08:59
\n<\/span><\/p>\n

that payment was 33 and a third percent
\n<\/span><\/p>\n

09:01
\n<\/span><\/p>\n

per year okay that’s even higher than I
\n<\/span><\/p>\n

09:05
\n<\/span><\/p>\n

pay on my credit card which is limited
\n<\/span><\/p>\n

09:08
\n<\/span><\/p>\n

at twenty nine point nine percent so
\n<\/span><\/p>\n

09:10
\n<\/span><\/p>\n

compound two credit card debt for 80
\n<\/span><\/p>\n

09:13
\n<\/span><\/p>\n

years you know it’s gonna be huge
\n<\/span><\/p>\n

09:16
\n<\/span><\/p>\n

so to deal with these issues the
\n<\/span><\/p>\n

09:20
\n<\/span><\/p>\n

Mesopotamians had the invent ways of
\n<\/span><\/p>\n

09:22
\n<\/span><\/p>\n

making very very large numbers so you
\n<\/span><\/p>\n

09:25
\n<\/span><\/p>\n

can see on this where the numbers are
\n<\/span><\/p>\n

09:28
\n<\/span><\/p>\n

see this right down here these three
\n<\/span><\/p>\n

09:30
\n<\/span><\/p>\n

holes that number has to represent
\n<\/span><\/p>\n

09:33
\n<\/span><\/p>\n

something that now we would regard we’d
\n<\/span><\/p>\n

09:37
\n<\/span><\/p>\n

measure in the billions and the way that
\n<\/span><\/p>\n

09:41
\n<\/span><\/p>\n

it worked was first you’d stick a little
\n<\/span><\/p>\n

09:43
\n<\/span><\/p>\n

hope you turn over your stick and it was
\n<\/span><\/p>\n

09:45
\n<\/span><\/p>\n

at around bought a bottom like a like I
\n<\/span><\/p>\n

09:47
\n<\/span><\/p>\n

am like an eraser you’d stick that in
\n<\/span><\/p>\n

09:52
\n<\/span><\/p>\n

and that represented 60 because it was
\n<\/span><\/p>\n

09:54
\n<\/span><\/p>\n

base 60 and then you’d have a larger
\n<\/span><\/p>\n

09:56
\n<\/span><\/p>\n

stick and put on top of that it would be
\n<\/span><\/p>\n

09:58
\n<\/span><\/p>\n

60 squared and you could use powers of
\n<\/span><\/p>\n

10:04
\n<\/span><\/p>\n

60 successively to represent larger and
\n<\/span><\/p>\n

10:07
\n<\/span><\/p>\n

larger numbers so this was a quite an
\n<\/span><\/p>\n

10:09
\n<\/span><\/p>\n

ingenious I would call it software the
\n<\/span><\/p>\n

10:12
\n<\/span><\/p>\n

the development of mathematics to
\n<\/span><\/p>\n

10:14
\n<\/span><\/p>\n

express very large numbers an imaginary
\n<\/span><\/p>\n

10:18
\n<\/span><\/p>\n

number actually because nobody was ever
\n<\/span><\/p>\n

10:19
\n<\/span><\/p>\n

gonna pay back what amounts to about a
\n<\/span><\/p>\n

10:21
\n<\/span><\/p>\n

trillion bushels of brain but it was
\n<\/span><\/p>\n

10:25
\n<\/span><\/p>\n

financed it used in the kind of service
\n<\/span><\/p>\n

10:28
\n<\/span><\/p>\n

of a political dispute so this is just a
\n<\/span><\/p>\n

10:33
\n<\/span><\/p>\n

fascinating document that that shows you
\n<\/span><\/p>\n

10:35
\n<\/span><\/p>\n

how finance financial thinking was
\n<\/span><\/p>\n

10:37
\n<\/span><\/p>\n

integrated into the notion of of society
\n<\/span><\/p>\n

10:40
\n<\/span><\/p>\n

politics and the state okay today now
\n<\/span><\/p>\n

10:46
\n<\/span><\/p>\n

also we’re excited about new payment
\n<\/span><\/p>\n

10:47
\n<\/span><\/p>\n

systems we don’t use cash very much
\n<\/span><\/p>\n

10:53
\n<\/span><\/p>\n

anymore the younger you are the more
\n<\/span><\/p>\n

10:56
\n<\/span><\/p>\n

likely that you are to be using a social
\n<\/span><\/p>\n

10:58
\n<\/span><\/p>\n

media app like venmo to pay even
\n<\/span><\/p>\n

11:01
\n<\/span><\/p>\n

though your friends can see what you’re
\n<\/span><\/p>\n

11:02
\n<\/span><\/p>\n

buying it seems to be kind of what
\n<\/span><\/p>\n

11:05
\n<\/span><\/p>\n

people do and then we also have
\n<\/span><\/p>\n

11:09
\n<\/span><\/p>\n

interesting challenges to large scale
\n<\/span><\/p>\n

11:12
\n<\/span><\/p>\n

payment systems now Bitcoin being one of
\n<\/span><\/p>\n

11:16
\n<\/span><\/p>\n

them so the payment system in
\n<\/span><\/p>\n

11:22
\n<\/span><\/p>\n

Mesopotamia was all an accounting system
\n<\/span><\/p>\n

11:25
\n<\/span><\/p>\n

they didn’t have coins so all of those
\n<\/span><\/p>\n

11:29
\n<\/span><\/p>\n

records I was showing you they may have
\n<\/span><\/p>\n

11:31
\n<\/span><\/p>\n

used silver as a as a unit of account
\n<\/span><\/p>\n

11:33
\n<\/span><\/p>\n

but by and large everybody had some
\n<\/span><\/p>\n

11:37
\n<\/span><\/p>\n

account or ledger that they were running
\n<\/span><\/p>\n

11:39
\n<\/span><\/p>\n

with with each other and part of that
\n<\/span><\/p>\n

11:42
\n<\/span><\/p>\n

was because you know it was it was it
\n<\/span><\/p>\n

11:45
\n<\/span><\/p>\n

was a City based organizational
\n<\/span><\/p>\n

11:47
\n<\/span><\/p>\n

structure where you kind of knew who was
\n<\/span><\/p>\n

11:50
\n<\/span><\/p>\n

coming in and out of your city and how
\n<\/span><\/p>\n

11:51
\n<\/span><\/p>\n

long they would be there but you want
\n<\/span><\/p>\n

11:56
\n<\/span><\/p>\n

your payment system to be convenient
\n<\/span><\/p>\n

11:59
\n<\/span><\/p>\n

secure accepted and you don’t want there
\n<\/span><\/p>\n

12:03
\n<\/span><\/p>\n

to be the possibility of inflation so I
\n<\/span><\/p>\n

12:05
\n<\/span><\/p>\n

put limited there that’s why Bitcoin has
\n<\/span><\/p>\n

12:09
\n<\/span><\/p>\n

this feature of only so many bitcoins
\n<\/span><\/p>\n

12:10
\n<\/span><\/p>\n

being made and then everybody keeps
\n<\/span><\/p>\n

12:12
\n<\/span><\/p>\n

losing them so that’s even makes them
\n<\/span><\/p>\n

12:14
\n<\/span><\/p>\n

more valuable the really innovative
\n<\/span><\/p>\n

12:18
\n<\/span><\/p>\n

payment system of the 7th century
\n<\/span><\/p>\n

12:22
\n<\/span><\/p>\n

borderline 6th century BC was coinage so
\n<\/span><\/p>\n

12:28
\n<\/span><\/p>\n

we always think well the invention of
\n<\/span><\/p>\n

12:30
\n<\/span><\/p>\n

money must be coins money was invented
\n<\/span><\/p>\n

12:32
\n<\/span><\/p>\n

before coins coins just became a very
\n<\/span><\/p>\n

12:34
\n<\/span><\/p>\n

convenient way when there was a bunch of
\n<\/span><\/p>\n

12:36
\n<\/span><\/p>\n

when there was trade in the in the
\n<\/span><\/p>\n

12:38
\n<\/span><\/p>\n

Mediterranean you didn’t know whether
\n<\/span><\/p>\n

12:40
\n<\/span><\/p>\n

the person you could run an account with
\n<\/span><\/p>\n

12:42
\n<\/span><\/p>\n

a sailor who might have come from from
\n<\/span><\/p>\n

12:44
\n<\/span><\/p>\n

Athens 3-year three months ago you would
\n<\/span><\/p>\n

12:49
\n<\/span><\/p>\n

use these coins you know you check the
\n<\/span><\/p>\n

12:51
\n<\/span><\/p>\n

people would get coins when they entered
\n<\/span><\/p>\n

12:54
\n<\/span><\/p>\n

your port they use the coins to buy
\n<\/span><\/p>\n

12:57
\n<\/span><\/p>\n

things and then you didn’t care whether
\n<\/span><\/p>\n

12:59
\n<\/span><\/p>\n

you ever saw them again so Athens itself
\n<\/span><\/p>\n

13:02
\n<\/span><\/p>\n

had the fort a good fortune of being
\n<\/span><\/p>\n

13:04
\n<\/span><\/p>\n

located right near one of the most the
\n<\/span><\/p>\n

13:07
\n<\/span><\/p>\n

largest silver mines in the
\n<\/span><\/p>\n

13:09
\n<\/span><\/p>\n

Mediterranean a lot of the Athenian
\n<\/span><\/p>\n

13:11
\n<\/span><\/p>\n

wealth came from that act
\n<\/span><\/p>\n

13:13
\n<\/span><\/p>\n

to silver that then became the coin of
\n<\/span><\/p>\n

13:16
\n<\/span><\/p>\n

the widespread unit of currency so that
\n<\/span><\/p>\n

13:21
\n<\/span><\/p>\n

so much so that the Athenians were in
\n<\/span><\/p>\n

13:28
\n<\/span><\/p>\n

the good position of saying well we can
\n<\/span><\/p>\n

13:30
\n<\/span><\/p>\n

make Goods come to our we can get grain
\n<\/span><\/p>\n

13:33
\n<\/span><\/p>\n

shipped to us and all we give them back
\n<\/span><\/p>\n

13:35
\n<\/span><\/p>\n

are these little pieces of silver and
\n<\/span><\/p>\n

13:37
\n<\/span><\/p>\n

then they trade amongst themselves with
\n<\/span><\/p>\n

13:39
\n<\/span><\/p>\n

this there’s a lot more going on in the
\n<\/span><\/p>\n

13:42
\n<\/span><\/p>\n

book about ancient Athens and the
\n<\/span><\/p>\n

13:44
\n<\/span><\/p>\n

relationship to the development of
\n<\/span><\/p>\n

13:46
\n<\/span><\/p>\n

democracy I get very excited about it
\n<\/span><\/p>\n

13:48
\n<\/span><\/p>\n

but but but the payment system alone
\n<\/span><\/p>\n

13:51
\n<\/span><\/p>\n

made it really an innovative feature so
\n<\/span><\/p>\n

13:57
\n<\/span><\/p>\n

here’s another document the book also
\n<\/span><\/p>\n

14:01
\n<\/span><\/p>\n

looks at the Chinese side of things the
\n<\/span><\/p>\n

14:04
\n<\/span><\/p>\n

financial innovations in China and how
\n<\/span><\/p>\n

14:07
\n<\/span><\/p>\n

that related to the Chinese state but
\n<\/span><\/p>\n

14:09
\n<\/span><\/p>\n

China invented paper money this is a
\n<\/span><\/p>\n

14:13
\n<\/span><\/p>\n

document that dates to the Ming Dynasty
\n<\/span><\/p>\n

14:16
\n<\/span><\/p>\n

early Ming Dynasty so for those of you
\n<\/span><\/p>\n

14:19
\n<\/span><\/p>\n

that read Chinese this is a da ming and
\n<\/span><\/p>\n

14:21
\n<\/span><\/p>\n

it says the great Ming universally
\n<\/span><\/p>\n

14:24
\n<\/span><\/p>\n

circulating Treasury note and this is
\n<\/span><\/p>\n

14:26
\n<\/span><\/p>\n

the sign for money and this is an
\n<\/span><\/p>\n

14:29
\n<\/span><\/p>\n

amazing technology the in order to print
\n<\/span><\/p>\n

14:34
\n<\/span><\/p>\n

the money in China and the printing
\n<\/span><\/p>\n

14:37
\n<\/span><\/p>\n

began about 1100 AD they had to invent a
\n<\/span><\/p>\n

14:41
\n<\/span><\/p>\n

process that that the bills you could
\n<\/span><\/p>\n

14:44
\n<\/span><\/p>\n

print thousands and thousands of bills
\n<\/span><\/p>\n

14:46
\n<\/span><\/p>\n

and have them all look exactly alike
\n<\/span><\/p>\n

14:49
\n<\/span><\/p>\n

they invented a copperplate engraving so
\n<\/span><\/p>\n

14:54
\n<\/span><\/p>\n

the woodblock engraving wasn’t good
\n<\/span><\/p>\n

14:56
\n<\/span><\/p>\n

enough they had to have a copper plate
\n<\/span><\/p>\n

14:57
\n<\/span><\/p>\n

in order to print these things and then
\n<\/span><\/p>\n

14:59
\n<\/span><\/p>\n

they put you can see as a technology to
\n<\/span><\/p>\n

15:01
\n<\/span><\/p>\n

prevent counterfeiting they filled it
\n<\/span><\/p>\n

15:04
\n<\/span><\/p>\n

full of all of these decorative borders
\n<\/span><\/p>\n

15:07
\n<\/span><\/p>\n

in order to make it something that
\n<\/span><\/p>\n

15:09
\n<\/span><\/p>\n

people would recognize that to people
\n<\/span><\/p>\n

15:11
\n<\/span><\/p>\n

that were illiterate that couldn’t read
\n<\/span><\/p>\n

15:13
\n<\/span><\/p>\n

they had to put a picture of how many
\n<\/span><\/p>\n

15:15
\n<\/span><\/p>\n

strings of coins that you this was good
\n<\/span><\/p>\n

15:17
\n<\/span><\/p>\n

for and then they had an
\n<\/span><\/p>\n

15:20
\n<\/span><\/p>\n

anti-counterfeiting feature built right
\n<\/span><\/p>\n

15:22
\n<\/span><\/p>\n

into this thing quite quite innovative
\n<\/span><\/p>\n

15:26
\n<\/span><\/p>\n

this message is a long message it
\n<\/span><\/p>\n

15:29
\n<\/span><\/p>\n

basically said anybody caught
\n<\/span><\/p>\n

15:32
\n<\/span><\/p>\n

counterfeiting will be killed anybody
\n<\/span><\/p>\n

15:35
\n<\/span><\/p>\n

who turns in the counterfeiter will get
\n<\/span><\/p>\n

15:38
\n<\/span><\/p>\n

a reward so so the doc it’s a contract
\n<\/span><\/p>\n

15:43
\n<\/span><\/p>\n

right there that is sort of self
\n<\/span><\/p>\n

15:45
\n<\/span><\/p>\n

reinforcing okay so these new payment
\n<\/span><\/p>\n

15:53
\n<\/span><\/p>\n

systems that’s just two examples of them
\n<\/span><\/p>\n

15:57
\n<\/span><\/p>\n

I want to move on to another broad
\n<\/span><\/p>\n

15:59
\n<\/span><\/p>\n

domain of financial innovation and I’m
\n<\/span><\/p>\n

16:02
\n<\/span><\/p>\n

going to call that loosely speaking
\n<\/span><\/p>\n

16:03
\n<\/span><\/p>\n

trading platforms because one of the
\n<\/span><\/p>\n

16:06
\n<\/span><\/p>\n

things I study is private equity and
\n<\/span><\/p>\n

16:09
\n<\/span><\/p>\n

private equity has gone from being very
\n<\/span><\/p>\n

16:11
\n<\/span><\/p>\n

illiquid to being progressively more
\n<\/span><\/p>\n

16:14
\n<\/span><\/p>\n

liquid as you have private shares and
\n<\/span><\/p>\n

16:16
\n<\/span><\/p>\n

private equity ventures limited
\n<\/span><\/p>\n

16:18
\n<\/span><\/p>\n

partnership shares that that exchanges
\n<\/span><\/p>\n

16:22
\n<\/span><\/p>\n

have been created intermediation has
\n<\/span><\/p>\n

16:24
\n<\/span><\/p>\n

made it possible to actually sell these
\n<\/span><\/p>\n

16:27
\n<\/span><\/p>\n

things and this we think of as a very
\n<\/span><\/p>\n

16:29
\n<\/span><\/p>\n

positive development for for investors
\n<\/span><\/p>\n

16:33
\n<\/span><\/p>\n

and then we hear about new trading
\n<\/span><\/p>\n

16:36
\n<\/span><\/p>\n

platforms on the internet for all sorts
\n<\/span><\/p>\n

16:39
\n<\/span><\/p>\n

of things and new ways to access
\n<\/span><\/p>\n

16:42
\n<\/span><\/p>\n

investors and so forth so I’m going to
\n<\/span><\/p>\n

16:44
\n<\/span><\/p>\n

show you that you know there are a few
\n<\/span><\/p>\n

16:49
\n<\/span><\/p>\n

principles that you need transparency
\n<\/span><\/p>\n

16:52
\n<\/span><\/p>\n

you need active share trading so
\n<\/span><\/p>\n

16:56
\n<\/span><\/p>\n

liquidity you need to make it accessible
\n<\/span><\/p>\n

17:00
\n<\/span><\/p>\n

to a broad pool of those people that
\n<\/span><\/p>\n

17:05
\n<\/span><\/p>\n

hold the shares and there’s a desire for
\n<\/span><\/p>\n

17:09
\n<\/span><\/p>\n

a fairness because if you think somebody
\n<\/span><\/p>\n

17:11
\n<\/span><\/p>\n

else knows more than you or somebody
\n<\/span><\/p>\n

17:13
\n<\/span><\/p>\n

else has an advantage you’re not going
\n<\/span><\/p>\n

17:15
\n<\/span><\/p>\n

to trade with them and so the market
\n<\/span><\/p>\n

17:17
\n<\/span><\/p>\n

will break down and so those are the
\n<\/span><\/p>\n

17:19
\n<\/span><\/p>\n

features that from the very beginning of
\n<\/span><\/p>\n

17:22
\n<\/span><\/p>\n

financial markets were necessary this is
\n<\/span><\/p>\n

17:28
\n<\/span><\/p>\n

a bond that we have in the collection at
\n<\/span><\/p>\n

17:30
\n<\/span><\/p>\n

the Yale School of Management and it
\n<\/span><\/p>\n

17:32
\n<\/span><\/p>\n

it’s a tradable security and so this
\n<\/span><\/p>\n

17:37
\n<\/span><\/p>\n

security was originally developed
\n<\/span><\/p>\n

17:40
\n<\/span><\/p>\n

in 1648 and it was issued in Holland
\n<\/span><\/p>\n

17:46
\n<\/span><\/p>\n

near Utrecht and it was issued to
\n<\/span><\/p>\n

17:49
\n<\/span><\/p>\n

finance it was a it was an
\n<\/span><\/p>\n

17:51
\n<\/span><\/p>\n

infrastructure bond to to finance a very
\n<\/span><\/p>\n

17:54
\n<\/span><\/p>\n

small curve in the the river lek
\n<\/span><\/p>\n

18:00
\n<\/span><\/p>\n

it’s called elected Ike Bhavan Dahms
\n<\/span><\/p>\n

18:03
\n<\/span><\/p>\n

is the name of the place and so they
\n<\/span><\/p>\n

18:07
\n<\/span><\/p>\n

sold off these bonds they fixed up this
\n<\/span><\/p>\n

18:09
\n<\/span><\/p>\n

piece of property and the bonds are
\n<\/span><\/p>\n

18:13
\n<\/span><\/p>\n

perpetual bonds so this is a living
\n<\/span><\/p>\n

18:16
\n<\/span><\/p>\n

financial instrument every every decade
\n<\/span><\/p>\n

18:19
\n<\/span><\/p>\n

or so somebody from Yale has to fly over
\n<\/span><\/p>\n

18:22
\n<\/span><\/p>\n

to Utrecht and then presents something
\n<\/span><\/p>\n

18:27
\n<\/span><\/p>\n

and say okay pay me the dividends the
\n<\/span><\/p>\n

18:29
\n<\/span><\/p>\n

coupon on this loan and we only do it
\n<\/span><\/p>\n

18:33
\n<\/span><\/p>\n

every 10 years or so because that’s
\n<\/span><\/p>\n

18:35
\n<\/span><\/p>\n

about what it takes to pay the airfare
\n<\/span><\/p>\n

18:37
\n<\/span><\/p>\n

that’s how much we get it but what’s
\n<\/span><\/p>\n

18:42
\n<\/span><\/p>\n

amazing about this is in Europe bonds
\n<\/span><\/p>\n

18:45
\n<\/span><\/p>\n

were invented and the trade ability
\n<\/span><\/p>\n

18:48
\n<\/span><\/p>\n

makes them an extraordinary instrument
\n<\/span><\/p>\n

18:51
\n<\/span><\/p>\n

for savings you know if you don’t have
\n<\/span><\/p>\n

18:54
\n<\/span><\/p>\n

bonds what what other instrument do you
\n<\/span><\/p>\n

18:56
\n<\/span><\/p>\n

have for whatever the perpetual
\n<\/span><\/p>\n

18:59
\n<\/span><\/p>\n

instrument do you have you have property
\n<\/span><\/p>\n

19:03
\n<\/span><\/p>\n

you know you have agriculture you know
\n<\/span><\/p>\n

19:04
\n<\/span><\/p>\n

your fields where you can go grow grain
\n<\/span><\/p>\n

19:06
\n<\/span><\/p>\n

but this was a substitute for that a
\n<\/span><\/p>\n

19:10
\n<\/span><\/p>\n

financial substitute for physical
\n<\/span><\/p>\n

19:12
\n<\/span><\/p>\n

property along with the creation of
\n<\/span><\/p>\n

19:19
\n<\/span><\/p>\n

bonds and actually saw the earliest
\n<\/span><\/p>\n

19:22
\n<\/span><\/p>\n

bonds that were created were sovereign
\n<\/span><\/p>\n

19:24
\n<\/span><\/p>\n

bonds actually bonds that were issued by
\n<\/span><\/p>\n

19:26
\n<\/span><\/p>\n

Venice the republic venetian republic in
\n<\/span><\/p>\n

19:34
\n<\/span><\/p>\n

order to make these things they got more
\n<\/span><\/p>\n

19:37
\n<\/span><\/p>\n

and more valuable when people realized
\n<\/span><\/p>\n

19:39
\n<\/span><\/p>\n

that not only could they pass the they
\n<\/span><\/p>\n

19:41
\n<\/span><\/p>\n

give them to their children and so forth
\n<\/span><\/p>\n

19:43
\n<\/span><\/p>\n

but that you could you could trade them
\n<\/span><\/p>\n

19:46
\n<\/span><\/p>\n

and the first bond exchange the first
\n<\/span><\/p>\n

19:49
\n<\/span><\/p>\n

bond market is the in the Rialto Square
\n<\/span><\/p>\n

19:53
\n<\/span><\/p>\n

in Venice so that’s that’s what we’re
\n<\/span><\/p>\n

19:55
\n<\/span><\/p>\n

looking at here and this was a it’s the
\n<\/span><\/p>\n

20:00
\n<\/span><\/p>\n

heart of one of the Europe s– earliest
\n<\/span><\/p>\n

20:02
\n<\/span><\/p>\n

of financial centers so not only did you
\n<\/span><\/p>\n

20:06
\n<\/span><\/p>\n

could you trade your bonds you could
\n<\/span><\/p>\n

20:10
\n<\/span><\/p>\n

also get loans there there were bankers
\n<\/span><\/p>\n

20:12
\n<\/span><\/p>\n

there there were insurance brokers there
\n<\/span><\/p>\n

20:15
\n<\/span><\/p>\n

so um
\n<\/span><\/p>\n

20:17
\n<\/span><\/p>\n

everybody you know it’s exciting to go
\n<\/span><\/p>\n

20:18
\n<\/span><\/p>\n

to Venice and go to piazza de san marco
\n<\/span><\/p>\n

20:20
\n<\/span><\/p>\n

and look at this beautiful architecture
\n<\/span><\/p>\n

20:22
\n<\/span><\/p>\n

but if you think of the really at the
\n<\/span><\/p>\n

20:25
\n<\/span><\/p>\n

heart of what made Venice great there
\n<\/span><\/p>\n

20:27
\n<\/span><\/p>\n

were three parts there’s the arson alley
\n<\/span><\/p>\n

20:28
\n<\/span><\/p>\n

where they could build those fantastic
\n<\/span><\/p>\n

20:30
\n<\/span><\/p>\n

boats but before they built the boats
\n<\/span><\/p>\n

20:32
\n<\/span><\/p>\n

they had to have the money to build them
\n<\/span><\/p>\n

20:34
\n<\/span><\/p>\n

and this is where the the money was
\n<\/span><\/p>\n

20:37
\n<\/span><\/p>\n

being generated so I think of this as a
\n<\/span><\/p>\n

20:40
\n<\/span><\/p>\n

must-see for Venice that that that few
\n<\/span><\/p>\n

20:44
\n<\/span><\/p>\n

people recognize is Atlanta a watershed
\n<\/span><\/p>\n

20:46
\n<\/span><\/p>\n

in the history of Finance okay
\n<\/span><\/p>\n

20:51
\n<\/span><\/p>\n

I’ve gotten very interested in
\n<\/span><\/p>\n

20:53
\n<\/span><\/p>\n

crowdfunding I think I think it’s got
\n<\/span><\/p>\n

20:55
\n<\/span><\/p>\n

the potential to democratize access to
\n<\/span><\/p>\n

20:58
\n<\/span><\/p>\n

ventures in a way that we don’t have now
\n<\/span><\/p>\n

21:01
\n<\/span><\/p>\n

venture capital now I think is been
\n<\/span><\/p>\n

21:05
\n<\/span><\/p>\n

captured by a set of institutions
\n<\/span><\/p>\n

21:08
\n<\/span><\/p>\n

private equity partnerships and so forth
\n<\/span><\/p>\n

21:11
\n<\/span><\/p>\n

and yet in much of the large gains to
\n<\/span><\/p>\n

21:15
\n<\/span><\/p>\n

let’s say to to Apple and and and
\n<\/span><\/p>\n

21:20
\n<\/span><\/p>\n

Facebook and and so forth I went to to
\n<\/span><\/p>\n

21:23
\n<\/span><\/p>\n

to these to a few institutions that were
\n<\/span><\/p>\n

21:27
\n<\/span><\/p>\n

investing in venture capital now we have
\n<\/span><\/p>\n

21:31
\n<\/span><\/p>\n

the ability to have websites where you
\n<\/span><\/p>\n

21:35
\n<\/span><\/p>\n

and I could go and invest you know two
\n<\/span><\/p>\n

21:38
\n<\/span><\/p>\n

or three thousand dollars and then
\n<\/span><\/p>\n

21:39
\n<\/span><\/p>\n

participate possibly in the next big
\n<\/span><\/p>\n

21:42
\n<\/span><\/p>\n

Facebook I think this is a fantastic
\n<\/span><\/p>\n

21:45
\n<\/span><\/p>\n

thing but it threatens existing
\n<\/span><\/p>\n

21:47
\n<\/span><\/p>\n

institutional structures and because of
\n<\/span><\/p>\n

21:51
\n<\/span><\/p>\n

that ever since the beginning of sort of
\n<\/span><\/p>\n

21:52
\n<\/span><\/p>\n

a crowdfunding approach there has been a
\n<\/span><\/p>\n

21:55
\n<\/span><\/p>\n

resistance to this democracy
\n<\/span><\/p>\n

21:59
\n<\/span><\/p>\n

innovation and growth
\n<\/span><\/p>\n

22:05
\n<\/span><\/p>\n

I mentioned this I
\n<\/span><\/p>\n

22:07
\n<\/span><\/p>\n

I see it as bringing in new investors
\n<\/span><\/p>\n

22:10
\n<\/span><\/p>\n

allowing new enterprises to develop for
\n<\/span><\/p>\n

22:14
\n<\/span><\/p>\n

creating a new model for governance
\n<\/span><\/p>\n

22:16
\n<\/span><\/p>\n

collective capital and and and that
\n<\/span><\/p>\n

22:18
\n<\/span><\/p>\n

involves distributing the control of
\n<\/span><\/p>\n

22:21
\n<\/span><\/p>\n

these ventures one of the big
\n<\/span><\/p>\n

22:25
\n<\/span><\/p>\n

innovations in financial history is the
\n<\/span><\/p>\n

22:28
\n<\/span><\/p>\n

creation of the corporation and with it
\n<\/span><\/p>\n

22:32
\n<\/span><\/p>\n

permanent capital that can be traded on
\n<\/span><\/p>\n

22:36
\n<\/span><\/p>\n

an exchange I showed you a bond exchange
\n<\/span><\/p>\n

22:38
\n<\/span><\/p>\n

before this is a picture of a Dutch
\n<\/span><\/p>\n

22:41
\n<\/span><\/p>\n

Dutch East Indies Indies company boat
\n<\/span><\/p>\n

22:44
\n<\/span><\/p>\n

and the crowdfunding feature of it was
\n<\/span><\/p>\n

22:49
\n<\/span><\/p>\n

the sale of broad sale of shares amongst
\n<\/span><\/p>\n

22:54
\n<\/span><\/p>\n

not amongst many Dutch investors what
\n<\/span><\/p>\n

22:58
\n<\/span><\/p>\n

they made possible was also a sharing in
\n<\/span><\/p>\n

23:02
\n<\/span><\/p>\n

their risks associated with that so when
\n<\/span><\/p>\n

23:05
\n<\/span><\/p>\n

we think of equity corporations that
\n<\/span><\/p>\n

23:10
\n<\/span><\/p>\n

that that emerged during the late 1600s
\n<\/span><\/p>\n

23:14
\n<\/span><\/p>\n

and early 1700s they were oftentimes
\n<\/span><\/p>\n

23:18
\n<\/span><\/p>\n

connected to international trade and and
\n<\/span><\/p>\n

23:23
\n<\/span><\/p>\n

so a way of capitalizing ventures that
\n<\/span><\/p>\n

23:26
\n<\/span><\/p>\n

required quite a bit of an investment to
\n<\/span><\/p>\n

23:29
\n<\/span><\/p>\n

create to build boats and so forth but
\n<\/span><\/p>\n

23:32
\n<\/span><\/p>\n

as well boats that might not come back
\n<\/span><\/p>\n

23:37
\n<\/span><\/p>\n

I’m going to show you another side which
\n<\/span><\/p>\n

23:39
\n<\/span><\/p>\n

i think is also I think I would argue as
\n<\/span><\/p>\n

23:42
\n<\/span><\/p>\n

equally socially beneficial who
\n<\/span><\/p>\n

23:45
\n<\/span><\/p>\n

internationally as opposed to
\n<\/span><\/p>\n

23:47
\n<\/span><\/p>\n

international trade which is equity
\n<\/span><\/p>\n

23:49
\n<\/span><\/p>\n

funding of an early corporation in
\n<\/span><\/p>\n

23:53
\n<\/span><\/p>\n

Toulouse in the in the 13th century so
\n<\/span><\/p>\n

23:59
\n<\/span><\/p>\n

and this is just part of my personal
\n<\/span><\/p>\n

24:01
\n<\/span><\/p>\n

research here is from the Nuremberg
\n<\/span><\/p>\n

24:05
\n<\/span><\/p>\n

chronicles which has great pictures of
\n<\/span><\/p>\n

24:06
\n<\/span><\/p>\n

us of cities here is Toulouse and la vie
\n<\/span><\/p>\n

24:11
\n<\/span><\/p>\n

rose and over on the left-hand side what
\n<\/span><\/p>\n

24:14
\n<\/span><\/p>\n

looks like a bridge is actually a mill
\n<\/span><\/p>\n

24:17
\n<\/span><\/p>\n

that water would flow through and it
\n<\/span><\/p>\n

24:20
\n<\/span><\/p>\n

would turn big millstones this was the
\n<\/span><\/p>\n

24:25
\n<\/span><\/p>\n

earliest recorded corporate organization
\n<\/span><\/p>\n

24:28
\n<\/span><\/p>\n

had limited liability it had a board
\n<\/span><\/p>\n

24:31
\n<\/span><\/p>\n

structure it had a rotating board
\n<\/span><\/p>\n

24:32
\n<\/span><\/p>\n

structure it had external accounting it
\n<\/span><\/p>\n

24:36
\n<\/span><\/p>\n

had one shareholder one vote as opposed
\n<\/span><\/p>\n

24:39
\n<\/span><\/p>\n

to one share one vote many different
\n<\/span><\/p>\n

24:42
\n<\/span><\/p>\n

features of it argue that it was a early
\n<\/span><\/p>\n

24:45
\n<\/span><\/p>\n

corporation I told you that some of my
\n<\/span><\/p>\n

24:48
\n<\/span><\/p>\n

personal research is about this the
\n<\/span><\/p>\n

24:51
\n<\/span><\/p>\n

feature that I’ve spent some time on is
\n<\/span><\/p>\n

24:53
\n<\/span><\/p>\n

collecting the prices and I do this with
\n<\/span><\/p>\n

24:56
\n<\/span><\/p>\n

two two other economists in Toulouse
\n<\/span><\/p>\n

25:01
\n<\/span><\/p>\n

they’ve spent the time collecting the
\n<\/span><\/p>\n

25:04
\n<\/span><\/p>\n

data so I’m taking credit for it today
\n<\/span><\/p>\n

25:07
\n<\/span><\/p>\n

but collecting the prices and the
\n<\/span><\/p>\n

25:09
\n<\/span><\/p>\n

dividends for this company that it goes
\n<\/span><\/p>\n

25:13
\n<\/span><\/p>\n

back another couple of hundred years but
\n<\/span><\/p>\n

25:15
\n<\/span><\/p>\n

we have excellent data from about 1,500
\n<\/span><\/p>\n

25:18
\n<\/span><\/p>\n

or so and there are two lines here one
\n<\/span><\/p>\n

25:22
\n<\/span><\/p>\n

line is the is the price level of the
\n<\/span><\/p>\n

25:26
\n<\/span><\/p>\n

shares and so that’s all the way over
\n<\/span><\/p>\n

25:28
\n<\/span><\/p>\n

here 6000 leave turn wah which is quite
\n<\/span><\/p>\n

25:32
\n<\/span><\/p>\n

a sum of money they weren’t cheap shares
\n<\/span><\/p>\n

25:35
\n<\/span><\/p>\n

and then the dividends on this side so
\n<\/span><\/p>\n

25:38
\n<\/span><\/p>\n

here’s a picture with a rolling average
\n<\/span><\/p>\n

25:40
\n<\/span><\/p>\n

where you can see that the over the long
\n<\/span><\/p>\n

25:44
\n<\/span><\/p>\n

term prices and dividends for this
\n<\/span><\/p>\n

25:47
\n<\/span><\/p>\n

company moved together in quite a
\n<\/span><\/p>\n

25:50
\n<\/span><\/p>\n

rational way as the dividends go up the
\n<\/span><\/p>\n

25:53
\n<\/span><\/p>\n

prices go up and to make a long story
\n<\/span><\/p>\n

25:57
\n<\/span><\/p>\n

short you might want to know what the
\n<\/span><\/p>\n

26:00
\n<\/span><\/p>\n

long term rate of return on this oldest
\n<\/span><\/p>\n

26:02
\n<\/span><\/p>\n

living company is it lived up until the
\n<\/span><\/p>\n

26:05
\n<\/span><\/p>\n

French nationalized it in 1946 the rate
\n<\/span><\/p>\n

26:08
\n<\/span><\/p>\n

of return was about 5% real return per
\n<\/span><\/p>\n

26:12
\n<\/span><\/p>\n

year now that’s a company that survived
\n<\/span><\/p>\n

26:15
\n<\/span><\/p>\n

a whole lot but but nevertheless it’s
\n<\/span><\/p>\n

26:20
\n<\/span><\/p>\n

kind of nice to know what the what the
\n<\/span><\/p>\n

26:22
\n<\/span><\/p>\n

expectation was and what the realization
\n<\/span><\/p>\n

26:24
\n<\/span><\/p>\n

was through that time these shares were
\n<\/span><\/p>\n

26:27
\n<\/span><\/p>\n

actively treated as well and eventually
\n<\/span><\/p>\n

26:28
\n<\/span><\/p>\n

the company got listed on the Paris
\n<\/span><\/p>\n

26:30
\n<\/span><\/p>\n

force although it was nationalized the
\n<\/span><\/p>\n

26:34
\n<\/span><\/p>\n

French also have recently spun off part
\n<\/span><\/p>\n

26:36
\n<\/span><\/p>\n

of their electrical company which is
\n<\/span><\/p>\n

26:38
\n<\/span><\/p>\n

what now is hydroelectricity is the
\n<\/span><\/p>\n

26:42
\n<\/span><\/p>\n

raison d’\u00eatre for this firm and so now
\n<\/span><\/p>\n

26:45
\n<\/span><\/p>\n

you could go back and buy a little bit
\n<\/span><\/p>\n

26:46
\n<\/span><\/p>\n

of this ancient firm if you wanted okay
\n<\/span><\/p>\n

26:51
\n<\/span><\/p>\n

I’m gonna wind up with some areas of
\n<\/span><\/p>\n

26:54
\n<\/span><\/p>\n

data analytics big data that’s also
\n<\/span><\/p>\n

26:57
\n<\/span><\/p>\n

something I think a lot about I use text
\n<\/span><\/p>\n

27:02
\n<\/span><\/p>\n

analytical tools and and things like
\n<\/span><\/p>\n

27:06
\n<\/span><\/p>\n

that to to explore in my research and so
\n<\/span><\/p>\n

27:14
\n<\/span><\/p>\n

there are historical precedents for all
\n<\/span><\/p>\n

27:17
\n<\/span><\/p>\n

of these one of the most interesting is
\n<\/span><\/p>\n

27:21
\n<\/span><\/p>\n

the one of the things that really made a
\n<\/span><\/p>\n

27:24
\n<\/span><\/p>\n

difference in the in the business of the
\n<\/span><\/p>\n

27:30
\n<\/span><\/p>\n

Middle Ages was the introduction of
\n<\/span><\/p>\n

27:32
\n<\/span><\/p>\n

Arabic numerals and algorithms for
\n<\/span><\/p>\n

27:35
\n<\/span><\/p>\n

calculating net present value and so
\n<\/span><\/p>\n

27:40
\n<\/span><\/p>\n

some of the things I’ve worked on
\n<\/span><\/p>\n

27:41
\n<\/span><\/p>\n

personally are these are two pages from
\n<\/span><\/p>\n

27:44
\n<\/span><\/p>\n

the mathematician Fibonacci his book
\n<\/span><\/p>\n

27:48
\n<\/span><\/p>\n

which was a textbook about business
\n<\/span><\/p>\n

27:51
\n<\/span><\/p>\n

finance essentially our business
\n<\/span><\/p>\n

27:52
\n<\/span><\/p>\n

operations and he introduced or he
\n<\/span><\/p>\n

27:55
\n<\/span><\/p>\n

wasn’t the first one but he popularized
\n<\/span><\/p>\n

27:58
\n<\/span><\/p>\n

the use of Arabic numerals in for
\n<\/span><\/p>\n

28:02
\n<\/span><\/p>\n

merchants and this is a kind of a
\n<\/span><\/p>\n

28:05
\n<\/span><\/p>\n

handwritten page from Laurinaitis books
\n<\/span><\/p>\n

28:07
\n<\/span><\/p>\n

and he had several banking problems so
\n<\/span><\/p>\n

28:11
\n<\/span><\/p>\n

you know we sort of banking had to go
\n<\/span><\/p>\n

28:14
\n<\/span><\/p>\n

underground after about the middle of
\n<\/span><\/p>\n

28:17
\n<\/span><\/p>\n

the 12 hundreds there wasn’t a lot
\n<\/span><\/p>\n

28:19
\n<\/span><\/p>\n

written about it explicitly but before
\n<\/span><\/p>\n

28:22
\n<\/span><\/p>\n

it did the Fibonacci was solving very
\n<\/span><\/p>\n

28:25
\n<\/span><\/p>\n

complex problems of interest rates and
\n<\/span><\/p>\n

28:30
\n<\/span><\/p>\n

so so this book one of the things that’s
\n<\/span><\/p>\n

28:36
\n<\/span><\/p>\n

exciting about it is the under the
\n<\/span><\/p>\n

28:40
\n<\/span><\/p>\n

understanding of the present value
\n<\/span><\/p>\n

28:42
\n<\/span><\/p>\n

relation another thing that was
\n<\/span><\/p>\n

28:46
\n<\/span><\/p>\n

introduced as a result of financial
\n<\/span><\/p>\n

28:48
\n<\/span><\/p>\n

problems is the correct calculation for
\n<\/span><\/p>\n

28:52
\n<\/span><\/p>\n

life annuities I will just say there’s a
\n<\/span><\/p>\n

28:55
\n<\/span><\/p>\n

long story behind this guy John divot
\n<\/span><\/p>\n

28:58
\n<\/span><\/p>\n

but but he was the first to realize to
\n<\/span><\/p>\n

29:04
\n<\/span><\/p>\n

actually quantify the difference between
\n<\/span><\/p>\n

29:06
\n<\/span><\/p>\n

writing a an annuity contract for a 5
\n<\/span><\/p>\n

29:09
\n<\/span><\/p>\n

year old girl and an 80 year old man and
\n<\/span><\/p>\n

29:13
\n<\/span><\/p>\n

before that it wasn’t clear what the
\n<\/span><\/p>\n

29:15
\n<\/span><\/p>\n

mathematics were because life expectancy
\n<\/span><\/p>\n

29:17
\n<\/span><\/p>\n

was not carefully thought through ok so
\n<\/span><\/p>\n

29:23
\n<\/span><\/p>\n

one last bit
\n<\/span><\/p>\n

29:24
\n<\/span><\/p>\n

Cambridge analytic he’s on all of our
\n<\/span><\/p>\n

29:28
\n<\/span><\/p>\n

minds one of the things it exploits
\n<\/span><\/p>\n

29:31
\n<\/span><\/p>\n

exploited is people’s willingness to
\n<\/span><\/p>\n

29:34
\n<\/span><\/p>\n

jump in and tell tell tell the world
\n<\/span><\/p>\n

29:37
\n<\/span><\/p>\n

about itself of answered questions this
\n<\/span><\/p>\n

29:40
\n<\/span><\/p>\n

sort of strange enthusiasm for the
\n<\/span><\/p>\n

29:42
\n<\/span><\/p>\n

internet and I also work in behavioral
\n<\/span><\/p>\n

29:46
\n<\/span><\/p>\n

finance and so I think you can’t
\n<\/span><\/p>\n

29:49
\n<\/span><\/p>\n

separate finance from human behavior all
\n<\/span><\/p>\n

29:52
\n<\/span><\/p>\n

sorts of mathematical analysis involved
\n<\/span><\/p>\n

29:54
\n<\/span><\/p>\n

but bottom line there are people making
\n<\/span><\/p>\n

29:55
\n<\/span><\/p>\n

decisions now here’s a print of the the
\n<\/span><\/p>\n

30:04
\n<\/span><\/p>\n

first big famous financial bubble which
\n<\/span><\/p>\n

30:08
\n<\/span><\/p>\n

is tulip mania and in this picture you
\n<\/span><\/p>\n

30:12
\n<\/span><\/p>\n

see the same thing you just saw saw in
\n<\/span><\/p>\n

30:13
\n<\/span><\/p>\n

the previous picture here’s a hat with
\n<\/span><\/p>\n

30:16
\n<\/span><\/p>\n

no head ok here is a little scheme of a
\n<\/span><\/p>\n

30:20
\n<\/span><\/p>\n

brain separated from the body now what
\n<\/span><\/p>\n

30:24
\n<\/span><\/p>\n

do you see here a hat with no head and
\n<\/span><\/p>\n

30:28
\n<\/span><\/p>\n

the whole narrative that about how
\n<\/span><\/p>\n

30:34
\n<\/span><\/p>\n

foolish the speculators in the tulip
\n<\/span><\/p>\n

30:36
\n<\/span><\/p>\n

bubble were this notion that the brain
\n<\/span><\/p>\n

30:41
\n<\/span><\/p>\n

can go haywire and and do things that
\n<\/span><\/p>\n

30:45
\n<\/span><\/p>\n

are not good for the the
\n<\/span><\/p>\n

30:47
\n<\/span><\/p>\n

good for the markets and good for
\n<\/span><\/p>\n

30:49
\n<\/span><\/p>\n

Humanity is is built in from the
\n<\/span><\/p>\n

30:51
\n<\/span><\/p>\n

earliest critiques of financial markets
\n<\/span><\/p>\n

30:57
\n<\/span><\/p>\n

the most famous a case that is anyway
\n<\/span><\/p>\n

31:03
\n<\/span><\/p>\n

another case that I’ve studied is the
\n<\/span><\/p>\n

31:05
\n<\/span><\/p>\n

case of John law the speculator the
\n<\/span><\/p>\n

31:09
\n<\/span><\/p>\n

gambler the visionary financier who
\n<\/span><\/p>\n

31:13
\n<\/span><\/p>\n

built this company of the Mississippi in
\n<\/span><\/p>\n

31:16
\n<\/span><\/p>\n

France in the early 1700s and this
\n<\/span><\/p>\n

31:20
\n<\/span><\/p>\n

became the first incredible bubble in
\n<\/span><\/p>\n

31:23
\n<\/span><\/p>\n

stocks and the reason that he was okay
\n<\/span><\/p>\n

31:28
\n<\/span><\/p>\n

there are many reasons that people posit
\n<\/span><\/p>\n

31:30
\n<\/span><\/p>\n

but I think the reason why he was so
\n<\/span><\/p>\n

31:32
\n<\/span><\/p>\n

successful at getting people to buy
\n<\/span><\/p>\n

31:35
\n<\/span><\/p>\n

stocks in a company that essentially was
\n<\/span><\/p>\n

31:38
\n<\/span><\/p>\n

created to exploit the Mississippi West
\n<\/span><\/p>\n

31:41
\n<\/span><\/p>\n

in in America is because he understood
\n<\/span><\/p>\n

31:44
\n<\/span><\/p>\n

this this this drive for transforming
\n<\/span><\/p>\n

31:48
\n<\/span><\/p>\n

your personal wealth the idea that you
\n<\/span><\/p>\n

31:51
\n<\/span><\/p>\n

could buy something and all of a sudden
\n<\/span><\/p>\n

31:52
\n<\/span><\/p>\n

be as rich as the people who you are
\n<\/span><\/p>\n

31:54
\n<\/span><\/p>\n

watching their carriages go by and
\n<\/span><\/p>\n

31:56
\n<\/span><\/p>\n

democratizing that I think it’s very
\n<\/span><\/p>\n

31:58
\n<\/span><\/p>\n

powerful and that has hooked people in
\n<\/span><\/p>\n

32:01
\n<\/span><\/p>\n

to to investing so here’s a picture of
\n<\/span><\/p>\n

32:05
\n<\/span><\/p>\n

John law he’s up here this is the rookin
\n<\/span><\/p>\n

32:09
\n<\/span><\/p>\n

Kapaa which now is right behind in paris
\n<\/span><\/p>\n

32:12
\n<\/span><\/p>\n

the central Pompidou but the important
\n<\/span><\/p>\n

32:15
\n<\/span><\/p>\n

part are all of the people the pictures
\n<\/span><\/p>\n

32:17
\n<\/span><\/p>\n

of this fear this excited one wild crowd
\n<\/span><\/p>\n

32:21
\n<\/span><\/p>\n

trying to trade all of these shares that
\n<\/span><\/p>\n

32:26
\n<\/span><\/p>\n

bubble that Mississippi bubble is
\n<\/span><\/p>\n

32:29
\n<\/span><\/p>\n

represented here in a recent thing from
\n<\/span><\/p>\n

32:32
\n<\/span><\/p>\n

The Economist or Bloomberg actually it
\n<\/span><\/p>\n

32:34
\n<\/span><\/p>\n

shows you how high that bubble is
\n<\/span><\/p>\n

32:37
\n<\/span><\/p>\n

compared to the dot-com bubble and
\n<\/span><\/p>\n

32:40
\n<\/span><\/p>\n

compared to tulip mania and here’s
\n<\/span><\/p>\n

32:43
\n<\/span><\/p>\n

Bitcoin so are we in a historic period
\n<\/span><\/p>\n

32:47
\n<\/span><\/p>\n

maybe so but so I can’t resist a little
\n<\/span><\/p>\n

32:54
\n<\/span><\/p>\n

bit more about the future
\n<\/span><\/p>\n

32:56
\n<\/span><\/p>\n

you take in this whole sweep my main
\n<\/span><\/p>\n

32:59
\n<\/span><\/p>\n

theme has been finances a technology
\n<\/span><\/p>\n

33:01
\n<\/span><\/p>\n

that deals with the same old problems
\n<\/span><\/p>\n

33:03
\n<\/span><\/p>\n

right the themes the recognized today
\n<\/span><\/p>\n

33:07
\n<\/span><\/p>\n

are the themes that were solved in
\n<\/span><\/p>\n

33:09
\n<\/span><\/p>\n

different ways in the past but I think
\n<\/span><\/p>\n

33:11
\n<\/span><\/p>\n

that the things that have to be
\n<\/span><\/p>\n

33:14
\n<\/span><\/p>\n

addressed in the future are this
\n<\/span><\/p>\n

33:16
\n<\/span><\/p>\n

relationship between finance the mind
\n<\/span><\/p>\n

33:19
\n<\/span><\/p>\n

the emotion where there can be a
\n<\/span><\/p>\n

33:22
\n<\/span><\/p>\n

breakdown in rationality we argue about
\n<\/span><\/p>\n

33:26
\n<\/span><\/p>\n

whether we should be Patra a
\n<\/span><\/p>\n

33:28
\n<\/span><\/p>\n

paternalistic and not let people invest
\n<\/span><\/p>\n

33:30
\n<\/span><\/p>\n

their own money or just let them do
\n<\/span><\/p>\n

33:33
\n<\/span><\/p>\n

whatever they want and then live with
\n<\/span><\/p>\n

33:34
\n<\/span><\/p>\n

the consequences that’s a name that’s a
\n<\/span><\/p>\n

33:37
\n<\/span><\/p>\n

very live and important debate I think
\n<\/span><\/p>\n

33:40
\n<\/span><\/p>\n

finance is going to be used important
\n<\/span><\/p>\n

33:43
\n<\/span><\/p>\n

for the next level of infrastructure
\n<\/span><\/p>\n

33:44
\n<\/span><\/p>\n

that is the global level of
\n<\/span><\/p>\n

33:46
\n<\/span><\/p>\n

infrastructure if we need to solve
\n<\/span><\/p>\n

33:48
\n<\/span><\/p>\n

problems about the environment that
\n<\/span><\/p>\n

33:51
\n<\/span><\/p>\n

require a global of technological
\n<\/span><\/p>\n

33:54
\n<\/span><\/p>\n

solution that’s a whole one or two
\n<\/span><\/p>\n

33:57
\n<\/span><\/p>\n

levels of magnitude beyond what we
\n<\/span><\/p>\n

34:02
\n<\/span><\/p>\n

currently have the capability for
\n<\/span><\/p>\n

34:03
\n<\/span><\/p>\n

financing but I think it may be
\n<\/span><\/p>\n

34:05
\n<\/span><\/p>\n

something that we should prepare for and
\n<\/span><\/p>\n

34:09
\n<\/span><\/p>\n

finally the age-old problem of people
\n<\/span><\/p>\n

34:12
\n<\/span><\/p>\n

out living their their means of economic
\n<\/span><\/p>\n

34:15
\n<\/span><\/p>\n

support so that again is something that
\n<\/span><\/p>\n

34:19
\n<\/span><\/p>\n

particularly in the United States with
\n<\/span><\/p>\n

34:21
\n<\/span><\/p>\n

our state pension systems failing so
\n<\/span><\/p>\n

34:23
\n<\/span><\/p>\n

badly finance is got to solve and novel
\n<\/span><\/p>\n

34:30
\n<\/span><\/p>\n

propositions are things that we going to
\n<\/span><\/p>\n

34:33
\n<\/span><\/p>\n

have to consider so I’ll leave it with
\n<\/span><\/p>\n

34:37
\n<\/span><\/p>\n

those big issues thank you very much for
\n<\/span><\/p>\n

34:39
\n<\/span><\/p>\n

your attention and happy to hear your
\n<\/span><\/p>\n

34:43
\n<\/span><\/p>\n

thoughts
\n<\/span><\/p>\n

34:44
\n<\/span><\/p>\n

[Applause]
\n<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

[Applause] 00:06 okay yeah thank you very much for the 00:09 introduction and thank thank all of you 00:13 for inviting me to give this talk as you 00:19 mentioned I have kind of a mixed 00:20 background I have a career as a finance 00:25 professor at the Yale School of 00:27 Management but …<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"class_list":["post-7568","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/heungno.net\/index.php?rest_route=\/wp\/v2\/posts\/7568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/heungno.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/heungno.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/heungno.net\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/heungno.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7568"}],"version-history":[{"count":1,"href":"https:\/\/heungno.net\/index.php?rest_route=\/wp\/v2\/posts\/7568\/revisions"}],"predecessor-version":[{"id":7569,"href":"https:\/\/heungno.net\/index.php?rest_route=\/wp\/v2\/posts\/7568\/revisions\/7569"}],"wp:attachment":[{"href":"https:\/\/heungno.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/heungno.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/heungno.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}