Part III: Alchemy

Alchemy—magical powers, traditionally associated with transmuting base metals into gold.

In medieval times, alchemists sought riches in science, by developing techniques to create gold—money. In the age of capital, financiers developed techniques based on fundamentalist money theories, which exploited society’s faith in money.

Like alchemy, private equity, securitization, derivatives, and hedge funds promised unimagined riches. In reality, the techniques were merely disguised debt or new opaque risk packages that would fool customers and eventually the financiers themselves.