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Understanding Money


The Real Lesson of History

For most of history, the world has been an embattled and chaotic place in which a huge amount of human effort has been devoted to war and the problems caused by war. Traditionally, many people have considered the causes of war to be aggression, politics, greed and hatred. In order to bring peace to the world, the thinking goes, we must learn to control these primal urges.

However, aggression, politics, greed and hatred are inevitable expressions of human nature. What the lessons of history have really shown us is that the best way to ensure world peace is to create a stable economy in which people, countries, and regions are economically dependent on one another.

For example, the harsh economic conditions in Germany that followed World War I were one of the principal causes of World War II. After World War II, however, the winning countries did not demand reparations from Germany. Instead, they spent a huge amount of money and effort rebuilding the Western European economy and stabilizing its currencies. The U.S., for example, spent over $12 billion ($85 billion in today's dollars) from 1948 to 1951 as part of the Marshall Plan in which an enormous amount of food, manufactured goods, and raw materials were sent to Europe, much of it to Germany.

This might seem like a lot of money for a country to spend rebuilding other countries after a war (especially when you consider that the United States was one of the winners of the war). However, the Marshall Plan — named after U.S. Secretary of State George Marshall — was one of the best investments the country ever made. As a result of this program, Europe was able to recover from the most devastating war in history and — over the next fifty years — create a unified economic system (the European Union) that assures peace in Europe for the foreseeable future. Although the effort cost the U.S. $12 billion at the time, we need only compare this to the cost of World War II, $360 billion, (over $4 trillion in today's dollars) to see that the Marshall Plan was a bargain.

Although the 20th century was marked by the worst wars in history, it was also a period of enormous transition, a time in which the global economy was born, creating a world in which major conflicts are unthinkable. The lessons of the 20th century show us that global peace is not achieved when people around the world decide to act peaceably. Global peace is achieved when people around the world perceive themselves as being economically dependent on one another.

The Internet plays an important role in the new economy by connecting companies, governments and individuals around the world. In an economic sense, these connections do more than simply facilitate commerce. They change the very experience of buying and selling in such a way as to increase the interdependence of the various parts of the global economy. As such, the Internet acts as a powerful catalyst of world peace.

Although the Internet is still rather new to mankind, the seeds of the new global economy were planted a long time ago, in 1933, when U.S. President Franklin Roosevelt was searching for a way to stimulate the American economy during the depths of the Great Depression.

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