The Money Debate Report Example

The Money Debate

Grameen Microfinance
Grameen Microfinance is provided by the Nobel Peace Prize-winning Bank that is the Grameen Bank; it is a community bank that offers Microfinance services and development loans in Bangladesh. The bank started a tradition of giving out microcredit also referred to as "grameencredit" to the locals without asking for any collateral from the loaned. The Bank was formed for the poor rural people with an aim of improving their livelihood, the Name Grameen itself means rural in Bangladesh local language Sanskrit. The founders of the bank believed that the local population though poor, they have inherent skills that if financially enabled by loans their lives can be improved.
Grameen microfinance has been developed in such a manner that groups are pressured to ascertain that all the members have acquired the small loan for self-development. The process is famously known as the group-based loaning criteria, it uses peer pressure to make all group members to acquire a loan. The microfinance program target the poorest in the society especially women. The program is very useful as it believes that all persons have high potential within them, and such incentives will boost their potential to the next level.
Credit management is simple, people form groups of five and takes the loans at 20% interest but payment depends upon an individual. The units ensure that all are responsible for their loan repayment. Applying such system of microfinance is easy in my city. Though the majorities are middle class, the poorest can form groups get loans if such institution like Grameen Bank is established.

Cigarette Money in POW camp

The story of World War II cannot be complete without mentioning the famous cigarette money; cigarette money pays a vital role in POW camp economy during the Second World War. Perhaps one may ask, what is cigarette money? This is the use of cigarette as money so as to get other goods and services. Cigarette qualified a form of currency in a POW camp because of two major reasons that are addiction and economic stability of non-smoking comrades. Addiction played a significant role in turning cigarette as a form of currency. Despite the fact the cigarettes were being provided freely, the demand was too high and the addicted prisoners were willing to provide their valued properties in exchange for cigarette hence cigarette was the currency. Non-smoking comrades also promoted cigarette money since they knew that the prisoners or their partners will crave for them when they exhaust theirs, and that will be an opportunity to strike a deal for the exchange. The cigarettes were supplied freely by American tobacco companies to the soldiers; the company had a long time investment for the future since cigarette is addictive. After the war, the addicted soldiers will add to its customer base. Moreover, soldiers were not worried about inflation due to the continuous supply; this is because one smoked cigarette reduced chances of inflation. The cigarette economy thus naturally deflated with one smoked cigarette per minute, hour or day; this made cigarette economy very attractive since it naturally controlled itself without any monetary policy like the current money system.

Island of Stone Money

Yap is a small island in the great Pacific Ocean; it is an island of great importance to economist since it defines how the use of money started. The history of stone money began in Yap Island hundred years back when the islanders decided to use large disk of calcite stones as money. The values of this calcite stone money were based on the size of the disk and its history.
The history of stone money acceptance dates back when the Highlanders crossed the ocean with their small bamboo boats and discovered limestone deposits on the neighboring island. Amazed by the sight of limestone, the Yaps chopped the limestone and carved them into the disc after which they took them back home, after some time the people started using the stones as medium of exchange. The strange thing about the Yaps mode of transaction was that one was never required to transport the stone to his/her place. The members of the community just knew that a particular stone belonged to a given individual, and the individual could use it as money. The Yapese (island dwellers) chose the calcite stone as money because the stone looked like quartz and had some shining property. The Yapese accepted the stones as legal tender and a formal way of settling bills.
The Yapese calcite stone money was more of commodity money than fiat money; this is because the stone money was big stones almost immovable and precious to the community. Though, the community accepted it as a legal tender and mandatory foam of payment its properties conforms to definitions of commodity money. With a thoughtful look at the Yapese way of life, one can conclude that the calcite stone money were both commodity money since they fitted that description and also fiat money because they were accepted legal tender.