I'm looking For a Man In Finance... Wait what is Finance?

My girlfriend showed me a music remix of a viral video where a woman says that she is looking for a man in finance who is 6' 5", has blue eyes, and is affiliated with a trust fund. This got me thinking: What does a man in finance do? What is finance even? What service does this "man in finance" provide that this woman needs to access? After some thinking and reading, I've decided to try my hand at explaining what is finance.

Finance seems to be the study of how to keep track of who owns what, and a financial system seems to be a system that keeps track of who owns what. In the early prehistoric days, the financial system was quite simple: You own what you can defend. If you thought you owned a nice rock, you kept track of it by holding it and attacking whoever tried to take it. Trading ownership meant handing your rock to another caveman, and simultaneously they would hand you a fish or something you wanted to trade for.

These were simple times, but you could only hold onto so many things as you only have 2 hands after all! So you, the intelligent finance innovator, came up with a system: You would mark everything that you owned with a piece of chalk with your symbol. This symbol denoted that you would fight anybody who tried to take that thing, and you were a pretty tough guy. This was great because now you could accumulate things.

You have a bunch of great rocks, and your caveman friend fished a lot of great fish, and you would trade. But sometimes he needed rocks, and you didn't need fish just yet (as fish can be quite stinky and perishable)! So you create a way to denote a coupon that can be redeemed at a later date for a rock and he creates a way to denote a coupon that can be redeemed at a later date for a fish, an IOU of sorts. These abstractions of rocks or fishes now allow you two to trade even if one party does not need the rock or fish immediately. Call this the rock standard, and the fish standard. This is a big leap in your system of keeping track of who owns what, because now people will find it much easier to exchange ownership of things.

Life progresses, and all the cave people adopt coupons for the things they own. You have markets for exchanging rock coupons for fish coupons, fish coupons for stick coupons, stick coupons for berry coupons. It is absolutely exhausting keeping track of all these various exchange rates, trying to locate enough liquidity to transact ownership of rocks via rock coupons into ownership of berries via berry coupons so you can eat something other than fish for once. You think, let's have 1 main representation of wealth. Instead of having a fully connected network of N^2 exchanges, let's just exchange everything into golden rock coupons, and exchange golden rock coupons into everything else, so there'll only be N exchanges! You'll call these golden rock coupons, redeemable for golden rocks, "dollars". This is now the gold standard, and it works well because golden rocks are very difficult to come by, so the relative value of the golden rock to everything will rarely inflate. This abstraction allows you to now easily denote every caveman's wealth using dollars, or ounces of golden rock, now! This is another big leap in your system of keeping track of who owns what, since now you can easily communicate the value of the items you own. While previously the wealthy caveman Elon Tusk owned a lot of Tuskla stock coupons, you can now easily translate that into dollars and give him loans and put him on lists of rich people.

Fast forward thousands of years. Billions of dollars are exchanged in nanoseconds in exchanges world-wide. Yet not much has changed! We're just less hairy, better-clothed Homo Sapiens exchanging our rock coupons for fish coupons so we can have a tasty meal.

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