Essay Sample on A History of Money: From Bullion to Bubbles

Introduction

The video "The Ascent of Money, Episode 1: From Bullion to Bubbles" gives a chronological background on the rise of money and financial systems throughout history. The author, Niall Ferguson, provides a solid financial history that comes along with great events of the past all through the financial innovation propelled by scientific and technological transformation. The episode begins with Ferguson explaining how the use of money and the escalation of banking started. During the 16th century, the Spanish conquistadors defeated the Incan Empire consequently gaining access to the vast quantities of silver and gold, which was used as money (PBS). Listening to this fascinating ancient story, Fergusson tries to provide a significant relation on how money comes to spread to the West. In their conquest to support and stabilize the declining economy and political instability, Spanish digs a lot of silvers and gold. Surprisingly, the metal becomes too much, which instead of supporting their economy increases the prices of products. Thus, Fergusson summarizes his tale by deducing that, "money is only worth what the other people are willing to offer in exchange".

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In defining, what we call money, Fergusson provides an intriguing and very thoughtful description. He describes money as a form of trust that we give to someone or thing. A trust that the other person deserves it or will uphold the trust safely. Substantially, Fergusson provides a reasonable explanation about what money means. Beneficially, the author provides supportive illustrations on how the guardians of the economy should protect it by not producing too much money, such that it loses its value. The author, explains how the concept of banking and credit was introduced in Northern Italy. The Medici introduced a cunning way to ask for a commission when exchanging one currency to the other after having a struggle with the Christians on the interest. Later, Fergusson shows how the Medici introduced the idea of credit to the money borrowed from the public. This concept gave a win-win benefit to both the government and the public. It was also around this time that the idea of borrowing oversees got introduced by the Italians who would lend money and receive some interest. Fergusson has concisely represented how various economics concepts, such as credit and interest, came into existence.

Fergusson's continues to describe how the Medici, particularly Giovanni, introduced the idea of money lending, a plan that was secretly practiced in the streets of Florence (PBS). Additionally, Giovanni created anti-usury laws that helped to raise the Medici to be the outstanding bankers of the time. Looking at this, Fergusson has helped reveal how Italy's has played a significant role in financial innovation. In his conquest, the author shows how the concept of the bond was introduced. With time, expansion of the commerce and money lending, government and companies, especially in Italy began asking money from the public or investors, which was known as a bond. This was quite needful to support the wailing wars in Europe and across the Atlantic. The bonds made a significant impact on the financial market of Italy and later the whole of Europe. Later, the Italian introduced the shares, in which an individual would convert the bond into owning part of the company or would receive a share of the profit made. Finally, the episodes end with Fergusson narrating the story of the genius John Law, who brought a revolution in the financial market by introducing the idea of paper money. Fergusson concludes the first episode with the advancement of banking during the 19th century in the United States and the United Kingdom.

Works Cited

PBS. "The Ascent of Money Episode 1: From Bullion to Bubbles." PBS.org, 2009, www.pbs.org/video/2246958992/. Accessed 27 Sept. 2019.