Brad DeLong has an interesting essay at Project Syndicate on The Hidden Purposes of High Finance. One of his points is that high finance gives us the illusion both safety and liquidity. But it is a useful illusion:
It is a fact that we are much happier saving and accumulating, and that we are much more likely to do so when we think that the resources we have saved and accumulated are at hand. It is also true that when we invest our wealth - in Pfizer's intellectual property, factories in Shenzhen, worldwide distribution networks, or shopping malls in Atlanta - it is not, in fact, at hand. Our invested wealth can only be made to appear liquid to any one of us, and only if there is no general shift in our collective desire for liquidity.
That is an interesting point to keep in mind - given recent history.
But there is a much more interesting point in that statement: the inclusion of "Pfizer's intellectual property" and "worldwide distribution networks" in that list of investment. That a noted economist would routinely included these intangible assets shows how far our thinking has come.
A small victory I will grant you. But a victory nonetheless.
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