The Future Of Currency

The Future of Currency

In the present day, the world's economy is ever-changing and adjusting. Many different reasons control the reasons for this. The future of currency is something that can only be predicted and is not guaranteed. However, there are many determing factors behind the changes that can take place. Asia and North America are two continents that have economies that have recently changed or are in the midst of change.

World War 2 drew a hard blow and left a serious and lasting effect to many Asian countries. This however, did not hamper the growth of countries such as China, Japan and Vietnam as their governments were taking serious steps to recover economically. Thus, the global market cannot deny a place for these 'Asian Dragons', because these countries are growing at a tremendous pace to the extent of being capable in emerging as global market leaders.

China's capitalism and boom was born when their president, Deng Xiaoping permitted the provinces to dismantle their communes and collective farms. This led China to venture into free-market economics, although they were still under the communist political system. When President Deng announced that they needed Western money and expertise, China flung their trade doors wide open and China went on a capitalist drive without ever looking back. By mid 1960's, the Chinese Revolution settled down to the job of ruling China. Its main goal was essentially nationalist: a prosperous modern economy. While there continued to exist substantially economic inequalities, distribution of wealth was probably a bit more equal than in most Western countries.

(Moise 171)

While there were great variations in income between different villages, and between different jobs in the urban sector, the overall averages showed a clear pattern: the cities were much richer than the countryside. Most capital investments were going into urban industries. The urban workers, using considerable amount of heavy machinery, had a much higher average level of productivity compared to the rural workers. The natural consequence was, for the city people, an average income level twice as high as that of the people in the countryside. The most obvious way to attack this poverty problem was to increase production, in all sectors of the economy. Though the easiest way to increase production was to increase capital inputs, China could only afford a limited amount of capital construction. In accordance to this, China went on a construction binge. Whole factories were purchased from abroad while others were built with local resources. By 1978, the frenzy for new projects reached a level that reminded some people of the Great Leap Forward. In an effort to promote agricultural production, the government released many of the restrictions on the 'spontaneous capitalist tendencies' of the peasantry. (173) In the late 1980's, the government decided to expand the scope of private marketing. The next step was to increase the amount land assigned to the peasants. The peasants were now not responsible to the government for the use they made to the private plots. They simply could grow what they wished, for the sale to the government or to private markets. This led to furious rebuilding and inflow of foreign investments. All this enabled China to remake itself into Asian's hub of finance, trade and culture.

By 1984, they were producing more than $1 million worth of rice and a range of side products, including rice wine. Their residential earning was up to about $200 a year. (Prager 52 ) This meant that they could begin replacing their mud-and-straw hats with solid brick houses. Shanghai today is a vast construction site with more than 20,000 projects, with 27,000 companies building bridges, tunnels, flyovers, ring roads, hotels, villas, golf courses and also public housing. This sparked national growth of about 10% a year.( 53 ) The Chinese now are going home with fat wallets, stocks, bonds and large bank accounts. Banks are reporting that savings have increased sixty-fold and is still growing. This has led China to join the world economic community and has become the globe's third largest economy. China is now ranked 11th in the world in exports of trade goods. (54)

Off the coast of China, there was another growing country. Japan recovered tremendously well after the bombing of Hiroshima in World War 2. Under post war conservative governments, Japan made a remarkable economic recovery. American aid of $2 billion gave an initial boost and then the Korean War acted as a further stimulant by creating a demand for military hardware. (Rich 191) By the early 1970's, Japan was the world's third biggest steel producer, one of the biggest ship builders, and ranked very high as a manufacturer of general engineering and chemical goods. Japan's motorcycles were winning import races in Europe, and Japanese cameras, transistor radios, cars, sewing machines, TV sets and optical goods competed successfully in the global market.

Japan's economy is second only to the U.S in absolute terms with a G.D.P of $3,385 billion dollars. By 1987, the Japanese were richer than the Americans with per capita income of almost $20,000. ( World 247 )This was because the Japanese saved five times as much from their paychecks as did the Americans. Lower military spending, a consequence of the Yoshida doctrine, was an essential contributor to Japan's economic advancement. Japan net assets rose to about $1 trillion and thus making Japan effectively the world's banker. In the 50's through to the 70's, the Japanese economy was averaging 11% of growth. (250) The Bank of Japan backed commercial banks in providing capital for investments.

Economic growth rates were the highest in the world based on high levels of savings and investments, rapid productivity growth and remarkable social consensus.

Japan was willing to forego immediate reward for long term benefits. Therefore, in large sections of world manufacturing, notably electronics, Japanese producers had no rivals. Manufacturing was the mainstay of the economy, improving quality and price. Japan has continually upgraded its economy and shifted from heavy industry with high-energy requirements to high technology, high value added industries such as semi-conductors, industrial robots and computers. Japanese manufactures than began investing heavily in foreign countries because of it's own rising yen. This massive outflow of money pushed many Japanese financial institutions to the top of the global financial markets. Japan was also the world largest importer of agricultural products where 60% of its food is imported. (Rich 192). If counted based on efficiency however, per unit