Globalization of our Money System

The last century has been marked by immense changes in our countries money system. Globalization and Catching-up In Transition Economics by Grzegorz Kolodko shows the effects globalization has had on our countries money systems. He talks about the increase in technology over time, and how it facilitates interactions between people all over the world. Kolodko then explains the invention of credit, and how this innovation changed the money system and revolutionized the economy.

My essay talks about how globalization made the evolution of our money system possible. The Author of The Consequences of Modernity, Anthony Giddens has an interesting perspective on the relationship between money systems and globalization. Giddens defines money as a symbolic token; by this he means a media of interchange, which can be circulated, and used by anyone who needs it. Additionally, Giddens also views money as debt. Specifically, “A basic transaction initiated when acknowledgements of debt can be substituted for commodities as such in the settlement of transactions.” (Giddens) The system mentioned above is comparable to bartering. Bartering is a system where people exchanged services and goods for other services and goods in return. Giddens also goes on to say that this debt based money system functions because of globalization. This is possible because, “One State is able to transform private debt transactions into a standard means of payment- in other words, to bring debt and credit in to balance in respect of an indefinite number of transactions.” (Giddens) This system is similar to today’s cash, and electronic money system. It functions because our country is globalized, and acts as one. Moreover the government regulates our money system. This insures debts are paid, and if the debts cannot be paid there person is compensated for what was lost. It also means that everything is kept in balance, which allows “an indefinite number of transactions” to take place. Furthermore, time and distance no longer affect transactions. Lastly, Giddens views on money systems, illustrate how globalization facilitated the evolution of our money system.

3 thoughts on “Globalization of our Money System

  1. I agree as you explain ‘The last century has been marked by immense changes in our countries money system’. If I think of MAC cards, Paypal, EFTs (electronic funds transfers) as opposed to waiting for paychecks in the mail to show up and checks to clear, I too am amazed. If Giddens idea of symbolic tokens is “media of interchange which can be passed around without regard to the specific characteristics of individuals or groups that handle them at any particular juncture” (Giddens 22). Do you think Giddens idea could come full circle if we were to exchange chickens, sheep and corn, in exchange for dollars, in exchange to buy milk and bread, essentially returning to medieval premodernity while still in modernity? Very intriguing post, thanks.

    Chris

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  2. This paper does into the idea of fiat currency too lightly, it doesn’t go beyond the abstract notions of what fiat currency is. “Giddens also goes on to say that this debt based money system functions because of globalization.” what aspects the endless printing or the use of a currency globally, the topic could go into better directions such as investigating the US Dollar’s history ad why is it used worldwide. Globalization has predecessors in many regards to things we have today, a more important question is how are these systems a result of modernity while keeping their predecessors at a distance?

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  3. I agree completely how globalization is the sole culprit for the evolution of our money systems. The diffusion of time and space leaves the door open for transactions to occur anywhere in the world. With the creation of electronic money, one simply just needs a credit card and has the power to buy anything he wants. The system also has its flaws as it has created a great deal of debt for individuals and our country as a whole. I then like how you bring Giddens into the conversation and relate his system of substituting debt for commodities in a settlement to bartering. They both interrelate since your trading off your debt, which you owe for something of value to hold yourself accountable, in turn bartering relates the exchange of goods for goods.

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