Reply to each of the attached posts. Response must be at least 100 words each. Responses must be substantive written responses.
What is Substantive Interaction? The School of Business is committed to the collaborative learning model. In this course, collaborative learning requires each student to read and spend time reflecting on other’s postings, and then respond in a substantive manner to the postings of others. In composing substantive responses, you can do several things, such as: *compare/contrast the findings of others with your research; *compare how the findings of others relate and add to the concepts learned in the required readings; and/or *share additional empirical knowledge regarding global business — or international experiences you may have had — relative to the postings of others. The collaborative learning model requires substantive interaction between students on a weekly basis. Consider the Discussion as equivalent to being in a class, thus maintain professional communication standards at all times (no “IM” shorthand or informal jargon, please).
APA format. Credible scholarly sources/references to support.
FOLLOW GRADING RUBRIC ATTACHED
Criteria Ratings Points
Thread 40 to >35.
0 pts
Advanced
All key components of the
Discussion prompt are
answered in the thread, exactly
as listed in the instructions.
The thread has a clear, logical
flow. Major points are stated
clearly. Major points are
supported by good examples
or thoughtful analysis.
35 to >28.0 pts
Proficient
Most of the components of the
Discussion prompt are
answered in the thread,
exactly as listed in the
instructions. The thread has a
logical flow. Major points are
stated reasonably well. Major
points are supported by good
examples or thoughtful
analysis.
28 to >0.0 pts
Developing
The Discussion
prompt is addressed
minimally. The
thread lacks flow or
content, and does
not follow the exact
assignment
instructions. Major
points are unclear
or confusing. Major
points are not
supported by
examples or
thoughtful analysis.
0 pts
Not
Present
40 pts
Replies
30 to >26.0 pts
Advanced
Each reply focuses on a
meaningful point made in
another student’s thread. Each
reply provides substantive
additional thoughts regarding
the thread and an explanation
of why the student agrees or
disagrees with the idea
presented in the thread. Each
reply is clear and coherent. A
minimum of 3 substantive
replies are submitted. See
instructions for what
constitutes a substantive reply.
26 to >21.0 pts
Proficient
Most replies focus on a
meaningful point made in
another student’s thread. Most
replies provide substantive
additional thoughts regarding
the thread and an explanation
of why the student likes or
dislikes the idea presented in
the thread. Most replies are
clear and coherent. A
minimum of 2 substantive
replies are submitted. See
instructions for what
constitutes a substantive reply.
21 to >0.0 pts
Developing
Some replies focus
on a point made in
another student’s
thread. Replies
could be more
substantive
regarding the
thread. Replies lack
clarity and
coherence. A
minimum of 1
substantive reply is
submitted. See
instructions for what
constitutes a
substantive reply.
0 pts
Not
Present
30 pts
Discussion Grading Rubric | BUSI604_B05_202220
Criteria Ratings Points
Spelling,
Grammar,
Current
APA
Formatting
30 to >26.0 pts
Advanced
Spelling and grammar are
correct. Sentences are
complete, clear, and concise.
Paragraphs contain
appropriately varied sentence
structures. Exact level heading
required wording is present. 5
references are cited in current
APA format.
26 to >21.0 pts
Proficient
Some spelling and grammar
errors are present. Sentences
are presented well.
Paragraphs contain some
varied sentence structures.
Inexact level heading required
wording is present Where
applicable, 4 references are
cited with APA formatting.
21 to >0.0 pts
Developing
Spelling and
grammar errors
distract. Sentences
are incomplete or
unclear. Paragraphs
are poorly formed.
Level heading
required wording is
present references
are minimally or not
cited in current APA
format.
0 pts
Not
Present
30 pts
Total Points: 100
Discussion Grading Rubric | BUSI604_B05_202220
Gold Standard
Key Term
The gold standard is the key term I have chosen to focus on for my discussion post. I picked the gold standard because the relevance of a currency backed by gold relates to the massive inflation that has occurred over the past year. As most currencies are no longer backed by gold, inflation is likely to occur more rapidly as governments can essentially print money with no value behind it. This dilution of the currency has occurred since the onset of the pandemic as the US government looked to aid unemployed workers during the shutdowns across the country. The gold standard is relevant as countries wouldn’t be able to print money without the price of gold being diluted as well.
Term Overview
Saterlee (2019) explains that the gold standard occurred “when governments started issuing currency in the form of paper money, it was usually convertible into a predetermined amount of gold” (p. 146). The gold standard spread across the world and was the major backing of most currencies into the 20th century. The onset of World War I in combination with the later Great Depression eventually led to the end of the Gold Standard, with the United States among the last to keep it in practice until the mid-1930s (Saterlee, 2019). The gold standard was eventually replaced by a currency exchange system, which we still utilize today.
Article Overview
Cutsinger (2020) focuses on how feasible it is to return our modern economic systems to the antiquated gold standard. This question is raised due to the massive inflation that has been occurring in the past few years across the globe and discussions in previous administrations on returning to a gold standard (Cutsinger, 2020). Cutsinger (2020) argues that returning to the gold standard is feasible and there is enough gold for it to be a realistic option.
Many economists argue that returning to the gold standard is unrealistic and “is a relic of a past marred by macroeconomic instability that central banks helped to alleviate” (Cutsinger, 2020, p. 88). Cutsinger (2020) demonstrates that while significant hurdles may exist, the gold standard would offer advantages like lower inflation levels, a common currency, increased international trade, and lower price-level uncertainty. One of the major questions on returning to the gold standard is the availability of above-ground gold. While a need to convert non-monetary uses of gold would be needed to support a fully backed currency, a realistic reserve ratio can be utilized reducing the need by a factor of ten (Custinger, 2020). Overall, the need to mine more gold is not necessary for a full conversion as “Australia, Brazil, Canada, China, the Eurozone, Great Britain, India, Japan, Russia, South Korea, and the United States” own about 80% of all gold (Custinger, 2020, p. 89). While additional costs for maintenance and conversion would exist, conversion to the gold standard is still possible even as its merits continue to be argued.
Discussion
Cutsinger (2020) directly addresses the gold standard and discusses the reasons outlined by Satlerlee (2019) relating to why the gold standard was replaced. This article furthers understanding of how the gold standard was implemented and why it is still a reasonable monetary system, despite years of dismissal. Overall monetary policy is discussed by both Custinger (2020) and Saterlee (2019), but Cutsinger (2020) focuses on the merits and disadvantages of the gold standard. Understanding the gold standard is fundamental to this module as it provides an outline for how monetary policy was dictated before the modernized economy and how central banks have picked up the pieces since.
Many other supporting articles provided overviews on the gold standard and other monetary policies. Dorn (2020) discussed how the gold standard has many misguided criticisms and could be an answer for current inflation and price uncertainty. Lennard (2018) explores the causal effects of monetary policy on economies including the British economy during the gold standard. Othman et al. (2020) determine how macroeconomic policies affect income inequality and wealth distribution. Both the gold standard and cryptocurrency contribute positively to government promotion of social welfare, while centralization may lead to more inequalities (Othman et al., 2020). Finally, Teupe (2020) explores the historical significance of the gold standard with case studies on Germany and the United States and the relation their monetary systems had on inflation and wage negotiation.
References
Cutsinger, B. P. (2020). On the feasibility of returning to the gold standard. The Quarterly Review of Economics and Finance, 78, 88–97. https://doi.org/10.1016/j.qref.2020.03.002
Dorn, J. A. (2020). How the classical gold standard can inform monetary policy. Cato Journal, 40(3), 777-790. http://dx.doi.org/10.36009/CJ.40.3.11
Lennard, J. (2018). Did monetary policy matter? Narrative evidence from the Classical Gold Standard. Explorations in Economic History, 68, 16–36. https://doi.org/10.1016/j.eeh.2017.10.001
Othman, A. H., Musa Alhabshi, S., Kassim, S., Abdullah, A., & Haron, R. (2020). The impact of monetary systems on income inequity and wealth distribution. International Journal of Emerging Markets, 15(6), 1161–1183. https://doi.org/10.1108/ijoem-06-2019-0473
Teupe, S. (2020). Inflation and the negotiation of wages. comparative responses to monetary changes in Germany and the United States during the Gold Standard Era, 1876–1926. Labor History, 62(1), 1–22. https://doi.org/10.1080/0023656x.2020.1844875
Satterlee, B. (2019). International Business with Biblical Worldview. McGraw-Hill.
Federal Reserve Bank
My key term for this week’s
Discussion
Board is Federal Reserve Bank. The reason that I chose the Federal Reserve Bank is academic curiosity and potential career opportunities. I currently work as an accountant for a large Oil company in San Antonio, Texas. I would like to switch career paths, so once I finish up my courses for my MBA I want to look into a career in banking. I believe that banking would be a good career opportunity for me so I would like to know as much about the banking industry as possible. I have been trying to do as much research on this topic as possible, and now that I have this as a topic for school, I feel like this is an added bonus in learning.
Explanation
Satterlee’s definition of the Federal Reserve Bank is “responsible for regulating the growth of the economy, which is accomplished by the increase or decrease of money supply” (Satterlee, 2018, p.136). Other countries and economies also have similar financial institutions such as the Bank of England, the European Central Bank, and the Bank of Japan. The Federal Reserve Bank is a central banking system that was created on December 23, 1913 along with the Federal Reserve Act. The Great Depression in the 1930’s and the Great Recession in the 2000’s has increased the duties and responsibilities of the Federal Reserve System.
There are twelve Federal Reserve Banks spread across the United States and serve many districts and territories. The Federal Reserve system also has 5 major functions that helps to stimulate the United States economy. The Federal Reserve handles the nations monetary policy, fosters the stability of the financial system, ensures the safety and security of individual financial institutions, provides services to the banking industry that ensures payment and clearing house transactions occur safely, Ensures consumer protection through numerous programs (Federal Reserve, 2022).
Summary
The article I chose for my key term the Federal Reserve Bank is an article published by Kimberly Amadeo. This article was fascinating, it spoke about how the Federal Reserve works and who owns it. The Federal Reserve is the central bank for the United States and is there to regulate the economy. President Woodrow Wilson was the president at the time that the Federal Reserve Bank and the Federal Reserve Act were enacted in 1913. This article also spoke about funding and the bank members on its board. The funding does not come from Congress as one might think, funding actually comes from investments.
The Federal Reserve is also made up of twelve banks across the United States and each bank services certain states. To become a member of the Federal Reserve banks must own shares of stock in the twelve regional Federal Reserve Banks across the country.
But owning Federal Reserve bank stock is nothing like owning stock in a private company. It cannot be traded and does not give the member banks voting rights. These pay out dividends, mandated by law to be 6%. But the banks must return all profits, after paying expenses, to the U.S. Treasury (Amadeo, 2022, para. 9).
In summary, the Federal Reserve Bank was established to help regulate the economy. After the Great Depression in the 1930’s and the Great Recession of the 2000’s, the Federal Reserve has been in more demand and has had more responsibilities such as reducing inflation and trying to cut interest rates.
Discussion
The Federal Reserve plays an important role in the United States Economy. It will adjust the monetary policy as needed to help stabilize prices, interest rates, and help the unemployment rate. It does this by either stimulating demand by reducing interest rates or and constricting the policy by increasing interest rates. “How does the Fed cut interest rates? It lowers the target for the fed funds rate. Banks usually follow the Fed’s lead, cutting benchmark rates such as the prime rate” (Amadeo, 2022, para.18). With inflation starting to increase in the United States over the last few months the Federal Reserve is starting to implement higher interest rates in hopes to lower inflation.
The article I cited is similar as all the articles talk about the monetary policy of the Federal Reserve. The Federal Reserve is responsible for setting the monetary policy for the United States. At times the policy set by the Federal Reserve and other central banks of other countries have an impact on international financial markets. With the global economy the Federal Reserve bank’s policy has more impacts on other countries and currencies. “More specifically, the monetary policy of a center country could be transmitted to the periphery economies via the exchange rate, trade, credit, and risk-taking channels” (Inoue & Okimoto, 2022, p.2).
This can sometimes lead to the United States receiving criticism from other countries due to the fact that the dollar is a dominant currency in the global market. Due to these concerns the Federal Reserve attends meetings with other central banks during the year in order to allow other central banks the opportunity to question and respond to the Federal Reserve Bank (Bernanke, 2017). With continued globalization of the economy the monetary policy of the United States will become increasingly important to other nations.
References
Amadeo, K. 2022. Who Really Owns the Federal Reserve? The Balance.
https://www.thebalance.com/who-owns-the-federal-reserve-3305974#:~:text=The%20Federal%20Reserve%20is%20the%20central%20bank%20for,agency.%20Its%20leader%20is%20not%20an%20elected%20official
.
Bernanke, B. S. (2017, April). Federal Reserve Policy in an international context. IMF Economic Review, 65(1), 5+. Retrieved from
https://bi-gale-com.ezproxy.liberty.edu/global/article/GALE|A494741776?u=vic_liberty&sid=summon
Federal Reserve. (2022) Board of Governors of the Federal Reserve System. About the Fed.
https://www.federalreserve.gov/aboutthefed.htm
Inoue T & Okimoto T. (2022) International spillover effects of unconventional monetary policies of major central banks. International Review of Financial Analysis. Volume 79 ISSN 1057-5219, 1-19. (
https://www-sciencedirect-com.ezproxy.liberty.edu/science/article/pii/S1057521921002854?via%3Dihub
).
Satterlee, Brian. (2018) International Business with Biblical Worldview. McGraw Hill Publishing
Discussion Thread: Financial Markets, Monetary Systems, and Regional Economic Integration
Key Term and Why You Are Interested in It
During this week’s reading for Chapters 5 and 6, one key term that specifically stuck out to me was the other international groups, Organization of Petroleum Exporting Countries – OPEC. This international group is interesting to me because they dictate how much oil and gas the participating countries will produce and market to the rest of the world. This is an interesting concept because this group holds a monopoly over the rest of the world as OPEC has the most influence on the spot price of brent crude oil. Specifically, OPEC relates to me because that I work in the Upstream function for an integrated supermajor oil and gas company. This means that OPEC has a direct affect on how much or how little that we try to produce oil as it is dictated by the spot commodities price. Should OPEC increase production of oil, this could over supply the world, thus driving down the price per barrel.
Explanation of the Key Term
Every modern nation in the world is driven by energy, where it is often produced in foreign lands. The Organization of the Petroleum Exporting Countries or also known as OPEC, is a key factor in the world supply of both oil and gas that is sold and distribute globally. OPEC’s major function is to help member countries coordinate oil production in an effort to stabilize the oil market, while achieving a reasonable return on oil investment (Scatterlee, 2018). OPEC is setup to soften the wild swings in the oil and gas commodity space, where there are numerous things that might affect pricing. A few factors that can affect the global price of oil and gas, is geopolitical risks, weather patterns, climate, among others. When countries do not have a secured energy source, this can cause conflicts between nations, much like we are seeing in Eastern Europe currently. An increase in economic growth in developing countries may be associated with a higher expected growth for commodity demand than an increase in growth in developed countries (Ratti & Vespignani, 2015).
Major Article Summary
The article that I chose for this week’s discussion board post was, Determinants of OPEC production: Implications for OPEC behavior, by Kaufmann, Bradford, Belanger, Mclaughlin and Miki. In this article, the authors discuss how OPEC countries influence the price of oil on the commodity market and how there is a quota system for the minimum amount of oil that is produced by OPEC countries. But when realized spot pricing for oil further exceeds the lifting cost for the OPEC producers, there is an incentive to produce or increase production of oil and gas to further supply the world. These decisions are generally used for short-run economics to help swing production or should the producing country have spare capacity to sell excess amounts of oil to capture the economic benefits of high pricing environment. Real prices generally have a positive effect on production and the size of this effect may depend on spare capacity, which implies that OPEC behaviors also embody competitive elements (Kaufmann, Bradford, Belanger, Mclaughlin, & Miki, 2008). This is a major reason that OPEC generally meets once a month to discuss production quotas, pricing of different weights or APIs of crude, and consumption forecasts that companies such as Woods Mackenzie are projecting.
Discussion
In the article, Determinants of OPEC production: Implications for OPEC behavior, by Kaufmann, Bradford, Belanger, Mclaughlin and Miki, they discuss how OPEC countries take advantages of pricing, when they can. Throughout this article, I learned about how OPEC, who controls a majority the world’s oil and gas supply, regulate production and place quotas on how much the participating countries will produce. Right now, the United States is experiencing tight oil supply and low availability of crude to be purchased on the open market, which is driving prices of oil higher. But eventually, the OPEC countries will begin to ramp up production of oil to bring on more supplies to help balance out the market. Higher oil prices increase production by individual OPEC nations, rather than depressing production, thus implying that OPEC behavior also embodies competitive elements (Kaufmann, Bradford, Belanger, Mclaughlin, & Miki, 2008). One such country that can help balance out the supply demand is Saudi Arabia, which is generally thought of as the leading member of OPEC. The reason for this, is Saudi Arabia has some of the world’s largest reserves of oil, and it has the ability to rapidly increase oil production in a short time frame. In addition, they have the financial coffers to withstand producing oil in a low economic environment for a sustained time. Given the complexities that are associated with the geological, economic, and institutional determinates of oil production in the completive market, it is often hard to find an equilibrium balance with vastly different geological endowments, economic structures, and political/social aspirations (Kaufmann & Cleveland, 2001).
References
Kaufmann, R. K., Bradford, A., Belanger, L. H., Mclaughlin, J. P., & Miki, Y. (2008). Determinants of OPEC production: Implications for OPEC behavior. Energy Economics, 30(2), 333-351.
https://doi.org/10/1016/j.eneco.2007.04.003
Kaufmann, R. K., & Cleveland, C. J. (2001). Oil production in the lower 48 states: economic, geological, and institutional determinates. The Energy Journal, 22(1), pp. 27-49.
Ratti, R. A., & Vespignani, J. L. (2015). OPEC and non-OPEC oil production and the global economy. Energy Economics, 50, 364-378.
https://doi.org/10.1016.j.eneco.2014.12.001
Scatterlee, B. (2018). International Business: with Biblical Worldview. 1st Edition. McGraw Hill.