The Ascent of Money (Essay Sample)

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The Ascent of Money
In the recent years, the world has experienced moments of economic turmoil blended with global losses to large influential organizations and banks. This has led to depression that has hit many if not all vast economies in the world. Consequently, most countries have lost their foot to curb unemployment, struggled with credit, and seen the crumbling of banks and industries. In a bid to explain the causes of the collapsing economy, Niall Ferguson presented a video entitled The Ascent of Money. Niall is a historian with a business-oriented interest where his research normally entailed finance related historical upheavals. According to Fergusson, the historical precedents of our financial system explain the progress made amid the economic crisis. Moreover, he explains further that money is the core of human’s history where political dominance, victory in war, and wealthy individuals who determine the fate of millions is determined by the amounts of money the respective individuals own (Ferguson, 50). With his vast knowledge on the evolution of finance to the latest economic situation, Niall produces a four-part series that scrutinizes the establishment of the monetary system, the evolution of the global finance, the current fiscal crisis, and the history of money.
In his first episode, Niall gives an insight on the evolution of money. According to history, the use of money, some clay tablets that were used to record transactions, in the Mesopotamia began with agricultural produce. The main virtue implemented with the tablets was trust. Later, Fibonacci gave Europe the root of modern finance. The system grew to lending money at interest to non-Jews. As the system progressed, a standardized currency for all transactions was introduced in the Italian model in addition to the fraction reserve banking (Hirsh, 2). The bank enjoyed the monopoly of issuing bank notes, but this system was susceptible to liquidity problems. This led to a dispute regarding the role of finance in the expansion of the European economy (Ferguson, 53). Consequently, the phased out gold standards were adopted but later. This resulted in the use of the system of money that was based on bank deposits and floating exchange rates to control the circulation of bank notes. Finally, the introduction of the Federal Reserve System allowed free banking.
Secondly, Niall dealt with the introduction of the bond market in the finance system. Northern Italy was the origin of the bonds that were either forcefully or voluntarily sold to the rich natives. The bond market allowed governments to borrow money not only from banks but also from other people and firms. It was argued that this sets long-term interest rates for the economy thus influences the value of all assets. Funds raised by the governments through bonds were usually used to fund wars or increase protection (Hirsh, 2). Rothschild was a rich family that dominated Europe’s finance since they served as the intermediate for the government issuing bonds and the eventual buyer. The influence in the finance system was also boosted by investing in different businesses such as mining and railways. During the world war, the supply of money increased causing inflation especially in Germany and its collaborators who could not access the world’s bond market. The hike in inflation and drop in currency rates led to hyperinflation that led to flawed political systems in some countries. According to Niall, inflation is currently under control as compared to the earlier times due to weaker trade unions, privatization of banks and industries and the commodities becoming cheaper.
The third episode discusses the invention of the joint-stock limited liability company. According to Niall, this enables individuals to pool resources and avoid risking their whole wealth. These also involved speculation buying and sometimes panic selling. After the stock market discovery, the stocks’ investment outperformed the bonds. The Dutch East Indies Company was responsible for the origin of the stock market. Later, the company inspired John Laws system that took over the French finance in the 18th century. Law implemented the monopoly of issuance of notes in the French economy that was faced by huge war debts. The implementation entailed the introduction of a private bank whose issued notes were payable in gold for a period of 20 years. This revived the French economy. However, the printing of extra money to pay off major shareholders high face values led to inflation and fiscal crisis. The Great Britain also faced a simil...