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This should blow your mind.

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I show this little plastic card to a
stranger in a city I've never been to,

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and he hands me books, or groceries, or
a cell phone, or even lends me a car.

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And I can even postpone
payment indefinitely,

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though that will cost me dearly.

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Until recently, credit was given only
to the richest and most respected.

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Everybody else needed cash –
unless they were willing to humiliate

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themselves by begging their local
banker, or worse, their parents.

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But then, suddenly, this
little thing democratized finance.

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After World War II, finance pioneers
wanted to extend credit to everybody.

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A fascinating idea but incredibly
difficult to pull off: people wouldn't

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get a credit card unless lots of
vendors agreed to accept it,

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and vendors wouldn't accept it
unless lots of people used it.

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Then, in 1958, Bank of America decided
to send credit cards to all their

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customers in Fresno,
California, and that inspired

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other banks to do the same.

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It was a disaster.

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Criminals stole cards from mailboxes
resulting in fraud, while many

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consumers poorly managed their new
credit lines resulting in delinquent

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loans the banks had to pay for.

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They lost millions and politicians
wanted to ban the new, crazy cards.

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It was a mess, but it also created a
critical mass of credit card users.

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Writer Joseph Nocera says that
veterans of the credit card industry

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view that wild west era as necessary.

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The banks had to learn from their
mistakes to build the huge networks

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that provide the international
systems of credit we enjoy today.

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And the people who issue credit
cards have come to represent the

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second-highest wage earners in
the banking and credit industries –

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meaning new careers were
created along with these handy cards.

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Progress is not
smooth nor predictable.

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Progress comes from trial, error,
experiments,

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pushback, feedback, and adaptation.

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And a few disasters along the way.

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Hey! Check out these other great videos
from Free to Choose Network.

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And don't forget to subscribe to our
channel to get updated on episodes

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of New and Improved
with me, Johan Norberg.