Finance

System's Perfect Victim 1 Part 1: The By-the-Book Admiral 2 Part 2: The Railroad Manager Who Followed Policy 3 Part 3: The Architect Who Obeyed the Emperor 4 Part 4: The Minister Who Balanced the Books ← Series Home The Ledger That Lit the Revolution In February 1781, French Finance Minister Jacques Necker published the Compte rendu au roi (Account to the King), a unprecedented document: the royal treasury’s accounts, available for public purchase. Necker, a Swiss Protestant banker, had been brought in to rescue France from bankruptcy. His report was a masterpiece of political theater. It showed a modest surplus of 10 million livres. The public was dazzled by this transparency. The book sold over 100,000 copies. There was only one problem: the accounts were fiction. Necker had omitted the colossal costs of supporting the American Revolution and hid debt through creative accounting. He hadn’t solved the crisis; he had repackaged it as a success. When he was forced to resign in 1783, the façade cracked. His successors revealed the truth: a deficit of 112 million livres. The public felt betrayed. The trust Necker had built through transparency evaporated, replaced by cynicism. When he was recalled in 1788, it was too late. The Estates-General was convened, the Bastille fell, and the monarchy Necker had tried to save with bookkeeping was destroyed by the very expectations his books had raised. ...

Capitalism Unmasked 1 Capitalism Unmasked - Part 1: The Myth of the Free Market 2 Capitalism Unmasked - Part 2: The Shareholder Value Myth 3 Capitalism Unmasked - Part 3: The Trickle-Down Delusion 4 Capitalism Unmasked - Part 4: The Myth of the Lazy Poor 5 Capitalism Unmasked - Part 5: The Self-Fulfilling Prophecy of Distrust 6 Capitalism Unmasked - Part 6: The Education Myth 7 Capitalism Unmasked - Part 7: The Myth of Natural Inequality 8 Capitalism Unmasked - Part 8: The Myth of Capital Flight 9 Capitalism Unmasked - Part 9: The Myth of the Rational Consumer 10 Capitalism Unmasked - Part 10: The Hidden Costs of 'Free' Markets 11 Capitalism Unmasked - Part 11: The Myth of the Self-Made Man 12 Capitalism Unmasked - Part 12: The Myth of Efficient Financial Markets 13 Capitalism Unmasked - Part 13: The Myth of Corporate Social Responsibility 14 Capitalism Unmasked - Part 14: The Myth of Growth 15 Capitalism Unmasked - Part 15: Development Institutions - Help or Hindrance? 16 Capitalism Unmasked - Part 16: The Myth of Immigration Harm 17 Capitalism Unmasked - Part 17: The Myth of Flexible Labor Markets 18 Capitalism Unmasked - Part 18: The Myth of Shareholder Primacy 19 Capitalism Unmasked - Part 19: The Myth of Technological Unemployment 20 Capitalism Unmasked - Part 20: The Privatization Illusion 21 Capitalism Unmasked - Part 21: The Myth of Patent Protection 22 Capitalism Unmasked - Part 22: The Myth of Government Debt Crisis 23 Capitalism Unmasked - Part 23: Finance - Economy's Brain or Parasite? ← Series Home What They Tell You Financial markets are efficient. Prices reflect all available information. Professional investors can’t consistently beat the market because prices are always right. Asset bubbles are rare or impossible—if prices seem too high, smart money will sell and correct them. Deregulation allows markets to work better. Financial innovation improves efficiency. ...

Capitalism Unmasked 1 Capitalism Unmasked - Part 1: The Myth of the Free Market 2 Capitalism Unmasked - Part 2: The Shareholder Value Myth 3 Capitalism Unmasked - Part 3: The Trickle-Down Delusion 4 Capitalism Unmasked - Part 4: The Myth of the Lazy Poor 5 Capitalism Unmasked - Part 5: The Self-Fulfilling Prophecy of Distrust 6 Capitalism Unmasked - Part 6: The Education Myth 7 Capitalism Unmasked - Part 7: The Myth of Natural Inequality 8 Capitalism Unmasked - Part 8: The Myth of Capital Flight 9 Capitalism Unmasked - Part 9: The Myth of the Rational Consumer 10 Capitalism Unmasked - Part 10: The Hidden Costs of 'Free' Markets 11 Capitalism Unmasked - Part 11: The Myth of the Self-Made Man 12 Capitalism Unmasked - Part 12: The Myth of Efficient Financial Markets 13 Capitalism Unmasked - Part 13: The Myth of Corporate Social Responsibility 14 Capitalism Unmasked - Part 14: The Myth of Growth 15 Capitalism Unmasked - Part 15: Development Institutions - Help or Hindrance? 16 Capitalism Unmasked - Part 16: The Myth of Immigration Harm 17 Capitalism Unmasked - Part 17: The Myth of Flexible Labor Markets 18 Capitalism Unmasked - Part 18: The Myth of Shareholder Primacy 19 Capitalism Unmasked - Part 19: The Myth of Technological Unemployment 20 Capitalism Unmasked - Part 20: The Privatization Illusion 21 Capitalism Unmasked - Part 21: The Myth of Patent Protection 22 Capitalism Unmasked - Part 22: The Myth of Government Debt Crisis 23 Capitalism Unmasked - Part 23: Finance - Economy's Brain or Parasite? ← Series Home What They Tell You Finance is the brain of the economy. It allocates capital to its most productive uses. Financial innovation creates value by better matching savers and borrowers, managing risk, and enabling new forms of investment. A larger financial sector means a more sophisticated economy. We should be proud of our financial centers. ...

Introduction It’s a common feeling: financial markets seem impossibly complex, a domain of arcane mathematics and high-speed computers. Or, they’re brutally simple, driven by the raw emotions of greed and fear. For over a century, some of the most brilliant minds in economics and mathematics have tried to discover the hidden “rules” that govern this global game of risk and reward. What they found is often far more surprising and counter-intuitive than we might assume. ...