Finance and Morality

It hits differently when you discover that finance, is really not only about money. But rather, money caught up with finances.

Finance has mostly been about morality and it provides the scale for measuring human interactions and exchange within the realms of fair, good, bad, honest, trust, or evil. It might take a while to catch that.

Introduction

I have fallen in love with finance in the last 2 years. It has become an ecosystem that literally defines every aspect of our life. From bills, wages, salary, loans etc we cannot escape it. Even more interesting is knowing how far it has evolved over the ages to the complexity that now exists. Complex mathematical models are now used to understand finance and make predictions. It wasn’t that deep centuries ago, but like every other ecosystem, it has grown with the times.

What comes to mind when you think about finance? “Money” primarily right? But you might be shocked, it’s deeper than that.

Finance & Morality

We, humans, have always been very moral beings with sacrifices to deities and gods. Different kingdoms had priests and early on we learned that to deserve the blessings of the gods we had to pay our dues and in essence, we owed the gods for their blessings – “Debts”.

As society became more complex – the finance sector evolved from our relations with the gods to our relations with our fellow humans.

Let’s take a quick peep at some concepts & terms in finance.

Debt:

Debt?is an obligation that requires one party, the debtor to pay money borrowed or otherwise withheld from another party, the creditor.

Note the word “obligation”. This means one is obligated to pay his debt. Why? Why should anyone repay their debts? The answer is simple – it’s the right thing to do and the word “right” is a moral term.

Account:

The word account has an etymology from words that mean “to sum up, calculate, reckon”.

Reckon or reckoning in ancient times would more easily be understood by the mere notion that “our deeds” either good or bad were going to be summed up or calculated in the “afterlife” when we die. In essence, we are all going to give an account of how our lives have been spent.

Today, the word in finance – literally means giving a narration of our behavior in how we have handled what we own or owe. So you are not just accounting figures but decisions, behaviors, truths, etc each time we balance sheets or create statements.

Credit & Debit:

Both of the terms debit and credit have Latin roots. The term debit comes from the word debitum, meaning “what is due,” and credit comes from creditum, defined as “something entrusted to another or a loan.” (investopedia)

Credit?(from Latin verb?credit, meaning “one believes”) is the trust which allows one party to provide?money?or?resources?to another party wherein the second party does not?reimburse?the first party immediately (thereby generating a?debt), but promises either to repay or return those resources (or other materials of equal value) at a later date.

The meaning of credit in itself is closely tied to trust. If I offer you a credit, I simply trust you and believe it will be returned. The person to whom the credit has been offered has to prove his “integrity” (another moral term) by repaying.

Debit on the other hand refers to “what is due” and what is due refers to one's “debt”. For this reason, ancient civilizations believed that good was what mortals owed to the gods, and because of that – the wealthy could buy their way to the afterlife. This explains the huge edifice behind the pyramids, expensive burial rites, and so on.

Conclusion

We have come thus far as a civilization. In today’s world where Trust is scarce – only the most trusted can access the most wealth. Trust is the biggest driver of any wealth.

So I submit to you, that finance has more to do with morality, than just money. As long as we continue exchanging value at any level – Trust, Good, Bad, and Integrity will always remain the base that drives all that exchange.

The dollar bill has a powerful line that says “IN GOD WE TRUST”. The federal reserve – is a demigod whom every trader of currency trusts but the federal reserve In itself is only second to the bigger sovereign being – God and no one else. The same applies to all Central Banks or currency minter.