The Ascent of Money - Individual Essay ECO/372 October 10th, 2012 The Ascent of Money - Individual Essay The Ascent of Money written by Harvard Professor Nail Ferguson as a way to converse about “The Financial History of the World” (Ferguson, 2009). Ferguson describes the increase and development of economics concentrating on insurance, financial institutes, and the bond market. Ferguson reveals the method in which history can enlighten our comprehension of the existing economic predicament for American worldwide domination or control.
Ferguson's main premise is that these institutions, which are highly criticized these days, are vital for the success of the capitalist system. Stock markets allow companies to raise money in order to expand their businesses and by that create jobs, or provide services in which the consumer is interested in. In the process, the quality of life of the people, who got hired or received better services, has improved. The banking system achieves a similar goal, but in a different manner.
The banking system acts as the middleman, between the person who wants to lend money and the person who wants to borrow money. Doing so, helps to allocate better capital into places where it is more needed. In the episode entitled “Risky Business,” Ferguson observes the origin of the insurance trade in Europe; how catastrophes similar to Hurricane Katrina depicts dilemmas in risk management, how countries like Japan and Chile administer risk for their people; and the large rewards that can be accumulated through risk with hedge funds (Ferguson, 2009).
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The position of jeopardy engaged in the insurance industry. Comprises the incapability to cover-up the payments owing from the disaster rooted by Hurricane Katrina; the source of the insurance trade; how Japan converted into a wellbeing state, and it’s penalties in the current day; Chile leaving from the welfare state model in the 1970's; the unoriginal market, and the unusual riches it has led to as well as the implosion of such firms as AIG (Ferguson, 2009). Life is a serious of ups and down and somewhat risky at times.
This is the reason the individuals take out an insurance policy on their homes, vehicles’, and themselves? There are movements’ when the unforeseen tragedy happens and the state steps-in to help. When the disaster with Hurricane Katrina occurred, Ferguson visited the site to inquirer why the market can’t offer sufficient safeguard against disaster. His journey takes him to the beginning of contemporary insurance at the start of the 19th century to current date insurance issues (Ferguson, 2009).
Insurance is a risky business and mainly used to evade against the peril of a dependent of unforeseen events. Insurance is distinct as the evenhanded move of the danger of a defeat, from one unit to one more, in trade for compensation. An individual that is an insurance agent or broker is an individual that sells insurance policies from vehicle policy to a homeowner’s policy. The insured, or policyholder, is the individual or person purchasing the insurance plan or policy. The quantity to be priced for a definite sum of insurance coverage is called the premium.
Risk management, is an exercise in appraise and manage the risk factors, and has developed as a separate subject of learning and observation (Ferguson, 2009). The contract engages the insured to assume assurance and identified comparatively in a small amount in the shape of fee to the insurer in trading for the insurer's pledge to reimburse (assure) the insured in the situation of a monetary (individual) demise. The insured obtains an agreement, called the insurance policy, which fine points the stipulations and conditions under which the insured will be financially compensated.
Risk management is the classification, appraisal, and prioritization of risks pursued by synchronized and inexpensive request of capital to diminish, observe, and manage the likelihood or collision of fateful measures or to capitalize on the understanding of opportunity. Perils can occur as part of doubt in economic markets, development failures, lawful liabilities, natural accidents, and disasters as well as assaults from an opponent or enemy or even from unforeseen causes.
The strategy to supervise danger naturally is to include moving that danger to different individual, evading the danger, plummeting the harmful results or likelihood of the danger, or still tolerating little or the entirety of the possible or real penalty of a specific danger. Particle characteristics of risk management principles have been praised and analysis for possessing no quantifiable enhancement on risk, whether it is self-confidence in estimation and judgment. Conclusion
Although risk management and insurance are directly linked, insurance by itself is not totally risk management. Risk management is extreme expansive and consist of the theories dealing with evading, stopping, and reducing cost and damage. Risk management focuses on additional means than insurance for removing the monetary penalties of items lost in a disaster. References: Ferguson, Niall (2008-11-13). The Ascent of Money: A Financial History of the World. Retrieved from The Penguin Press HC. ISBN 978-1-59420-192-9
The Ascent of Money. (2009). Risky Business. Retrieved from http://video. pbs. org/program/ascent-of-money/ The Economist (2008). A Financial History of the World. Retrieved from http://www. economist. com/node/12376642 Ferguson, Nail 2009). The Ascent of Money: A Financial History of the World. Retrieved from http://www. youtube. com/watch? v=4Xx_5PuLIzc Cornell University Risk Management & Insurance. (2005). Welcome to Risk Management & Insurance. Retrieved from http://www. risk. cornell. edu/
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