“Pretending that deposits are safe when they are invested in long-term risky assets is an illusion,” he writes. Author Mervyn King, the recent governor of the Bank of England, suggests this immensely seductive process led to “the creation of extraordinary financial powers that defy reality and common sense.” In his revelatory 2016 book The End of Alchemy, King calls for change, noting that modern blending of money and banking not only caused last decade’s global recession but is also largely to blame for the painfully slow recovery. Alchemy, the medieval practice of attempting to convert base metals into gold in pursuit of a universal elixir, found new purpose during the Industrial Revolution as banks transformed secure short-term deposits into long-term risky investments.
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