The Industrial Revolutions Chapter 63: Finance and Turbulence
May 1, 2023
Explore the birth of the Chicago Board of Trade and its pivotal role in 19th-century commodity trading. Discover how financial systems evolved alongside industrial growth, creating cycles of prosperity and crisis. Dive into derivatives, understanding their significance and how speculation fuels markets. Uncover the emergence of banking giants like Deutsche Bank and J.P. Morgan, and the financial scandals that shaped modern economies. This journey through finance reveals the complex dance between greed and growth in an interconnected world.
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Grain Elevators Spark Trade
- Grain elevators revolutionized Chicago's grain storage and transport, enabling rapid agricultural export growth.
- The Chicago Board of Trade formed in 1848 to regulate grain trading and introduced futures trading rules in the 1860s.
Derivatives Enable Commodity Markets
- Derivatives markets evolved to allow efficient buying, selling, and risk management of commodities.
- Commodity exchanges like Chicago Board of Trade facilitated agricultural surpluses and market liquidity.
Money and Brain Dopamine
- Making money activates brain dopamine like cocaine, causing increasing risk-taking behavior.
- Modern hedge funds use brain scans to assess risk-aversion, unlike 19th-century markets.
