AOM 2

The section of the documentary that we watched last week was about bonds. It focused on the definition of bonds, how they are used and their role in the economy. Bonds are seen as a minimal-risk investment, allowing the government to borrow money. This is because the tax money collected is not enough funds for the government, so they use bonds. This money goes towards healthcare, education, etc., which ultimately supports economic and social power. Bonds also played a massive role in political power, because of their association with war and conflict. 

In the late 14th century, when Italy was at war, Florence was struggling to fund the war so citizens would lend money and receive it back with interest and could sell these bonds. This was the first form of bonds. By the 16th century, there was still war and they were still relying on the use of bonds. Because of this increased need and use of bonds, their value decreased. After the war, the bond market set the precedent for Italy’s economy and showed the true power of the bond market.

  Bonds also had a massive impact on the American Civil War. The confederates needed Europeans to purchase their bonds in order to fund the war. The Confederates used cotton as an alternate way to pay off their bonds and this really hurt the textile industry in the U.S.. In order to fix this they limited the amount of cotton exported to raise the value of cotton. This did not go well for factories in the U.S., so ultimately deals were formed with other trade organizations in order to solve this. The bond market has a huge impact on our world today, way more than we realize. It is interesting because the bond market isn't something we hear about on a daily basis, but it has such a huge impact on economy, culture and politics in individual nations and between nations.