The End of Alchemy

Mervyn Allister King, Baron King of Lothbury, is the former Governor of the Bank of England. He served as Governor from 2003-2013, and he has recently released the book The End of Alchemy, which is a discussion on, in no particular order:

• The 2007-2008 financial crisis
• The history of financial crises over the years
• The nature of money, banking, and economics
• The nature of finance as a (dis)function of society
• Post-crisis central banking policy, regulations, and concerns

I am not yet done reading it, but do be assured that I will post a complete review when I am. Regardless, I can unreservedly state the following about it:

1. It should be required reading for anyone entering, or seriously practicing, modern finance and economics.
2. It most certainly should be required reading for anyone in the business of fintech.

I’m only 50% of the way through and I’ve an army of quotes and thoughts I would like to disgorge upon the world, but I’ll save that to the next posting.

That said, it is an elegant, thoughtful read, that understands that the mathematical ascension of economics and quantification in finance in many ways has missed the mark in that banking is, at its heart, still about people and money serves a central function to people. We have created banks that have started to persist for their own sake, let them loose with guidelines that inspire moral hazard and don’t mitigate it, and human nature can be a fearful thing when let loose.

Perhaps we can find better ways to curb that nature and not necessarily with excessively complex, unwieldy, and ultimately toothless over-regulation.