AOM - Blog 2 - Bonds and Power

John Mazziotti

Mr. Roddy

GPHC

April 14th, 2020

Ascent of Money Blog 2

In the second episode of the ‘Ascent of Money’ documentary series, the topic and history of bonds is explained in great detail. Bonds were pre-stock markets, and they were a great investment opportunity due to their fixed interest rate. However, bonds were the fuel for empires and revolutions, like the confederate states. Bonds were the main power catalyst for the CSA(at the start of the war), and this was their way to finance their war.  A great example of countries without access to bonds would be during the first world war. Germany and its allies didn’t have the much needed funding for this war, and didn’t have access to the world’s bond market. This resulted in Germany's loss and also staggering inflation, and shows just how much bonds can have an effect on a re-developing economy. Something that can strip countries of their economy is when people don’t buy enough bonds, this is something called hyper-inflation. Argentina in 1989 is the best example of this, having a 3,079% annual inflation rate. This was due to the country irresponsibly  spending more money then they had on war, and without anyone to buy bonds from, their economy collapsed completely. This was a very interesting episode and helped me understand bonds more-so as I actually realized that I have a few myself.

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