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Historical Significance and Relevance Essay


The U.S. banking system determines the world economy by controlling the global financial system. Traditionally, the use of a currency was not common; people engaged in barter trade. The modern banking system provides better economic opportunities than traditional trade.

Traditionally, people would exchange goods for goods across communities in the world. For instance, the Pharaohs of Egypt treasured jewelry as it had more value than other treasures. People would also exchange food products in the Sahara desert where Tuaregs reside. This allowed Egyptians to acquire valuable resources such as food products. The historical significance of the U.S. banking system traces its way back to slavery periods. Africans were kidnapped and others threatened with death if they failed to take part in an auction. Sugar plantations required manpower and settlers in America preferred slaves for farming jobs. Middlemen would parade slaves who were sold in barter trade in exchange of diamond jewelry. Modern U.S. banking system, which has been modified in the past two decades, allow safekeeping valuable products are aside from currencies. The U.S. dollar has risen rapidly to international levels making it a global currency.

The U.S. banking system still values gold (and other expensive ornaments) as important for retaining the value of trade. Wealthy businesspeople use expensive jewelry such as diamond to store their riches in banks. However, these riches disappear whenever a bank is raided and organized crime leads to loss of valuables. Currencies have a tendency of fluctuating value. Countries such as Venezuela and Zimbabwe are facing an economic crisis due to the lack of value for local currencies. Their banks handle numerous currency notes that carry insignificant value. Many currency notes in an economy lead to a flooded economy in that the purchasing power among ordinary people reduces. This illustrates that the collapse of an economy depends on a banking system. The 2007-2008 economic crisis elaborates how banks control and regulate an economy. The collapse of the JP Morgan bank initiated the global crisis in the last decade. Loans had a growing interest rate which many people could not pay as it accumulated to unsustainable levels. Similarly, lack of gold and diamond products would not facilitate high-level barter trade in civilized economies such as the Ottoman Empire and the Egyptian kingdom led by pharaohs.

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