just procrastinating

Monday, February 09, 2004

Good article over at Reason on derivatives, something that has always interested me but that I am still trying to get my head around. Here is an interesting bit on early derivatives:
Although sometimes viewed as a recent innovation, derivatives actually predate Christ. Thomas F. Siems, a senior economist at the Federal Reserve Bank of Dallas, claims that the Greek philosopher Thales created the first known derivative contract roughly 2,500 years ago. Thales, apparently an excellent prognosticator, suspected that the olive harvest would be exceptionally good one year, so he bought options securing him the exclusive use of olive presses in his area. When the harvest turned out to be much as Thales had expected, he made a tidy profit renting out his monopolized presses for high fees.

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