Adam Smith and his ideas.......

ONCE UPON A DIME reflection!

“Once upon a dime” is divided into three parts. Each part portrays a significant change in the economy, starting from the origin of money to the foundation of the federal bank. I really enjoyed reading the cartoon, it was funny, colorful, and really helped me to understand the history of economics (although Mazuma island doesn’t exist in real life  :).

The first part of the cartoon is about the origin of money. Before money exists, the people of Mazuma(a fictional island in the cartoon) used a system called trading to exchange valuables. However, the trade system contains many flaws. First, it does not support direct trade between individuals. For example, when Captain Sharky and Dr. Millicent wants flowers for their wedding, they need to trade fish for a spear, a spear for coconuts, coconuts for a net, and then a net for some flowers. This method is troublesome, because they don’t have a medium of exchange. Second, the trade item can’t hold its value over time. Third, most trade items have poor portability and durability. To solve the problem, Bloomfield (another character in the story) came up with ‘dime’, a painted stone that measures value and can be acceptable for all change of goods. Money has been invented!

 The second and third part of the cartoon focuses on the developing economy of Mazuma. Paper bank notes with higher value was invented, along with bank, check, and loan system. Every time a problem arises, Bloomfield tends to invent a way to solve or improve the situation. However, loan system causes people to have too much money to spend, which leads to inflation (continued rise in prices of money), the uncontrollably price rising lit the idea of the federal bank. The federal bank controls how much someone can lend and determine the interest rate of the other small banks, like a mother giraffe looking after her baby giraffes :)

               After I finished the cartoon, I noticed how the economy has developed from trading fish for a spear to exchanging a piece of paper for an ice cream. It shows how human can make value out of the simplest things and make life much easier. I wonder what will happen to the money system 100 years from now on. If the economy keeps developing, what problems will take place? Will there be a new medium of exchange? What determine the amount of money (dime) each Mazuma people can obtain when dime was first invented (how was it measured)?