Money is the root of all evil, as the famous saying goes, but is money really evil or are we denying that it has really contributed to the growth of the world’s economy and finances. Money turns bad when excess greed captures the human imagination, but it is a blessing if used wisely and wisely.
History is full of stories about money in which the lust for it can lead to the greatest financial disasters, but the good use of it can generate economic development. The Sumerians used clay tablets and other devices as a way to facilitate trade and sometimes as forward contracts thousands of years earlier. This facilitated commerce, trade and business. This is a good example of how money in the form of tablets can help business development. As the story goes, it was only the greed of money that caused the decline of the Roman civilization in which looters led crusades for gold and other valuable items that wiped the Roman Empire from its glory.
Trade in the medieval period required credit to drive long trips to far corners of the world, although banks in the early stages of development gave credit to merchants in exchange for interest on them. In The Merchant of Venice, Shakespeare creates a beautiful moneylender character, the villain who demands the merchant’s friend as ransom to give him a loan. If the merchant’s journey was successful, then all is well, otherwise all is not well. So, in a way, this banking system that flourished off the shores of Italy facilitated world trade brought the world together and brought about major changes in the world’s political and economic turmoil. Money here was certainly important in this regard.
Wars fought like the Napoleonic wars or the interstate wars in Europe or the civil war in North America required money. But where the money came from, it came from government-issued bonds. or other third parties. So money financed wars and caused political unrest. It was the lust for money and power that led Napoleon to wage war throughout Europe and was one of the factors in the wars.
European countries such as Great Britain, France, Portugal, and the Netherlands had merchants and a government. that they had a greed for money that led them to undertake sea voyages far beyond their territories. The large profits that merchants can make by importing cotton, spices, and other valuable products gave them the incentive to establish their private companies in the new colonies. The fact that these Companies increased their political strength, which would help them conduct trade at will, was remarkable in the sense that this led to colonization and imperialism. So money was the reason or the real force behind this imperialism of the western countries in Africa and Asia. But at the same time, this was just a colonization that facilitated the spread of science, western education, and other liberal ideas to the rest of the world. So money was a downfall and a blessing to the world at the same time.
Can’t forget about the Great Depression of 1929, the euphoria surrounding the stock market led investors to over-buy the market and sparked the boom. But weak economic development led to the whole market crash that lasted for several years, but it was a harbinger of a new economy in the sense that a new economic policy emerged. Keynes, with his theory of employment and wages, presented his views for the government to act and give fiscal stimulus. The greed for money, at the same time, led the depression to sound the alarm for economists and policy makers to take the necessary steps and, at the same time, formulate sound economic policies that will prove to be a guiding policy for decades to come. to tame booms and recessions. . Then Money has it all.
Much money is poison, since a celebrity goes beyond anything it is a poison, but when it is in a limited quantity it is an asset. During the 1970s oil prices rose to staggering levels that caused inflation, there were no strong policies to control this inflation. Sooner, the logic of Milton’s freedman that Irving Fisher’s equation is good MV = PQ, so if the money supply S increases, prices P increase keeping all other things V the velocity of money and Q the Constant GDP. So he asked a central office for a reserve bank to formulate interest rates so that the money supply is under control, which in turn can control price levels to manageable levels. Thus was born monetary policy. So Money the evil led us to a new theory of surveillance policy, another addition to the lexicon of economics and finance. But malignant inflation – that is, excess money in the economy – appeared regularly, so central bank policy moved frequently on interest rates – a tough task that any governor of a reserve bank will ask. .
Towards the turn of the century, the dotcom bubble led investors to invest heavily in Internet companies. The euphoria surrounding the companies was great and investors who made a lot of money in a short time invested heavily in these companies. But they forgot that they are betting on a longer period of growth and not on short-term growth. Their lust led to financial disaster and loss of money. The same greed for money created the housing bubble in the early 21st century. The banks, to offset their risks in the payment of the mortgage loans, sold these loans to third parties called Sponsored Private Vehicles. These Sponsored Private Vehicles would create derivatives that would be sold to investors, taking interest differential. Therefore, profit motives led these privately sponsored vehicles to create derivatives that, as Warren Buffet put it, were weapons of mass financial destruction. They acted as catalysts for the collapse of the entire banking system. Rising house prices generated greed among investors to refinance loans and banks, thinking they were out of the danger zone, continued to lend money. Thus was born the real estate bubble. Once the subprime mortgages were in default, this created a kind of panic among investors of losing money, so they withdrew their money from the banks. The major investment banks went bankrupt and the world economy came to a standstill.
Money is ultimately the root of all evil, be it politically, socially or economically, the love of money changed the entire landscape of human civilization, but at the same time development would have been impossible without money. Money was the King, it is the King and it will be the King of human beings. Lust is lust and humans cannot escape the lust for money as it is in their very nature.