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THE ASCENT OF MONEY The Ascent of Money Research Project Part IIII Leidy Perez Florida National University Prof

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THE ASCENT OF MONEY The Ascent of Money Research Project Part IIII Leidy Perez Florida National University Prof. Georges De Schryver Financial Institution June 6th 2021 THE ASCENT OF MONEY 2 Synopsis of the book The Ascent of Money book by Niall Ferguson portrays the financial crisis by looking at some of the secrets behind the journey of a historical phenomenon. Ferguson seeks to capture financial markets engaged in a series of activities within the human history of America by looking at some of the events that magnify on its values and weaknesses. Crime in the financial market is analyzed by using money as what expands on human actions and their involvement in making bad choices. Money is with this pointed out as the main element in the book that has a direct effect on humans, where it is mentioned as having the ability to control how they react on things. White Collar-Theme of the book The white-collar theme is addressed in the book by looking at the cause of the financial crisis and its occurrence in the world. According to Ferguson, he believes that every historical phenomenon has a financial secret that involves engagement in criminal activities. The entire book, therefore, supports the theme of white-collar by being keen on explaining how this phenomenon in financial history had the involvement of illegal activities. The Ascent of Money book is thus keen on identifying the causes of this financial crisis and how different parties were involved in it. Description of the Protagonist The protagonists in this book are different stakeholders in the world who were involved in the affairs of globalization, diplomacy, and money. In explaining how they got caught up in a dilemma, Ferguson uses the economic booms and busts to bring out their reasons for engaging in different acts of white-collar crime. They all hold secrets that are accounted for by the fact that they look at their journey as what matters to them the most. The book thus uses different visual THE ASCENT OF MONEY 3 settings to express their desires to survive in the financial world. Roman society is consequently emphasized in having undergone a lot of financial bubbles in the 18th century. Personality, Conduct, and Motivations of the Perpetrators The personality, conduct, and motivation of the perpetrators are further explained by looking at different economic eras and how each one of them was involved. Each one of them managed to reach their positions by being part of significant activities in financial histories, which, due to the pressure of making money, ended up making different choices. Their devotion towards modern capital is what pushed them to get risky in taking up offers, which they believed would bring out the best for the world, which some failed and caused significant financial crises. It brings out their involvement in the theme of white-collar within their areas of operation in the financial markets. Components of Fraud Triangle In The Ascent of Money, components of fraud triangle are represented by elements of pressure within the individuals, presentation of opportunities to commit the crime, and their ability to rationalize their acts. With a lot of dependence on engaging with complex financial systems in which the perpetrators were in control, the book explains that they had the opportunity of controlling and going against the requirements of the operation. The author confirms that having the power to engage in such acts and use different ways to justify and rationalize their actions, they encouraged to participate more in fraud activities. Fraud Theories Fraud theories apply in the book by looking at how the tremendous victorious powers applied different ideas in getting smart money. The use of economic theories is mentioned, which explains the financial events that were taking part in the stock market at the time, which THE ASCENT OF MONEY 4 are expressed by the rate of inflation. For example, poverty in the 18th century is associated with different schemes that Ferguson believes were engaged by the perpetrators, which had the economy suffer from its effects. The role of money is given a different meaning as the fraud theories, such as the crisis of capitalism during the 1930'as, are all associated with a lack of interest in the history of capital. Harm Caused The use of these fraud theories is associated with major historical events such as the industrial revolution, where it resulted in cotton famine in the 1860s. The book further explains that the events at the time caused a lack of interest in the engagement in the history of capital. This was also associated with causing the crisis of capitalism, which is considered to have been great. It affected the works of great scholars of the time, such as Adam Smith, who is mentioned to have been affected by the evolution of George Soros during the crisis of capitalism. 5 THE ASCENT OF MONEY Specific Offense Engaging in white-collar crime by different individuals who were in charge of running the monetary organs is explained as an offense that is punishable by law. In The Ascent of Money, Fergusson is clear that the effect of these cases is the panorama of neoliberal capitalism, which is believed to be what has had little investigations done on financial history. He, therefore, recommends the efforts by the finance department to take part in exercising democratic accountability to follow up in the cases and inquire about what caused the crisis. Prosecution of Offense By having applicable laws, Ferguson explains that the offenses should have been taken more seriously, having had the economy affected by the outcomes. No investigations have been done in looking at the causes of some of the losses in the money ascent. He explains that the happenings of these crimes disadvantaged the good traits from others who were delivering their duties with honesty and goodwill. With a lack of clarity in what caused these events, Ferguson calls for the need to have rules and regulations that can be used to prevent such happenings in the future. Others Victimization and Victim Psychology Many people became victims of the crisis, which is well explained by how some are even blameless about its causes. An example given is the International Monetary Fund (IMF), which is one of the organs that suffered from the events of these crimes in its response to the Asian Financial Crisis. The victim psychology was equally affected as Ferguson mentions that the policymakers were criticized for the events which affected them psychologically. THE ASCENT OF MONEY Moral Ambiguity and Societal Response Moral ambiguity can be associated with the book as there is a probability that the perpetrators were not aware of whether their actions were right or wrong. It can be expressed in The Ascent of Money were some of their decisions were unethical, but they still went ahead in engage in them. The societal response, on the other hand, is expressed in the book by looking at how Ferguson works on bringing society to the light of understanding how finance and money works. It is a way of encouraging them to be keen on responding to some of the critical matters that affect their economy under global financial institutions. 6 THE ASCENT OF MONEY 7 Illegal Conduct The act of engaging in fraudulent activities within the running of global institutions is considered an illegal act that should be punishable by lawful. The book looks at Ferguson’s research on moral decisions by managers where they are expected to engage in running the institutions well by encouraging valuable contributions in the companies and not shaking the financial positions of the companies. Punishment With the involvement of illegal conduct, Ferguson recommends legal action to be taken on the perpetrators who engage in such crimes. The role of the financial institutions, as explained in the book, should be building trust between the borrower and the lender. Here, Ferguson recommends that the managers should work on getting institutions to grow and enhance the wellness of their communities. In this case, proper rules and regulations are expressed as the action that should be taken by financial institutions to prevent falling in the same pitfalls in the future. Other Observations The Ascent of Money is described as essential reading for every individual as long as they rely on building a future by use of money. According to Ferguson, ignorance is seen as what caused a major financial crisis in the world's economy, which recommends from the use of strategic insights when it comes to money-making decisions. 8 THE ASCENT OF MONEY Reference The Ascent of Money: A Financial History of the World by Niall Ferguson 1 THE ASCENT OF MONEY BOOK The Ascent of Money Documentary Research Project Part II Leidy Perez Florida National University Prof. Georges De Schryver Financial Institution May 22, 2021 THE ASCENT OF MONEY BOOK 2 I found very interesting chapter 1 of the book “The Ascent of Money” by Niall Ferguson because in this first chapter he focused on the avarice. We can see how the money is important all societies, in the past of decades, from hunter to civilizations times. The world turn out in a slander place because the mechanics of an economy. However, some civilizations use the economy in different way, some of them still tie into each other and keep an important part in the global financial cycle. In this chapter also explained the point of how societies don’t use money because are focused on forced labor and the distressing amount of people dying because the violence over resources. Physical currency has been used since 600 BC in modern day in Turkey. Coins made with precious metals are associated with powerful rulers. During the time of Charlemagne, in the period of 768-814, there was a lack of silver, so during the Crusades, people tried to fix the monetary lack by robbery from Muslims as long as they were changing them to Christianity. History’s crusade to gather as much silver and gold as possible led to huge inflation across Europe. The increase in supply was making the value decrease. What they failed to understand is that money is only worth what someone else will give you for it. This relationship between money and people is seen in the emergence of loans. The borrower/lender relationship has existed as long as currency has, but loan sharks started to emerge in the early thirteenth century among minority groups. Loan sharks are known for charging extremely high interest rates and turning violent if they do not get their money back. However, loan sharks hold back economic development, so banking emerged. The Medici family legitimized the banking industry as they were the first to use legitimate book keeping and a diverse portfolio and they kept a one hundred percent gold reserve, which limited their credit. The Italian banking system became a model for other European nations. In 1924, John Keynes dismissed the gold standard, but it wasn’t until 1971 that the United States broke the link THE ASCENT OF MONEY BOOK 3 between money and precious metal. After the establishment of banks, the creation of the bond was an incredible advancement in the ascent of money In chapter two I found very interesting the way he explained why the bond market is so powerful and that it creates credibility for the government and holds the government responsible. The bond came in handy for the US government especially during the Civil War because it helped finance the war. During World War I, governments had to quickly raise money for the war, but this created a lot of inflation. After Germany was defeated, inflation greatly increased and there was a harsh drop in the currency rate. When inflation increases, the bond market usually falls. However, because goods are now made cheaper, inflation is better under control across the world. It seems that when there is a faulty political system, inflation follows consequently Chapter three was very interesting for me because this chapter is called "Blowing Bubbles." A great innovation to the business world was the joint stock LLC. This allowed individuals to pool resources without putting their liability at risk. This was made in attempt to end the liability issue that governments were going through when issuing bonds. This is why the stock market is so much more important in the USA and much more popular than the bond system through each state. John Law was the first to create a stock He learned stock market ins and outs, and attempted to merge the idea of an expanding company and the bank of England. Law tried this idea on France in 1716 after their war time. They needed a financial reboot. He created a private bank that distributed notes payable in gold for a 20 year period after they were sold. The injection of capital saved the French economy and centralized the debt so they could pay it off easier. He spread this idea overseas and became a major shareholder in Dutch and English trading companies, who collected revenue from tobacco trades. With popularity THE ASCENT OF MONEY BOOK 4 growing, Law printed more money and brought in more shareholders, which created an economic bubble, while supporting the French economy. England tried to do a similar bubble, but the company never fully took control of the bank which later increased the conditions of investment, eventually leading to a damaged market. This wasn’t the beginning for stock market crashing. In 1929, the USA and Germany both took a severe blow in the economy because of the stock market crash. This was the Great Depression, and nearly all banks lost their money, which cause all citizens to lose theirs, too. The cause of this depression couldn’t be pinpointed, but it had to do with the lull in between World Wars and, unemployment made it even worse, because no one was making their money back by working, but at the same time, companies weren't hiring because their business had lost shareholders, which at this time was the bank. It was a chain effect that was hard to get out of. The government had to later directly interfere with the economy to fix it, even though this was argued to be against Constitutional rights. In chapter four I found very interesting because he explained the return of risk. The question when building an economy always has to do with how people should save their money; financial security. Some say the state should provide relief, others say the people should be on their own. The USA has a little bit of both. The USA government is expected to give major financial help when natural disasters happen or if the economy goes into a shut down like in the depression. What came out of this concept is Welfare, Social Security, and Insurance, provided by companies, not the state. Private insurance agencies can charge different prices for different areas, depending on where you live or what your health is. This brought on more in depth forms of insurance like life, home, and auto, which all operate under the same concept. You pay a yearly fee and the damages are usually covered for you, or at least go to a certain extent. Hurricane Katrina is a good example of how insurance, especially private companies, can be bad. THE ASCENT OF MONEY BOOK 5 Private companies tried to throw the claims at the state saying the wind did the damage, but the state came right back in saying that the structures weren't built to withstand a storm, so it isn't state responsibility. Constant arguing went back and forth. Some people never got their money, others did. The effects of this issue still live on today. Most areas where storms are a possibility aren’t insurable anymore and some people won't see a full monetary return until 2044. Insurance is still a part of economy that is being worked on worldwide, because the rules are up for argument depending on a lot of variables. Finally, chapter five was very interesting also because he illustrated how finance and housing are link and how it came about. The need to buy our own house is drilled into our lives as early as childhood, it is expected of you. Banks are usually more than happy to get you into a house through their programs. The rate of housing distributed by the bank has increased 75% since 1959. After the depression, it sounded easier to listen to communist voices that said they would get everyone who was in the lower class into a house for a very small price, payed for by an increase in tax on the wealthy, which was payed to the banks. This system almost became a statement in the New Deal, which helped us out of the depression, but adding this was advised to FDR as to over the top for the situation. The Federal Mortgage Association issued bonds and bought the loans off some people's houses to help them afford it, which made loans cheaper and made the mortgage drop nearly 20%. Because of this, by 1960, 60% of the country owned their own house. However, there needed to be a way for the banks to be certain that they would get their loan money back, so the banks started issuing credit to their customers. This put people in a category based on your spending and other loans. If you made your payments on time and in full, the banks were more likely to give you a mortgage at a lower interest rate. This provided some safety for banks that were previously just giving out houses upon a mortgage filing. This gave THE ASCENT OF MONEY BOOK 6 incentive to the people to spend carefully and make their payments so they would get better rates when buying something big. This credit became usable with more big purchases like cars, boats, and even business purchases. 1 THE ASCENT OF MONEY BOOK The Ascent of Money Documentary Research Project Part I Leidy Perez Florida National University Prof. Georges De Schryver Financial Institution May 16th 2021 BOOK TITLE: The Ascent of Money NUMBER OF PAGES: 496 pages AUTHOR: Niall Ferguson THE ASCENT OF MONEY BOOK 2 PUBLISHER: Penguin Books (October 27, 2009) Synopsis of the book and purpose of the author The Ascent of Money book by Niall Ferguson portrays the financial crisis by looking at some of the secrets behind the journey of a historical phenomenon. Ferguson seeks to capture financial markets engaged in a series of activities within the human history of America by looking at some of the events that magnify on its values and weaknesses. Crime in the financial market is analyzed by using money as what expands on human actions and their involvement in making bad choices. Money is with this pointed out as the main element in the movie that has a direct effect on humans, where it is mentioned as having the ability to control how they react on things. The Ascent of Money begins with Ferguson discussing the ways that money is viewed as the root of all evil, and the way it factors into war and the march of progress. He looks at how credit and debt are as important to the rise of civilization as any other innovation, and the way the fluctuations of the market can lead to the rise and fall of ruling powers. A stock market bubble influenced the start of the French Revolution, for instance. He argues that financial markets are like a mirror to humanity. In the book, he presents his argument that money is now more important than ever. In his book, the author provides a historical look at the world's biggest financial events and the impact they had. According to Ferguson, this historical account will show you that finance is, in fact, the true foundation of human progress. 3 THE ASCENT OF MONEY BOOK Reference Rebel Mystic. (2013). The Ascent of Money: A Financial History of the World by Niall Ferguson Epsd 1 5 Full Documentary.