
For a long time I’ve been thinking about doing a series about the concept of a “hierarchy of finance”. This phrase refers to the fact that different households and institutions have access to financing for their current—or desired—activities, at both different quantities and qualities. To put it in the simplest terms: some of us can borrow a million dollars easily with good terms…While some of us can’t borrow a hundred dollars at any interest rate. And that difference is not random, it is constructed! A panoply of legal instruments have been created over the centuries—particularly the past three centuries—which influence the quantities and qualities of finance different institutions have access to. Institutions that would otherwise be low down the hierarchy of finance can use specific legal instruments—which we will discuss at length in this series—to access financing on terms, and in quantities, they would not be able to access in any other way.


