When Finance Needed More Math, It Turned to the Card Players

The modern financial system is a house of cards, according to a popular metaphor on both the left and the right. It turns out this is literally true.

From 1970 to 1990, the world moved from a 19th century economy based on gold, banks, stocks and bonds to a global derivatives economy based on intangible parameters, upstart financial innovators, hedge funds and options. The brave new world required people who were good at both math and betting. Today, of course, we train such people in quantitative finance programs, but in the early days they could be found at bridge and ...