How Currency Has Changed Since It First Came Into Use

 by Michael Browne

 Metals have always been preferable over the use of commodities because they are portable, durable and can be easily divided. Gold was commonly used by the Egyptians. Widespread use of coinage began through Ionia and Greece in the 6th Century B.C. Metal based currency came into its own with the discovery of the touchstone, a stone which can be used to identify precious metals and therefore verify their authenticity and total content. This led to the standardisation of coinage. Coins were pre-weighed and pre-alloyed to negate the use of the touchstone and were usually minted by governments. Eventually coinage changed from being a unit of weight to a unit of value, setting it apart from its commodity value.

Following coinage, bills of exchange became more common with the expansion of European trade in the Middle Ages. Trade in cloth, wine and other commodities expanded rapidly and became reliant upon credit in order to maintain momentum. A bill of exchange essentially represented the buyer's promise to make a payment in the future. It was then possible for the seller to present the bill of exchange (provided it was endorsed by a guarantor) to a banker in order to receive the money before it was due. They could also be used by the seller as a form of payment to his suppliers. Trade credit had become an important source for the creation of new money.

The emergence of symbolic money, the ability to use a symbol to represent something of value elsewhere allowed the development of new ways to pay for goods, services and taxes. One example is the tally system used by the English monarchy in the 12th Century for taxes. Various forms of symbolic money followed with the goldsmith bankers issuing paper receipts in exchange for a deposit of precious metal. Banks followed on from the goldsmiths, issuing paper notes as a form of representative money which circulated in pretty much the same way as bank notes do today. The notes were representative of gold or silver which could be converted by the bank.

Bank notes eventually came under the control of national governments and until the Great Depression of the 1920's the notes were representative money, valued against the gold standard, a fixed weight of gold. Fiat money is money that is not backed by reserves of another commodity but the money itself it valued by a government fiat or decree. The money is legal tender and to be accepted as such to relieve a person of their debt. The rapid production of fiat money beyond the rate of economic growth leads to inflation and a devaluation of the currency. In 1971 the USA began to use fiat money indefinitely and as a result of the Bretton Goods Conference, most countries currencies were fixed to the US dollar and as a consequence became fiat money also.



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The crude steel industry of China

Steel production are on the decrease

The amount of steel which are produced in China had decreased recently and this could be due to the slower rate of growth since the global recession. According to statistics the steel production are approximately 1.7% lower than at the same time last year. This is the first time since 1995 that this kind of reduction are experienced. This has led to a lot of assumptions on the part of investors and financial experts who are seeing this as an indication that the world’s largest producer of steel are suffering because of the slower pace of exports and also construction requirements. There are a lot of indications that steel production can fall even further especially as the Chinese government are implementing measures to avoid a situation where too much steel is produced. There are also an increasing concern about pollution of the environment and the Chinese government are implementing several measure in order to stimulate the world’s second-biggest economy and to find ways to streamline services and consumption.

Struggle for survival

It is a well-known fact that China has been closing down some of their steel mills and that’s why it is surprising that steel production hasn’t dropped further. The reality is that those production installations which have been closing were the ones that were not cost effective and that were causing a lot of pollution but this void has been filled almost complete by the larger steel producers so that most of those losses were eliminated. Despite all of these economic difficulties the Chinese gross domestic product had actually increased by 7% when compared to the same period last year. This is more or less in line with forecasts which has been released. The usual demand for steel in order to supply the construction industry has decreased by almost 2.0% and likewise the output of pig iron which is used in the steelmaking process has decreased by 2.3%. It wasn’t only the steelmaking industry which has suffered but even producers of cement products have seen a substantial decrease, in fact the largest since 1995.

China a global steel giant

China has been the largest buyer of raw material which is used in the steelmaking process for many years. However under the current economic conditions the demand for iron ore is expected to remain limited due to the significantly lower demand for steel products. The current economic conditions are making it very difficult for the steel manufacturing installations in China to maintain their current output. This has led to a situation in which China has been seeking alternative markets for their excess steel. This had a very negative effect especially on the South African steel market were large Steel manufacturing installations are either closing down or are substantially reducing their workforce because they cannot compete with the cheap steel which are dumped on the market by the Chinese. This is expected to have a very negative impact on the South African economy because of its dependence on iron ore exports especially to China.

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Export Commodities of Pakistan

Exports have decreased in 2015

There have been a slight decrease in Pakistani exports during 2015 when compared to statistics which have been gathered in 2014. This follows on the excellent levels which has been a reached in 2013 which was the year in which the highest level of exports has been recorded in the history of Pakistan. All of these export statistics are updated regularly by the Pakistan Bureau of statistics.
Pakistan are exporting many commodities and goods among which are mineral fuels, various types of manufactured goods as well as beverages. Other exports include live animals as well as various kind of food types and also chemicals and other crude materials. The largest export partner of Pakistan is still the United States followed by China and UAR.

There has been a significant increase in the volumes of Pakistan’s basmati rice exports. This is good news after the export of rice has taken a substantial dip earlier in the year because of various factors such as poor marketing, and lower prices which was charged for equivalent products in India and also because of increases in prices of rice in Pakistan. There are expectations that exports can further increase because the price difference between Indian rice and those which are produced by Pakistan has narrowed significantly making Pakistani rice more attractive to importers of this product.
Another very important export product of Pakistan is spices and there are many producers of various kind of spices in Pakistan that are exporting their products on a continuous basis. The same thing is true for all fruit related products as well as the dried fruits as well as peanuts, almonds, and various other nut products.

Pakistan also export raw cotton and other textile products such as cotton yarn. Various kinds of leather and products which is being manufactured from leather are continuously exported. There are also excellent manufacturers of carpets and rugs and a very large quantity of tents are also manufactured in Pakistan which are being export to foreign markets.

Pakistan is also an exporter of surgical instruments as well as synthetic textiles and even various kinds of sporting equipment. There are also many manufacturers of ready-made garments which contribute handsomely to the overall export scenario of Pakistan. Various type of food related products such as fish, fruit and even vegetables are continuously exported as well is various types of engineering goods and also pharmaceutical and chemical products.

Although Pakistan has an open policy which allows for trade with many different countries it is a well-known fact that their major export destinations is still the US, Japan, Germany, the UK and Hong Kong. Almost 30% of all Pakistani exports find their way to the US. The next biggest partners is Germany and the UK. Exports to Japan has been declining in recent years and are now contributing to any one percent of the total exports of Pakistan which is significantly lower than the 5.7% of a decade ago. There is widespread agreement that in order to ensure more vigorous growth Pakistan will have to diversify both in terms of the markets with whom they deal with and also in terms of the commodities which are being exported.



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