...There has been a revolution in US business practices. Several factors have combined to force significant change to the US economy, and the resultant changes on company production costs/techniques and location has forced a bifurcation of the workforce and the business community. The United States has been drawn into the world economy, and as such must compete globally for sales of its goods and services. So too, the labor force, once the highest paid and most respected in the world, has been forced to compete with lower-cost labor sources worldwide. Add the economic malaise of 2007-2008, and the years 2006-2010 reflect an economic upheaval never seen before, or likely, since. This exercise tracks the exchange rate between the US dollar and the Canadian dollar over that period, and , the author believes, tracks closely the macroeconomic conditions between the two countries during the selected period of 2006-2010. This paper will show that a review of economic history, followed by a review of the exchange rates for the fund, (symbol FXC), will show a close correlation. 2006-2007 saw the end of boom economics for many Americans. Loose credit policies allowed stock and real estate prices to expand rapidly. Real estate speculators would execute options on new condominiums, only to flip those contracts to another purchaser for profit before the property was built. Several forces combined to threaten collapse of the US financial markets, from rogue traders making huge bets that threatened...
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...Gianlombardo May 3, 2014 History of American Currency When we go to store and buy a soda, or a candy bar, what do you use to pay for it? Did you use change? How about dollar bills? Did you use your debit or credit card? Money is a medium of exchange for people to use to trade things of value. When we think of currency, most people will generally just think of paper money, and they are right. However, in today’s world, the term currency extends much further than just paper money; it includes coins, bonds, checks, and even some types of loan papers. The earliest days of American currency is typically referred to as a history of a mixture of types of money. All the way to the beginning of when the settlers first came over to the States, shells and nails were used to trade for other goods that they may need. This made these shells and nails a kind of coinage. Back in the colonial days, cons were the most common form of exchange. As early as the 1650’s, British coins were being minted on American soil but colonists usually did not trust them. In fact, colonists trusted the Spanish dollar which was referred to as the Real. There were also forms of paper money back in the colonial days. However this paper money was typically traded for coins because of the trust issue. Currency in America has been an ever evolving thing even since the colonial days. The way currency has been made and the way it is used has changed drastically over the years. Before currency was even adopted, people...
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...or bank. But, it is suitable for gold dinar to replace the current fiat money that already in circulation for more than a decade in the market? Even though the Gold Dinar is not a legal tender, the bimetallic gold and silver system has been used as a medium of currencies since the Byzantium era before it ended in the year 1875 when the fiat money was introduced to replace the gold and silver coins from the monetary system. As we know, gold dinar has been around us for a long decade. History shown that gold dinar is a very effective medium of exchange for a long time. But why all the country nowadays uses paper money? Paper money had such a bad reputation in the economy but still most of the banks use this type of money for their everyday transaction. There must be a reason why paper money holds a very strong influence in the current economy although it was devastating when we use it. But throughout the history, gold dinar also had shown an issue of its own. A gold standard had a breakdown in 1931 and the world witness a era of freely fluctuating exchange rates between national currencies. The International Monetary Fund (IMF) was established in 1946 to make arrangements for fixing exchange rates among national currencies with some measure of flexibility and help them tied over their balance of payments difficulties. The return to gold standard was not considered desirable, for a variety of reasons. After the 1997-98 financial crisis Malaysia was in particular searching for...
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...Gregory D. Johnson HIST102 – American History since 1877 April 26, 2014 President Frankin D Roosevelt is most commonly remembered for signing into law the Social Security Act which was ratified August 14, 1935. He was also burdened with the very difficult task of trying to stabilize a economy and bring the nation out of what would later be known as the longest depression in United States history lasting from 1929 until 1941, much of his Presidency. One controversial decision FDR made was to remove the US from the Gold Standard which he did in June of 1933.1 The Gold Standard is a monetary system in which currency is backed by gold. The decision to remove the United States from the Gold Standard came as a result of the tremendous economic hardship of the Great Depression, which Americans had already been enduring the symptoms of for several years before FDR took office in 1932.2 The Gold Standard was not plausible according to many economic experts because with the Depression came staggering unemployment numbers as high as forty percent in some parts. Nearly 13 million people were out of work when Roosevelt took office.3 Whitehouse.gov Many people lived in extremely crowded living arrangements especially people of color. In 1913 the Federal Reserve was created, it was suppose to alleviate the fears of American account holders and prevent run on from banks in two ways: It could provide a vehicle for banks to borrow cash during times of stringency; therefore, satisfying...
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...Bitcoin is a virtual currency. It doesn't exist in the kind of physical form that the currency & coin we're used to exist in. It doesn't even exist in a form as physical as Monopoly money. It's electrons - not molecules. But consider how much cash you personally handle. You get a paycheck that you take to the bank - or it's autodeposited without you even seeing the paper that it's not printed on. You then use a debit card (or a checkbook, if you're old school) to access those funds. At best, you see 10% of it in a cash form in your pocket or in your pocketbook. So, it turns out that 90% of the funds that you manage are virtual - electrons in a spreadsheet or database. But wait - those are U.S. funds (or those of whatever country you hail from), safe in the bank and guaranteed by the full faith of the FDIC up to about $250K per account, right? Well, not exactly. Your financial institution may only required to keep 10% of its deposits on deposit. In some cases, it's less. It lends the rest of your money out to other people for up to 30 years. It charges them for the loan, and charges you for the privilege of letting them lend it out. How does money get created? Your bank gets to create money by lending it out....
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...(iv) Your country is in a recession. You feel that a policy of exchange rate depreciation will stimulate aggregate demand and bring the country out of the recession. This essay examines the effectiveness of using exchange rate depreciation to stimulate aggregate demand in order to bring a fictional country, Australand, out of recession. It will explain how a policy of exchange rate depreciation can increase aggregate demand and how this will stimulate economic activity and bring Australand out of recession. The process of depreciating the currency will be explained as well as possible ramifications of this policy. Alternative options to increase aggregate demand will also be explored. A recession is technically when an economy has experienced two successive quarters of negative gross domestic product (GDP) growth. For this to happen the total amount of goods and services produced by a country must contract on a quarter by quarter basis for six months or more. (http://news.bbc.co.uk/2/hi/business/7495340.stm) It therefore stands to reason that by increasing the total amount of goods and services Australand produces, known as aggregate output, will bring Australand out of recession. Blanchard and Sheen (2009 p39) state that in the short run the main determinent of aggregate output is demand and that changes in demand can lead to an increase in output. Aggregate demand is the total quantity demanded for output at a given price level and it is therefore necessary to...
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...INTRODUCTION The history has seen changes, rises and falls of an international reserve currency, emerging with an increased role of sterling in the 19th century and replaced by U.S. dollar in the 20th century (Eichengreen, 2006; Flandreau and Jobst, 2006). The emergence of euro has influenced a lot the whole world in many aspects and it is not a doubt that its introduction improved the functioning of euro financial markets, especially if we look from the perspective of transaction costs and country specific economic risks (Freix, 2004). It is the fact that euro is rapidly approaching U.S. dollar in terms of liquidity and breadth of euro financial markets. But at this level U.S. dollar is still maintaining its leading role on the international financial markets, maybe because of its greater financial market size or the inertia in the use of financial resources. The objective of this paper is to analyze different aspects of challenges U.S. dollar faces today. What are the chances for euro to surpass U.S. dollar and to become the leading currency. The first section of the paper gives a brief history about an international currency development, the second and the basic part gives some theoretical aspects and reviews the ideas of different economists about the challenges dollar face. All these discussion leads to the final part - conclusion. HISTORY Before the few decades of World War I, international gold standard emerged. It was gold bullion and not a gold coin standard, which...
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...The US Banking System: Origin, Development, and Regulation by Richard Sylla Currency note of one shilling, six pence, printed in the colony of New Jersey in 1776. (Gilder Lehrman Collection) Banks are among the oldest businesses in American history—the Bank of New York, for example, was founded in 1784, and as the recently renamed Bank of New York Mellon it had its 225th anniversary in 2009. The banking system is one of the oldest, largest, and most important of our industries. Most adult Americans deal with banks, often on a fairly regular basis. Nonetheless, banks and banking seem rather mysterious. What do banks do? Why have they for so long been an integral part of our economy? Why, as in the financial crisis that commenced in 2007, do banks every so often get into trouble and create serious problems for the country? Banks have two important economic functions. First, they operate a payments system, and a modern economy cannot function well without an efficient payments system. We make most of our payments by writing checks, swiping credit cards issued by banks or tied to them, and by paying bills via online banking. Most of the money stock of the country is in fact bank money; the rest of the currency is “legal tender” issued by the government, namely Federal Reserve Notes and coins. We have confidence in bank money because we can exchange it at the bank or an ATM for legal tender. Banks are obligated to hold reserves of legal tender to make these exchanges when we...
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...effects can produce oil prices increase? a. Brief history and evolution in oil markets b. Causes of the increment in oil prices B. Colombia on the two sides of oil prices rise effects c. Brief description of effects d. Brief history of petroleum industry Body I. International context a. Global situation of oil prices b. Volatility and Dutch disease II. Colombia Case c. analysis of effects in the macroeconomic view: inflation and currency appreciation Conclusion A. Which are the solutions to control the harmful effects of oil prices increase B. What strategies are implementing in Colombia to deal with the effects of oil prices increase. Thesis statement Since the 1970s the world hadn`t experienced an oil increase like the one that is happening these days where many countries are concerned about the effects that this phenomenon can bring to their economies. As an oil exporting country, Colombia has to deal with a lot of challenge in order to transform all the revenues from petroleum into benefits to their society. However there are some effects that can bring some instability to this small economy, especially the one that international markets create a speculative bubble which can end in the Dutch disease. ‘The Dutch disease is a major market failure originating in the existence of cheap and abundant natural or human resources that keep the currency of a country overvalued for an undetermined period of time;...
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...value of the goods was expressed in terms of other goods. This type of trade was called as the Barter System. The limitations of this system of trade paved the path for the introduction of ‘Money’and Money gave birth to the need to exchange different currency:- Foreign Currency trading. The origin of Foreign Exchange (Forex) trading traces its history to centuries ago. The Babylonians are credited with the first use of paper notes and receipts. However, during this phase of history Speculation hardly ever happened. During the middle ages, the introduction of a paper form of governmental I.O.U. gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion.These paper bills represented transferable third-party payments of funds, making foreign currency exchange trading much easier for merchants and traders and causing these regional economies to flourish. These I.O.U’s have now become the basis of today's modern currencies. From its infantile stages during the Middle Ages to First World war, the forex markets were relatively stable and without much speculative activity. During this phase, most Central banks supported their currencies with convertibility to gold. This standard had a major weakness called the ‘boom-bust’ pattern. As an economy strengthened (Boom), it would import a great deal from out of the country until it ran down its gold reserves required to support its money; as a result, the money supply would diminish, interest...
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...country with a history of a major war and bright future ahead for its people. The country’s GDP is on a constant growth with $97.18Billion in 2009 (World Bank) to $102Billion in 2010 (Bureau of East Asian). All this growth is thanks to many foreign investments in domestic enterprises, especially “Green” technology. Vietnam is currently exporting nearly $15 billion of commodities to the US and importing nearly $3.5 billion from the US (VIR). The country’s export a total of $71.6 billion in 2010 with principal exports of “crude oil, garments/textiles, footwear, fishery and seafood products, rice (world’s second-largest exporter), pepper (spice; world’s largest exporter), wood products, coffee, rubber, and handicrafts” (Bureau of East Asian). Vietnam has major export partners, including the US, EU, Japan, China, and South Korea. Imports in Vietnam are currently at $84 billion, mainly machinery, oil and gas, iron and steel, garment materials, plastics. Vietnam major import partners include China, Japan, Taiwan, South Korea, and the EU (Bureau of East Asian). The exchange rate for the Vietnamese money, called Dong, is continuing to suffer from inflation. Vietnam ended 2010 with an inflation rate of 9.19% and ended the first quarter of 2011 with an inflation rate of 12.79% (Bureau of East Asian). This is apparent when comparing the Dong to US dollar. This time last year, the Dong was at 19,450 VND to 1 USD to October 5th, 2011 rate of 20,804 VND to 1 USD (US Dollar Currency Exchange)...
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...The History of Money THE HISTORY OF MONEY From Its Origins to Our Time This was the final draft of the English text of "Une Histoire de l’Argent: des origines à nos jours" - www.autrement.com/ouvrages.php?ouv=2746710306 - published by Autrement in Paris in November 2007 with a few minor changes in the final French text. I am very grateful to Philippe Godard - www.autrement.com/collections.php?col=277 for his editorial support, and to Autrement for allowing me to make the English version accessible here. INTRODUCTION This book is about the history of money: how did it begin? how has it evolved to the present day? what has it enabled humans to achieve? and why do so many people in the world today have problems with it and suffer from the way it works? The book is also about the future: how may money develop further? how might we want it to develop? Humans are the only creatures that use money. Animals and birds and insects and fishes and plants exist together in the world without it. But in human societies the earning and spending of money has become one of the most important ways we connect with one another. Most of us have to have money. We need to get enough coming in to match what we need to pay out. We all need to understand at least that much about money. But there is more to it than that. Over the centuries, money has reflected changes in politics and government, in economic life and power, in science and technology, in religious and other cultural beliefs, in family and...
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...“not put all our eggs in one basket”, “have stocks, bonds, cash, and CD’s”, etc. This is the standard route to financial success and I have not come across many people who would argue that position. As a matter of fact, I would not argue that we should not diversify. Actually, my point is just the opposite. We need to have more diversity. You see, the question begs, just how diverse are all of those things? Do they not all depend on one sole currency? If I were to sell my stocks, I would get dollars in return. When I cash in my bonds, I will get dollars back. When my CD’s reach maturity, what do I get out of it? You guessed it, dollars. This points to the plain and simple fact, that we need more diversity outside of the U.S. dollar. Precious metals and foreign currencies make that possible. James Cooper wrote in the “Business Outlook”, “Since the greenback's peak in early 2002, it has dropped 35% against the euro, 28% vs. a trade-weighted basket of major currencies, and 18% vs. the currencies of all countries the U.S. does business with.” He then goes on to explain a very valid concern, “…the huge U.S. current account deficit, that gap, comprising mainly the U.S. trade deficit and some other financial transactions, has ballooned to an annual rate of just over $900 billion, or 6.8% of gross domestic product. At that level, the U.S. must attract some $75 billion in foreign financing...
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...economy Numismatics is the scientific study of money and its history in all its varied forms. Many items have been used as commodity money such as naturally scarce precious metals, cowry shells, barley, beads etc., as well as many other things that are thought of as having value. Modern money (and most ancient money) is essentially a token — in other words, an abstraction. Paper currency is perhaps the most common type of physical money today. However, objects of gold or silver present many of money's essential properties. Non-monetary exchange: barter and gift Contrary to popular conception, there is no evidence of a society or economy that relied primarily on barter. Instead, non-monetary societies operated largely along the principles of gift economics. When barter did in fact occur, it was usually between either complete strangers or would-be enemies. In a gift economy, valuable goods and services are regularly given without any explicit agreement for immediate or future rewards (i.e. there is no formal quid pro quo).[3]Ideally, simultaneous or recurring giving serves to circulate and redistribute valuables within the community. There are various social theories concerning gift economies. Some consider the gifts to be a form of reciprocal altruism. Another interpretation is that social status is awarded in return for the 'gifts'.[4] Consider for example, the sharing of food in some hunter-gatherer societies, where food-sharing is a safeguard against the...
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...or service, and one who is expecting a predetermined amount of money for the product. The purchaser expects to pay the same dollar amount whether they are at home using their currency or abroad exchanging their home currency for the foreign currency. In a perfect world this would prove the Purchase Power Parity that we will discuss in this paper. There is great history of the evolution of the currency, and how the price of that currency has affected price. These changes will be explored to see if there are any correlations that we can show. In this paper we will attempt to test the correlation between the increase and decrease in price against the increase and decrease of the value of the currency for a specific country. II. Purchase Power Parity Purchase Power Parity can be defined as the law of one price where the identical product would sell for the same price no matter the location. The PPP is applying that law of one price to currency. Purchase Power Parity is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency. Gustav Cassel developed this theory, in its current form, in 1918. The PPP only works when you can price on goods where the product is the same no matter the location of the...
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