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Once upon a time, rich people often bought even small things on credit, lest they sully themselves handling filthy lucre. They employed professional investment advisers to manage their money, which might be deployed in stocks, bonds or real estate. Should the need for a loan arise, one’s personal banker arranged it. (Discreetly, of course.)

Nowadays that description might apply to the great bulk of middle-class Americans-except it’s inadequate. When I go shopping, I pay with plastic, obtaining instant credit from merchants anywhere in the world, even though they’ve never heard of me. As to investing, no robber baron or trust-fund scion ever had more choices. With a toll-free telephone call or a few mouse clicks, I can put my money in an infinite variety of stocks, bonds, mortgage-backed securities, real estate investment trusts, money market accounts, options and futures, to say nothing of professionally managed mutual funds. The assets held by these investment pools are scattered from New York to Nepal.

If I need a loan, I can write myself a check. If I want to buy a house, I can shop for a mortgage electronically. Rather than limiting myself to a single local bank (the one that knew my father and his father), I can scour the country for the lowest possible rates. Mortgages come in more flavors than gelato. Variable-rate loans, which require frequent recalculation, were made possible by the spread of cheap computing power. The same is true for money market funds. As to credit cards, modern telecommunications and information technology paved the way.

In a single generation, technology has remade the financial landscape. The net effect: a remarkable democratization of consumer finance and investing. As in other walks of life, technology is the leveler, giving the average person the ability to do what once required wealth, specialized flunkies and the greatest luxury of all-time.

“As much as anything, computer technology made the money revolution possible,” argues Joseph Nocera in his lively history of postwar consumer finance, A Piece of the Action: How the Middle Class Joined the Money Class. “Computers are the hidden spine of every modern financial device.”

But the marriage of technology and finance has proved to be, like most marriages, an affiliation with an uncomfortable side. The technology that has made it easy for me to buy anything, anywhere, anytime has created its own difficulties. For one thing, it’s made it easy for people to get into trouble, running faster and faster on the treadmill of getting and spending until they reach the point of financial exhaustion. The corollary is that bankruptcies have soared, and going bust has lost the stigma it had a couple of generations ago.

Then there’s the woman who stole my wife’s identity. She started by stealing her wallet. Despite my wife’s prompt notifications, the thief used the credit cards, passed a number of checks and adopted her victim’s name as an alias. For a long time thereafter,merchants required elaborate proof to accept my wife’s checks, and several years after the initial theft, she was rejected for phone service by a new provider because, the company said, she had a large outstanding balance. Generated, of course, by the crook.

This annoyance is more or less personal to us. But some dangers created by the technological revolution affect us all. Massive, cheap computing power has made possible a volume of securities trading heretofore unimaginable, while fostering a profusion of financial instruments so abstruse only savants understand
them. These “derivatives,” whose value derives from some underlying asset, often were created to control risk, but in the aggregate they add a huge, unknowable level of uncertainty to the financial markets. Edward Chancellor, in The technology buy anything, anywhere, created his recent Devil Take the Hindmost: A History
of Financial Speculation, notes that “by the end of 1996, the size of outstanding derivatives contracts was estimated at around $50 trillion, although since most of the derivatives trade was conducted away from the exchanges in the over-the-counter market, no one was sure of the figure.”

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