Dear Soc. 199 Scholars,
In 300 words or more, using paragraph form (so, 2-3 paragraphs), please identify what you think are some of the most interesting points of Ferguson's discussion of Planet Finance. What are some specific things that the typical citizen, or typically consumer (or "handler of money"), needs to really know about this often-mysterious world of money? Give specific points and facts from the reading to support your view. Do your ideas fit with the "big picture" nature of sociology? Why or why not?
An academic blog site devoted to the systematic study of Niall Ferguson's 2008 book, The Ascent of Money. To be used with the summer 2011 online class, Soc 199OL2, Sociology of Money, through Greenville College.
The points that stood out as most interesting to me were Ferguson's three great realizations about the world of money. His first understanding is that poverty is the result of a lack of financial intuitions rather than the presence of big financial institutions. This was interesting to me because it usually seems like the "big guy" is picking on the "little guy" in the financial world, but Ferguson brings up a good point that good financial institutions can actually help people. If sufficient, reliable financial institutions are abundant, then the poor will not be as susceptible to the "loan sharks" who charge them crazy high amounts of interest.
ReplyDeleteFerguson's next point was to point out that the financial system is defective in that it works much like human beings work. With all of its ups and downs, it is very similar to human emotions. This is a good fact to know so that one can be wise with one's finances in an ever-changing financial world.
Another good thing to know and understand is the complexity of the financial system and how difficult it really is to predict a crisis. Ferguson goes on to compare the situation of a dying financial world to a "mass extinction of species." He predicts that a financial catastrophe would be very comparable to the extinction of dinosaurs, emphasizing to citizens just how important the financial system is to society, and how carefully it should be handled.
When looking at the "big picture" nature of sociology, I think the financial system compares very closely because of its expansiveness. Nearly all societies use money, or some form of it, making it a worldwide, "big picture," phenomenon.
Niall Ferguson has a lot of interesting points in his book. What stood out for me is when he talks about how the globalization of finance has blurred the old distinction between developed and emerging markets. He gives examples, such as the turning of China into America’s banker, and the communist creditor to the capitalist debtor. Another interesting point he discusses is that planet finance has begun to dwarf planet earth. He lists some enormous amount of money that has changed hands in the past few years. In 2006, $48.6 trillion was the economic output of the world, $50.6 trillion was the market capitalization of the world’s stock markets, and $67.9 trillion was the amount for domestic and international bonds. He also shows that every day $3.1 trillion changes hands on foreign exchange markets and $5.8 trillion on global stock markets. This is an incredible amount of money!
ReplyDeleteAccording to Ferguson, people need to have an introduction to financial history, because so many people don’t have a general awareness of the most basic information that is necessary in order to use your money wisely. He states the following: “A substantial proportion of the general public in the English-speaking world is ignorant of finance.” This is amazing that people could be ignorant about issues that directly affect them. People are involved in many aspects of finance, such as investing, the purchasing of homes, the extensive use of credit cards, and many other related issues without knowing some of the most basic information! He gives some examples that show how little people know. People need to pay off their credit cards as soon as possible; otherwise they will pay so much in interest. He tells us that 4 in 10 do not pay the full amount due on their credit cards and these have high interest rates. Another thing the public needs to know is what the interest rate is on their credit card, and Ferguson says that 29% don’t know the interest rate on their card. He tells us that 2/3 of Americans don’t understand how compound interest works, and less than 23% knew that income tax is charged on interest from a savings. These are all very important things we should all know if we are going to be wise with the use of our money. I think my ideas fit with the “big picture” of sociology, because sociology is the study of human society. In this case we are taking a look at people and their lack of knowledge about finances, and what can be done to improve it.