A Brief History of Gold

Gold History

Gold has had an immense impact on humanity. It has caused the fall of nations, pushed the Age of Discovery, made some men rich and others poor. It is something that we all cherish and we all want more of it. It has a bloody history at times and as Led Zeppelin once said, all that glitters is not gold. Gold is amazing, beautiful and valuable but it is also something that has helped to drive our civilization in various good and bad directions.

Archaeologists have dated gold artifacts to as far back as 4,000 BC in the Balkans but most estimates of when gold began to be used by artisans goes back a few thousand years further than that. Various items like golden hats and the Nebra disk have been found in Central Europe since around 3,000 BC.

The Ancient Egyptians were in love with gold and gold was quite common around the Nile. King Tushratta of Mitanni said that gold was more plentiful than dirt in Egypt and it was in Egypt where the first gold production and mining began. Even the world’s oldest map shows a plan for a gold mine in it, proving the power gold has had on our civilization for the past few thousand years. The Egyptians would get gold through methods like fire-setting and they set up gold mines all along the Red Sea in the current location of Saudi Arabia.

Gold was mentioned within the Bible several times, including in the Book of Revelations where New Jerusalem is described as a city where the streets are made of pure gold. Gold began to appear in more than decorative items by the sixth and fifth century BC, especially in China where a square gold coin was issued. While the Egyptians may have been the first to mine gold, the Romans were the ones who really turned it into a mass-production method. Using hydraulic mining methods in Spain from 25 BC onwards and in Romania from 150 AD onwards, the Romans mined vast amounts of gold from the Earth. One of the largest mines that the Romans had was at Las Medulas in Spain, where seven aqueducts fed water into the mine to help the Romans get at the gold.

Over 1,000 years later, the European exploration of the Americas would be fueled by the quest for gold. Gold was very common in South and Central America, so much so that the Aztec called gold “god excrement” because it was a product of the gods. Sadly, the large amount of gold and the gifts of gold for the Spanish conquistadors only fuelled their lust for more. Gold was a big reason why the Aztec Empire fell and if it was not for gold, world history may have been very different.

In the 19th century, various gold rushes helped create some of the most famous cities in the world including San Francisco.

These days, while platinum metals are usually worth more than gold, it is still widely regarded as the most desirable of precious metals. For centuries it was the standard of currencies around the world and even today it is the symbol of purity, royalty and prestige.

Today, gold is mined on an incredible scale and 75 percent of all the gold ever produced was extracted in the past 100 years. Gold is so valuable that much of the gold mined throughout history is still in use, simply recast into different shapes and products by subsequent generations.

It is estimated that some 170,000 tons of gold are now available above ground and if we were to take all the gold ever refined it would form a cube that is only 66 feet on each side.

What Is Micro and Macro Economics?

Difference Between Macro and Micro Economics

First Published: ADawnJournal.com May 16, 2010

In our day-to-day lives, the news will often mention the concept of microeconomics and macroeconomics. These two schools of economics are not as complicated as some people believe, but the concepts are extremely important for the economy of the planet. So, why not learn about microeconomics and macroeconomics? Here are some things for you to learn about these interesting economic policies. Before we start, here are some main ingredients of Micro and Macro Economics – Microeconomics: The Law of Supply, The Law of Demand, Opportunity Cost etc. Macroeconomics: Monetary policy, Fiscal Policy, Gross Domestic Product, Consumer Price Index, Unemployment, Inflation etc .

Microeconomics

Microeconomics is a branch of economics in which there is the study of how the individual parts of the economy, made up of households and firms, make decisions in order to allocate a limited amount of resources. These decisions are usually done in markets where goods and services are being bought and sold.  Microeconomics examines how all these decisions on the individual part have an impact on the supply and demand of goods, which in turn determine price and which itself determines the supply and demand of these goods and services.

Microeconomics is in contrast of macroeconomics, which looks at the total of economic activity rather than the individual parts of the economy. Microeconomics is not just about how individual parts affect the economy, but it is also about the effects of economic policies like taxation on the economy. Microeconomics also has the goal of analyzing market mechanisms in order to establish prices among goods and services and to allocate limited resources through alternative uses. Market failure is also analyzed through microeconomics, which is when markets do not produce efficient results, which allows microeconomics to describe the conditions that are needed to create the concept of perfect competition. Some places of study for microeconomics include:

·   General equilibrium

·   Asymmetric information

·   Uncertainty choices

·   Game theory

·   Elasticity of products

Under microeconomics, there are four categories in which a firm’s profit may be considered since it is assumed that all firms are following a decision making process that is rational and will produce the maximum profit output.

1.   When a firm has an average total cost that is less than the price of each additional product, then the firm is said to be making an economic profit. In this, the economic profit is equal to the quantity of the output when it is multiplied by the difference between the total cost and the price.

2.   When the firm’s economic profit is equal to zero, which occurs when the average total cost equals the price of the product or service, then the firm is making a normal profit.

3.   If the price is between the average total cost and the average variable cost, then the firm is in loss-minimizing condition. The firm produces, but if the firm stops producing then its loss would be larger. Firms continue production to offset the variable cost.

4.   When the price is below the average variable cost, the firm is in the shutdown condition. Losses are therefore minimized by not producing anything. The reason for this is that production would not generate any returns that would be large enough to offset the fixed costs and a portion of the variable cost.

Macroeconomics

In contrast to microeconomics, macroeconomics deals with the performance, behaviour, decision-making and structure of the entire economy. This can be the national economy, the regional economy, or even the world economy. Typically, macroeconomics will look at GDP, unemployment rates and price indexes to determine how the economy is functioning. Macroeconomists will create models as well that look at the relationships between:

1.   National income

2.   Output

3.   Consumption

4.   Inflation

5.   Unemployment

6.   Savings

7.   International trade

8.   International finance

9.   Investments

Macroeconomics, by definition, is very broad in its scope and study, but there are two areas where macroeconomists will research. These are the attempt to understand the causes and consequences of short-run fluctuations within a business cycle and the attempt to understand the determinants of the increases in national income.

Macroeconomics will help prevent depressions and recessions by allowing governments to make adjustments through changes within the macroeconomic policies. These policies are typically the fiscal policy and monetary policy of the country.

Within macroeconomics, there are two primary schools of thought; Keynesian tradition and neoclassical tradition.

·   Keynesian economics is a theory that was essentially created by the economist John Maynard Keynes. Through this policy, it is believed that fluctuations within the business cycle can be reduced through fiscal policies where the government spends less or more, and the monetary policy. Early Keynesian economist supporters wanted the regular use of policy to stabilize the economy of capitalist countries. Currently, in what is called Post-Keynesian Economics, there is emphasize on the importance of demand in the long run, and the role of uncertainty, preference and liquidity of the economy.

·   Neoclassical tradition challenges Keynesian tradition to ground the theory of macroeconomics in microeconomics. With this type of macroeconomics, the main policy difference is the increased focus that is put on monetary policy, like the money supply of the country and the interest rates. It was during the 1970s that this school of thought emerged.

There is one more underused form of macroeconomics school of thoughts is monetarism, which was created by Milton Friedman which says that inflation is always a monetary phenomenon. It does not include the concept of fiscal policy as it is the belief of supporters of monetarism that fiscal policy crowds out the private sector. Monetarism does not combat inflation or deflation through active demand management.

Macroeconomics and microeconomics help to influence the economy of countries around the world and many economists are not only divided between the two concepts, but the schools of thoughts within each. However, whether you understand macroeconomics and microeconomics, or you have trouble with the concept, both policies have a big impact on our lives and the economy of countries like the United States.

While there are many things to understand within economics, but if you have to choose two things to research and learn about it should be macroeconomics and microeconomics.

What Is The World Bank

The World Bank

One of the most important financial institutions in the world, if not the most important, is the World Bank. The World Bank is an international financial institution that provides leveraged loans to developing countries to help fund capital programs. Through the World Bank, the expressed goal of reducing poverty is worked towards.

Many people confuse the World Bank with the World Bank Group. The World Bank is made up of the International Bank for Reconstruction and Development and the International Development Association, while the World Bank Group is made up of those two organizations, as well as the International Finance Corporation, Multilateral Investment Guarantee Agency and the International Center for Settlement of Investment Disputes.

The World Bank was created in 1944 at the Bretton Woods Conference, which was the same conference where the International Monetary Fund was created. Like the IMF, the World Bank is headquartered in the United States. One interesting note is that while the IMF is traditionally led by a European, the World Bank by custom is always led by an American. The first country to be selected for World Bank aid was France, while Poland and Chile were rejected. The first loan was for $987 million, roughly half of what was originally requested and this was under strict conditions. The World Bank then monitored the use of these funds and it was required by the French government to provide a balanced budget and a plan for repayment to the World Bank. In addition, the United States required that the French government remove any communist elements within its cabinet in order to qualify for the loan. France, which had been decimated by the Second World War, complied.

The World Bank has set forward five factors that are necessary for economic growth within a country, which allows them to help countries improve their financial standing and the standard of living of the country’s citizens. These factors are:

1.   Build capacity to strengthen governments.

2.   Create infrastructure to implement justice systems that aid business and protect the rights of individuals and their property.

3.   Develop financial systems that are strong and can handle tough economic times through concepts like corporate ventures and micro-credit.

4.   Combat corruption by helping countries eradicate it within their borders.

5.   Research and train countries and their citizens, while providing the opportunity for citizens of these countries to get an education.

The World Bank has decided that it would try and reach some very ambition goals by 2015 in order to help make the world a better place. These goals have helped to improve the image of the World Bank from just an international bank, into an organization that is dedicated to making the world a better place. The goals set out by the World Bank for 2015 are:

·   Eradicate Extreme Poverty/Hunger

·   Universal Primary Education

·   Promote Gender Equality

·   Reduce Child Mortality

·   Improve Maternal Health

·   Combat the Spread of Diseases

·   Ensure Environmental Sustainability

·   Develop Global Partnership

Thanks to the World Bank, things are improving on many fronts.

These policies and goals are being pushed by the main voting powers of the World Bank. In 2010, the World Bank revised its voting system to help give developing countries more of a say in the decisions of the organization. Currently the voting powers of the World Bank are split as follows:

1.   United States:  15.85 percent

2.   Japan:  6.84 percent

3.   China:   4.42 percent

4.   Germany:  4.00 percent

5.   France:  3.75 percent

6.   United Kingdom: 3.75 percent

7.   Other members: 61.39 percent

Under the reforms in 2010, countries like Brazil, India, South Korea and Mexico saw their voting power increase. Many developed countries lost voting power while Russia did not see a change in its voting power.

Economics 101 - India

The Economy of India 101

First Published: June 19, 2010 ADawnJournal.com

India is a growing giant, just like China to the north and that has many investors looking at India as a possibility for investment. However, many do not know much about India, nor it’s economy. To help, here are some things that you should know about the economy of India, a growing giant of Southeast Asia.

First of all, the economy of India is the 11th largest in the world and moving up fast. In addition, it has the fourth-largest economy based on the purchasing power parity. The economy of India has gone through many changes, and it grew slowly until the 1990s when the economy shifted based on reforms. As a result, with vast human resources and a massive amount of resources, most economists feel that by 2020, India will have one of the most powerful economies on the entire planet.

From independence in 1947, to 1991, the economy of India was one of protectionism, public ownership, extensive regulation, massive amounts of corruption and very slow growth. However, the liberalization of the economy in 1991 has changed things dramatically. Now, the economy is more of a market-based economy, which has caused many economic booms for the country since then. India now has one of the fastest growing economies on the planet, putting it on par for growth with its northern neighbour; China. While the 2009 Economic Crisis did cause a slow down, it only slowed the economy down to a growth rate of 6.1 percent, which is still excellent.

India’s economy is based largely on the service industry, which accounts for 62.5 percent of the country’s GDP, while agriculture and industry make up 17.5 percent and 20 percent. The labour force of the country is truly massive, pushing 500,000,000 people, which is more than nearly all the countries of the world have themselves, minus China, which has a larger population.

While India does have a growing economy, that puts it 11th in the world, the per capita income of the country is only $1,030, which puts it 139th on Earth. In addition, it’s per capita of $2,940 ranks 128th in the world. As of 2007, the country accounts for 1.5 percent of the entire trade of the world. In 2006, the last year for figures, the merchandise trade, which includes both exports and imports, was $294 billion. The service trade exports and imports are valued at $143, which puts the total import and export amounts of the country at $437 billion, which is 72 percent higher than the $253 billion the country had only two years previously. Trade continues to grow as an income source for the country, from six percent in 1985 to 24 percent in 2006.

India is a country on the grow, and that has many investors looking to it as a place to invest in the future, as the country makes more and more in the coming years. While there are still some problems to work out, the country is clearly on the right track.

What Is GDP (Gross Domestic Product)?

GDP Definition

First Published: ADawnJournal.com March 20, 2010

Something that is vitally important for a country, and for the citizens of that country, is the gross domestic product, or GDP. The GDP is a basic measure of the health of a country’s economy because it is a measure of the overall economic output of that country. Similar to the profits of a company, the GDP shows whether or not a country is making money.

The GDP is essentially the market value of all the goods and services that are made within a country during one year and the higher the GDP, the higher the standard of living of that country.

In order to determine the GDP of a country, there are three different ways in which this can be done.

1.   The income approach

2.   The product/output approach

3.   The expenditure approach

The income approach works on the principle of having all the income of the producers in the country being equal the value of their products and the GDP is found by adding together all of the producers’ incomes.

The product approach is the most widely used of the approaches and it takes the sum of all enterprises to arrive at the GDP total for a country.

The expenditure approach uses the principle that products must be bought, so the value of a product must be equal to the expenditures of people when they buy items. This is not often used as an approach for GDP.

Standard of Living

As was mentioned earlier, the GDP of a country is tied closely with the standard of living of that country. While GDP per capita is not a measure of standard of living, it is an indicator of how the citizens of a country are doing financially. The better they are doing financially, the better the standard of living because they can buy more things to live on.

It is also important to note that the GDP per capita is not a measure of the personal income of a country’s citizens. It is possible for a GDP to increase while the income of the majority of the citizens in a country does not change by much, or may even go down. This has happened in the United States where during the 1990s, the income of the citizens went up by less than a percent, but the GDP went up by over three percent.

The biggest advantage of having a GDP per capita as an indicator of the standard of living of the citizens of a country is that it can be measured on a regular basis, often every year, or even every four months.

Of course, there is a disadvantage to using this method to determine standard of living and that is the fact that GDP per capita is not a measure of the standard of living, it is the measure of the economic health and activity of a country. An example of this is a country that can export 100 percent of its production, import nothing because it does not need to and that country will have a high GDP, but it will have a poor standard of living.

Real GDP and Nominal GDP

Real GDP is GDP in dollars that has not changed. This is usually done by taking the prices of a specific or base year. Read GDP is also referred as “constant dollar GDP”, “inflation protected GDP”, “constant price GDP” etc.

Nominal GDP is which has not been adjusted for price changes or inflation. Nominal GDP shows GDP in today’s or current prices. Nominal GDP may increase without increased economic output due to price increases.

The Highest GDPs on Earth

The world’s GDP is $60,971,477,000,000, which is $60.9 trillion, and of that, the European Union accounts for $18.3 trillion and the United States accounts for $14.4 trillion. Added together, the EU and the USA account for almost half of the world’s GDP. In terms of countries, not political groups like the EU, the United States has the highest GDP on Earth. The next highest is $10 trillion less, with Japan bringing in $4.9 trillion.

The top ten for GDP is as follows:

1.   United States   $14.4 trillion

2.   Japan    $4.9 trillion

3.   China    $4.3 trillion

4.   Germany   $3.6 trillion

5.   France   $2.8 trillion

6.   UK    $2.6 trillion

7.   Italy    $2.3 trillion

8.   Russia   $1.6 trillion

9.   Spain    $1.6 trillion

10.   Brazil    $1.5 trillion

The Lowest GDPs on Earth

Of course, there are plenty of countries that do not make much money in terms of GDP, and many of these countries make less in a year than some companies, and some of the richest people on Earth.

The bottom ten for GDP is as follows:

1.   Kiribati  $137 million

2.   Sao Tome  $176 million

3.   Tonga   $258 million

4.   Dominica  $364 million

5.   Guinea-Bissau $461 million

6.   Solomon Islands $473 million

7.   East Timor  $499 million

8.   Comoros  $532 million

9.   Samoa  $537 million

10.   Vanuatu  $573 million