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[...] the publication in 1973 of Fischer Black and Myron Scholes's algorithm for the pricing of options.

Before Black and Scholes's work, derivatives had been a small fraction of all investments, essentially the contracts known as 'futures,' [...] Black and Scholes's algorithm allowed almost everything else to be priced the same way, including personal debt. It was what made the 'hedge fund' possible, and a world economy in which financial assets completely eclipsed the real ones that they supposedly represented. [...]

something to remember

[...] the publication in 1973 of Fischer Black and Myron Scholes's algorithm for the pricing of options.

Before Black and Scholes's work, derivatives had been a small fraction of all investments, essentially the contracts known as 'futures,' [...] Black and Scholes's algorithm allowed almost everything else to be priced the same way, including personal debt. It was what made the 'hedge fund' possible, and a world economy in which financial assets completely eclipsed the real ones that they supposedly represented. [...]

something to remember

158

The power-shift towards finance became self-reinforcing. Financial institutions deployed their increased lobbying power successfully against the legal barriers between speculative and retail banking [...] This drew creative effort and investment into the monetary system itself, and away from the productive economy for which monetary systems in theory exist.

referring, obviously, to Glass-Steagall (introduced 1933; repealed 1999)

referring, obviously, to Glass-Steagall (introduced 1933; repealed 1999)

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