Ascent of Money 1
I think behavior and money intertwine in almost every aspect because of the value given to money. Money in itself has no real value whether it be in the form of our paper bank notes, the Babylonian’s clay tablets or numbers on a screen. It is the trust and promise associated with it that allows use to exchange for items that do hold value. Money has such a strong effect on human behavior because it is a means to power and comfort. People typically want to achieve, maximize, and maintain the benefits of money so they behave accordingly.
For example, when the Spaniards discovered the luxuries they could get in exchange for silver, they proceeded to dig up as much silver as they could without second thought. The Spaniards literally crossed oceans, fought wars, and risked their lives going deep into the mountain at high altitudes in search of silver. In the example of the Venetian Jews given in this episode, we see how religious practices can affect how individuals handle money. The Christians viewed lending money with interest rates as a sin while the Jews saw no harm in lending to non-Jews.
With the development of credit and the trust that the money you lend will be repaid at a later date, people began to manage larger loans with higher risks. Because the consequences for loan defaults are traditionally severe, lenders have to find the appropriate balance to encourage borrowers and returns. For this reason, the Medici preferred to lend to the rich, however, in the United States, rich and poor alike can receive loans. Americans have built a cultural norm where it is relatively easy to default on loans and go bankrupt because there are so many small businesses that will help you right back up. I think it is this sense of security that, unlike the Venetians or English, defaulting on a loan in the US doesn’t cost a pound of flesh or lifelong imprisonment that causes people to use their money less carefully.
Ultimately, I think accumulating wealth requires careful and appropriate money handling and the risks of mismanagement are what drive people’s actions in regards to money.
For example, when the Spaniards discovered the luxuries they could get in exchange for silver, they proceeded to dig up as much silver as they could without second thought. The Spaniards literally crossed oceans, fought wars, and risked their lives going deep into the mountain at high altitudes in search of silver. In the example of the Venetian Jews given in this episode, we see how religious practices can affect how individuals handle money. The Christians viewed lending money with interest rates as a sin while the Jews saw no harm in lending to non-Jews.
With the development of credit and the trust that the money you lend will be repaid at a later date, people began to manage larger loans with higher risks. Because the consequences for loan defaults are traditionally severe, lenders have to find the appropriate balance to encourage borrowers and returns. For this reason, the Medici preferred to lend to the rich, however, in the United States, rich and poor alike can receive loans. Americans have built a cultural norm where it is relatively easy to default on loans and go bankrupt because there are so many small businesses that will help you right back up. I think it is this sense of security that, unlike the Venetians or English, defaulting on a loan in the US doesn’t cost a pound of flesh or lifelong imprisonment that causes people to use their money less carefully.
Ultimately, I think accumulating wealth requires careful and appropriate money handling and the risks of mismanagement are what drive people’s actions in regards to money.
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