Introduction
Human beings have been using different items to carry out various transactions. This fact explains why the history of money is very long and incomprehensible. However, the recent past has been characterized by real money. The use of money has reshaped the fortunes and outcomes of many people. However, new objects of value have emerged within the past two centuries. Such objects are used by people and nations to pay debts. Such developments have therefore played a positive role in determining the past and future of money. The class readings and materials have therefore offered powerful arguments to support the historical developments of money.
The readings focus mainly on different financial markets and their impacts on the global economy. This development has transformed the positions of many global economies and states. The role of different monetary policies and financial institutions is something that cannot be underestimated. It is also notable that the future of the global economy will be determined by the current shifts and monetary practices embraced by different countries across the globe. These aspects can be described using different aspects of money in the global economy. That being the case, the essay will outline and describe some of the major lessons obtained about the history of money from different class activities and readings.
The History of Money
The class materials examined the developments, hurdles, and systems that have emerged due to the changing roles of money in the global economy. Money opened new paths for engaging in various economic activities. People engaged in such activities with the aim of amassing wealth. As well, governments have been implementing new policies and monetary systems in order to ensure various financial practices are legal, worthwhile, and effective. However, the complexity of such systems continues to encourage more people to identify the existing loopholes. More people also dictate or reshape such systems. Such actions are believed to cause both successes and failures in different economies.
According to historians, the 19th and 20th centuries were characterized by the gold standard. This standard made it possible for many countries to engage in various economic and trade activities. The period earned the name the golden age. More people focused on different approaches to investing globally thus supporting the economic performance of different economies such as China, Brazil, and Argentina. Most of the colonized nations such as India benefited significantly from such investments. Gold can, therefore, be studied as one of the fuelling factors towards the positive performance of the global economy during the period.
Throughout the 20th century, the golden age ushered in a new wave of economic freedom and global interdependence. This new wave is presently described by many economic theorists as globalization. During the period, many entrepreneurs from the west decided to invest in different countries across the globe. The East, for example, was characterized by numerous economic resources and labor opportunities. As well, new conflicts emerged such as the infamous Great War (also known as the First World War). International business activities were affected during the time. This led to the Balkan Crisis. Money was being used in different states during the period. However, international businesses were under pressure throughout the war.
The developed world strongly believed that future wars had the potential to disorient the global economy. The financial systems used in different countries were incapable of protecting more entrepreneurs from unprecedented economic crises. The decision to establish the International Monetary Fund (IMF) and the World Bank emerged. Before the war, gold was being used as the best tool for managing global resources and finances. This new decision was strongly associated with the use of the dollar instead of gold. Most of the nations decided to use the American dollar as the international reserve currency. Money could now cross different borders and be used to support various investments. The economies of many countries across Europe flourished. The World Bank and IMF were seen as imperialistic institutions. The institutions mainly supported the economies of many western nations. However, many developed nations suffered significantly thus being unable to achieve their economic goals.
The actions and functions of the IMF are believed to have caused the Asian Crisis of 1997. The institution decided to lend money to such nations thus worsening the condition. The countries became indebted thus being unable to achieve their economic potentials. However, China’s economy began to prosper during the crisis period. The country had encouraged Foreign Direct Investments (FDIs) thus improving the economy. Bilateral trade functions emerged between the US and China. However, the established economic relationship would cause new inequalities and imbalances. The relationship is believed to have caused different outcomes. For instance, the US was able to achieve the best economic potentials. However, the country encountered one of its worst financial crises in 2007. Financial markets usually emerge and disappear very fast due to the economic issues encountered in different parts of the world.
The other important historical aspect of money can be studied from the manner in which people obtain property. Banks have been using mortgages to support the economic needs of many entrepreneurs. Lending became a favorite practice throughout the 19th and 20th centuries. People were borrowing money from different banks to acquire new properties. However, this kind of practice led to new mortgage debts. The wave of democracy also empowered more people to own property than ever before. Capitalism also supported the concept of property ownership. However, new inequalities were observed in the United States throughout the first half of the 20th century. Issues of race dictated deferent federal lending practices. New cases of inequality and discrimination were observed throughout the 1940s. These malpractices are believed to have led to new financial tensions. The history of money and property can, therefore, be described as one of the potential causes of the Civil Rights Movement in the United States.
As well, many people believed strongly that the idea of property ownership was something safe. However, the estate market became volatile since different properties were prone to capital market changes. The property market became unsafe and unsustainable towards the end of the 20th century. The concept of housing was therefore used to manipulate different financial markets and economies. The approach was used to cause discrimination, social inequality, financial abuses, and circumventions. Mortgage debts have continued to affect the performance of many institutions. Experts argue that the estate market has become extremely risky and volatile. It is associated with the current political and financial conditions.
The modern history of money has led to new inventions such as shares, stock markets, and bonds. These methods of earning income led to the establishment of stock markets. Such stock exchange operations have always been used to echo the psyche of the targeted individual or investor. It is agreeable that stock markets will always encounter unforeseeable fluctuations and changes. Such changes can have disastrous implications thus affecting the outcomes of many investors. This analysis shows clearly that every transaction involving giant companies focused on new methods to execute different transactions. The emergence of stocks and shares revolutionized the manner in which investors executed their transactions. Some entrepreneurs used the approach to monitor the changing psyche of different consumers. They used such findings to earn new resources and opportunities. As well, the practice became flawed thus threatening the performance of many giant corporations.
The vulnerability of such financial tools can be used to explore some of the financial problems and challenges affecting many companies. Stock markets crashed throughout the 20th century. For example, the Great Depression and World War I must have been caused by the restrictive financial regulations imposed by the Federal Reserve System. Similar challenges were encountered in different nations across the globe. This fact shows how different financial markets will always be vulnerable to various global shifts and challenges. According to different analysts and theorists, inflexible monetary policies have the potential to produce numerous declines in asset prices. That being the case, such policies will result in recessions and depressions. Some experts have therefore been skeptical thus encouraging investors to be aware of various obstacles that can affect their financial fortunes.
It is agreeable that stock markets and joint-limited companies have been playing a positive role in supporting the global economy. However, such financial markets present new opportunities for investors to engage in greed and dishonesty. Such individuals will succeed because the existing monetary policies are flawed. This understanding shows clearly that stock markets have the potential to support entrepreneurs, companies, and even nations. However, ineffective financial operations and policies continue to undermine this mode of transaction. Various causes of fraud and embezzlement have been reported across the globe due to such loopholes. Governments should, therefore, focus on the most appropriate measures to ensure such financial operations are transparent, reliable, and effective.
Conclusion
History shows clearly that different methods of executing financial transactions have changed from one period to another. Such developments have been informed by different human activities and economic pursuits. The existence of various threats and global problems has led to new financial policies. New currencies and methods of executing transactions have emerged within the past two centuries. Shares and bonds have emerged as the most appropriate methods of transaction. However, such inventions and historical changes in money have led to new issues. Some economies have managed to achieve their potentials while others have suffered terribly.
Most of the targeted materials have indicated that the changes associated with a history of money have followed no rules. The players and actors determine the most appropriate methods of carrying out various transactions. Every method has its own limitations and strengths. That being the case, investors and nations should be aware of such changes in order to focus on the most appropriate economic policies. These readings have therefore equipped me with useful concepts and ideas. I am also planning to read new materials in order to understand the history of financial markets. Such materials will equip me with new ideas regarding the historical aspects of money.