Finance Matters Introduction

The global financial system is the greatest creation of humanity's collective imagination.

The “market” today is no longer a physical place like a grocery store, farmer's market, or the ancient souks. What we trade is no longer paper; it’s now a string of code, which machines translate and tell us that in exchange for our bits of code today, a formless entity will return our original bits—plus some extra—in the future. Alternatively, we could trade these promises owed to us with the government (in the form of money), transferring them into our "code repository" (bank account) to buy a cup of coffee, invest in a house, or acquire other bits of code representing different entities. I was surprised to belatedly learn a few weeks ago that even the Fed doesn't bother with printing currency anymore, and instead in a few keystrokes, creates trillions of $.

I know these concepts have been discussed before, but I’m re-setting the context.

If it’s all just in our imagination, does it matter? Yes because by being in our collective imagination this imagined market becomes very real. Similar to the laws of physics, which we interpret and codify, or the vastness of the universe, the financial system’s imagined rules become immutable laws that affect us daily. We’ve created this system because we need the resources of both present and future generations to unlock the creativity of human potential. In essence, we borrow from our children, hoping to build a better world for ourselves—and for them. This is why finance is so essential.

The purpose of finance has always been to pool collective resources so that a smaller group of people can achieve feats beyond individual capacity. These groups—whether warmongers, merchants, governments, manufacturers, or today’s venture-backed tech companies—have historically followed the same principle: use the capital to achieve something extraordinary, then return it with profit.

But in today’s world of trillion-dollar valuations and stock market debuts, with companies valued as highly as entire countries, it’s time to return to the fundamentals of why finance matters. This is what I will endeavour to do with my upcoming blog posts. The posts will cover what I think are interesting topics and I will aim to make them as easy to digest and close to the fundamentals as I can in my own capacity. I hope you enjoy reading them and please feel free to leave constructive feedback.

Disclaimer:

The information provided on this blog is for general informational purposes only and should not be construed as professional investment advice. All opinions expressed on this site are personal views of the author and do not constitute financial, investment, or other professional advice.

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