I had lunch yesterday with Nicolas Nova, who’s over here in the States for a couple weeks. At one point, we started talking about how the financial industry has (arguably) created the most sophisticated proto-pervasive computing network around: it’s got millions of access points, collects vasts amounts of data about its various kinds of users, and intersects with the real world in very tangible ways (you use it to buy stuff).
So, a question. Wealth used to be locked up in stuff: land, gold, this year’s crop, etc.. It was very clear how rich you were when all you had to do was count your sheep, or weigh your treasure chest. Wealth resided in things.
One of the key story lines in the history of finance in the last centuries has been one of increasing abstraction of finance from the real world. Some of the richest people in the world aren’t involved in the manufacture of things, but the manipulation (I mean that in a neutral, not sinister, way) of financial instruments, or the creation and ownership of intangibles.
Has there ever been confusion about where that value lives? Some wealth is still bound up in things, as anyone who lives in Silicon Valley knows; but a lot of it isn’t necessarily expressed in some physical way. If you buy stock, you don’t necessarily get a bundle of stock certificates. My 401k exists on a TIAA-CREF balance sheet (or more likely, in a database); my credit line isn’t something that’s in a vault; even the value of my house is somewhat abstract until I sell it.
Has there ever been a «cashspace,» some place where abstracted wealth was supposed to reside? If you asked financial professionals, what would they say? I would guess they’d say balance sheets and markets, or maybe that it really only exists during transactions— that the value of my stock is only a potential value until I sell it. And what about the rest of us? Where does your credit live? Where is your debt?
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