If fossil fuels were the key accelerator of The Story Of Progress, financial innovations like stocks, bonds, and mortgage agreements were a close second.
By the 19th and 20th Centuries, owning a house (along with a 30-year mortgage) became an essential ingredient of the Leave It To Beaver lifestyle so many yearned for. By the 1980s, not only had mortgages become ubiquitous in the United States, but investors had taken to profiting off them through mortgage-backed securities. Mortgages were sold off by the thousands, aggregated, and repackaged into something investors could buy. By pooling hundreds or thousands of mortgages together into one asset, investors could take on more risk and thus garner greater returns than ever before.
These new instruments revolutionized the financial industry. Investors made millions and the economy grew rapidly. At first, they were largely quite safe bets. After all, mortgages were typically only given to prospective homeowners who could be relied on for their monthly payments.
But the market’s appetite proved insatiable.
