Technology and Invention in Finance
CLASS NOTES:
History of finance is copies of various invention (in the
world) to manage long term risk
Need Invention
Long term risk theme (for risk management)
Backus Kchoe
(Perfect) Correlation of Consumption
-> elimination of risk
Socialism – R. Owen
Moral hazard problem
(Complete) Sharing, risk sharing,
equality
Karl Marcus
ð
Public finance
Tax and welfare
system (government) è Worked (Invention)
History of Taxes
Income Tax during civil war, progressive tax (Invention)
Insurance (good invention)
Framing issue: Money Frame, money terms
Real Frame – Index to price
IT à
economic dislocation and opportunities
Insurance Policy as invention, must exclude hazard cases to
make it works
Develop statistics
Topics: Wheel, Patent (examples of innovation)
19C IT innovation
for financial opportunity
Paper (mass-production) è record keeping
Carbon paper, typewriter, standardized
forms, civil service, firms, postal service
Social security (Germany) over 100 years old
SUMMARY:
Historically human has been trying to find a way for (financial) risk management. The process went through trial-and-error. Ones very success are considered innovations which are for instance, tax and welfare, income tax, insurance, money framing, and social security. The financial system development were also closely related and depending on IT development in the era. (i.e. Paper->Carbon paper->Printing technology->Postal service-> etc. etc. -> Computers/Database so on)
SUMMARY:
Historically human has been trying to find a way for (financial) risk management. The process went through trial-and-error. Ones very success are considered innovations which are for instance, tax and welfare, income tax, insurance, money framing, and social security. The financial system development were also closely related and depending on IT development in the era. (i.e. Paper->Carbon paper->Printing technology->Postal service-> etc. etc. -> Computers/Database so on)
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