#Banking Archives – THE PAGE TURNS

September 10, 2023September 10, 2023

Why I Need to Write About Aristotle

I’ve been futzing about for a few days, trying to decide whether to write a post that centers on Aristotle, “Barbie” and “Oppenheimer.” My big hang-up is frankly … audience. How much are y’all going to balk if you read the word Aristotle in the first sentence? And yet I can’t write my film review without mentioning him. So I’ve been stuck between the urge to get these ideas out and the knowledge that we’re living in a time of anti-intellectualism.

It’s like a seesaw effect. We don’t even know what we think about smarts. There are constant little tests nestled in among Corgi pictures on the interwebs that tell you to “solve this puzzle and your IQ is 180.” Which anybody with some kind of education knows is patently false because that’s not how IQ works and nobody has IQs over 170 except that little kid they found in Nepal once. (OK, I checked the Internet; there are a few people now with IQs over 170. But not because they can do some little puzzle.)

Meanwhile, we don’t even care if people learn how to write anymore because we have ChatGPT and other tools coming that will just write stuff for us. As if Chat knows. I think of ChatGPT as like a rather stupid, random World Book Encyclopedia. If you happen to go to the right page and copy the right bits word for word (or verbatim–we used to use that word in a business context until we were told people didn’t know what it meant, so we had to replace it with “word for word” because people can’t learn what words mean anymore)… If you go to the right page and plagiarize it, you might just get away with it. But what if you have to combine things? And if you’re not learning because all you ever do is copy things other people wrote, then you just wander through school and come out as dumb as you started.

April 24, 2022April 25, 2022

U is for Usury

German woodcut of Italian bankers. Photo from medium.com

Usury was denounced by the Catholic church in the Middle Ages, a potential route to heresy and excommunication. But royalty, the church, and the merchants needed bankers. The bankers found ways around restrictions. The Medici thrived on banking, but it proved to be their downfall, or their rise depending on how you look at it. Lending to people in charge seems to have an inherent risk, usury or not.

Criminal Interest

Usury is defined as charging an “exorbitant” interest according to Webster’s. But there’s that third dictionary definition, listed as Obsolete. Usury was once defined as charging any interest at all. It varied with the century.

There were banks in Rome, which might charge from 5-12% interest. There were banks in the 6th century Byzantine Empire, because Emperor Justinian set loan rates, which varied by the venture: 4% for “exalted personages,” 7% for business loans, and 12% for maritime loans. The Council at Nicea centuries earlier had banned interest but for clergy, not everybody.

Yet a few centuries later, between the time of Charlemagne (750 CE) to the Black Death (1350), usury was more strictly banned. First, the Catholic church said that usury was banned to everybody, that you could not have a transaction where more was returned than was given. Even in a simple transaction, like selling a cow, the farmers had to find a just price, where they would only receive what it cost.

April 2, 2021April 3, 2021

B is for Banking

Banks are like good hygiene, like brushing teeth and wearing underwear. A thankless resource, though someone needs to do it. People don’t like bankers, but they need them. People don’t like bankers because they need them. I explained why in the second post I ever wrote. But how does banking work?

Gringott’s Vault at Warner Bros. Studio tours, London

What Is a Bank?

Essentially, banks take your money and give it to somebody else. You could put your money in a sock under the mattress, but it’s a bit safer to choose someplace with big steel vault doors and complicated locks. Like Gringott’s. A bank might hold a Philosopher’s Stone, the royal treasury of the Lannisters, or the wealth of the InterGalactic Empire (who had Storm Troopers handling security). Modern banks spend huge sums on strong encryption systems–online vault doors–to keep your money safe.

Suppose your cousin Marvin wants to open a business, a combination sushi and ice cream store. Hey, they both need ice, right?! That’s Marvin’s business plan. The bank gives your money to Marvin as a loan.

Two problems here. First, Marvin may need more dough than your puny deposits, so the bank has to convince more friends and gather enough deposits in order to give out loans. Secondly, you may need some of your money back before Marvin can attract enough customers. He’s trying–he’s got the slogan: Come for the Eels, Stay for the Sprinkles! This is called a problem of liquidity.