Ascent of money
The video gives a description of the influence of money development and the development of financials in the economies of the world and impacts on people’s lives. The film has four parts which focusing their discussion on the events and history which has been experienced in the context of money.
In part one, we learnt about the history of the initial phase in ascent of money which involved the creation of banks. The film explains that before the creation of the banks, there had to be a discovery on the true value of money. Among the Spanish, it was believed that the value of money was passed on in the metal coins and all that they had to do to become richer was to bring more silver and gold coins from the American colonies. Instead of making the Spain richer, the influx only increased prices. They failed to notice that money is worth only as much as other people are willing to give in exchange. We learn that the value of money is only as the trust people have its worth. The film also touches on interest an usuries and how early lenders of money were hated due to it. The Medici called money charged on money commission for the purpose of currency changing services. They succeeded in banking because of diversifying lending, hence risks and could be able o charge less interests (Mystic Rebel, 2013).
In the second part, the film discusses the bonds and the reason why they matter. It describes the first bonds as having been issued by the Italians so as they could finance their wars. From that moment, the decision on wars was made not only in battle field but also on financial market. Rothschild are described as powerful family from France who traded gold in various places like Paris, London and Rome and took advantage of price differences to make money though buying and selling. During the Civil War, the Southern States collected money using bonds whose security was cotton. Currently the bonds are still sold by the states to banks, private individuals and other nations. The film asserts that specific occurrences such as battles, big purchases or sales and speculations influence the bond prices. The film touches on aristocracy which collapsed due to borrowing more than income. We learn that the world is not as safe as it appears as shown at the beginning of World War I (Mystic Rebel, 2013).
The third part explores issue of stock market and stocks .We learn that are also prone to the cycles of boom and bust like bonds. The first bubble burst was a creation of John Law. Another issue explained is that of Enron who was a contributor the George W. Bush led government. The Enron company had its shares were increasing in values but their dirty dealings brought the firm down. The firm cooked their books so that they appeared as making profits while in fact they were loss was greater. The film asserts that two of the firm’s directors were charged with cases of frauds. Fergusson advised that stock markets should trace a line which is not similar to Andes pick (Mystic Rebel, 2013).
In the fourth part, the film delves into how by the start of 21st century, the systems of insurance, credit, stock markets and bond trading had crossed all national boundaries and resulted to a worldwide economic system. This opened the chance of unprecedented growth and also global instability in case of a downturn in a single nation. This is seen in Great Depression following which the New Deal by United States lead to a democracy of property owning. Rampant inflation experienced in 1970s made government to deregulate interest rate culminating in 1980s massive scandals. Ferguson suggests that that the answer to economic crises would be found in ascent of money history (Mystic Rebel, 2013). This shows the process in which money has changed the history especially when it comes to financial systems and global economic crises.
Reference
Mystic Rebel (2013).The Ascent of Money: A Financial History of The World by Niall Ferguson Epsd 1 5 Full Documentary. Retrieved from: https://www.youtube.com/watch?v=fsrtB5lp60s
