Volume 3 of "The Tough Economic Story," the finance section, comprehensively covers how the financial world surrounding us divides, splits, flows, and absorbs money.
A particularly important stage is the bank, and among them, the central bank.
This is because it is an institution that decides and implements financial policies that affect our daily lives, including adjusting the base interest rate.
This book organizes confusing financial knowledge, focusing on banks, interest rates, inflation, and exchange rates, into an easy-to-understand format.
And that's not all.
We also cover various financial products that you may have heard of but not fully understood.
It allows students to naturally learn the principles and risks of derivatives, including stocks, funds, futures, and options.
By following the author's friendly lectures, you will experience the experience of understanding finance, which once seemed difficult, in an easy way.

Here, let's first understand the role of finance.
The basics are this.
When your money is transformed into financial assets through financial institutions, it can reach a much wider world.
Surplus funds, that is, money that was stranded in someone's pocket and had no immediate use, can now be transferred to someone who needs it.
---From "Part 1, Chapter 1, 'Inescapable Finance'"

Today, we buy gold at a price that fluctuates based on market supply and demand. That wasn't the case in Britain at one time.
If you take your banknotes to the bank, they will immediately exchange them for gold.
Exchanging banknotes for precious metals in this way is called convertibility.
Banknotes that can be exchanged for gold and silver are called convertible banknotes, and today's banknotes that cannot be exchanged for gold and silver are called inconvertible banknotes.
---From "Part 2, Chapter 1, 'What is Money?'"

Some people like it when prices go up.
For example, inflation is beneficial to those who own real assets such as land, factories, apartments, or gold and silver.
This is because when inflation occurs, the value of currency falls and the relative value of real assets rises.
When prices rise, housing prices also rise, and landlords use that as a reason to raise rents from tenants. Similar things happen in every sector.
----From "Part 2, Chapter 2, 'Is the Goal Price Stability?'"

Quantitative easing is like a shock to the heart.
When performing CPR, you are told to perform chest compressions first, and if consciousness does not return, use a defibrillator.
Quantitative easing is the first shock to the collapsed economy with a base interest rate cut, but when there is no sign of recovery, it is like using a shock absorber.
---From "Part 2, Chapter 2, 'Is the Goal Price Stability?'"

For example, let's assume that an American investor invested $10,000 in the domestic bond market when the dollar was worth 800 won.
If you exchanged dollars into won, you would have invested about 8 million won.
But what if, with your investment return of approximately 10%, the exchange rate rises to 1,000 won per dollar? With a return of 800,000 won, your total assets in Korean won would be 8.8 million won. However, if you convert it back to dollars, it would be worth only $8,800, effectively shrinking your principal.
The exchange rate fluctuations have caused the valuation of the currencies to change.
If you suffer a loss in this way, it is called an exchange loss, and if you suffer a profit, it is called an exchange gain.
It means loss or profit due to exchange rate difference.
---From "Part 2, Chapter 3, 'The Principle of Exchange Rate Movement'"

But there are more compelling reasons why the dollar remains the default currency in today's global trade markets.
Today, the dollar is linked to a resource far more important than gold in modern society.
It's energy.
More specifically, it refers to oil.

The dollar is linked to oil? How so?

The United States has long recognized the value of oil.
In 1974, three years after the Nixon Shock abolished the gold standard, then-US Secretary of State Henry Kissinger visited Saudi Arabia, then leading the Organization of Petroleum Exporting Countries (OPEC), and concluded a surprising agreement.
The content was that when buying and selling OPEC oil, payments could only be made in dollars, and oil prices were also to be set based on dollars.
Simply put, they've made it impossible to trade crude oil without the dollar.
---From "Part 2, Chapter 3, 'The Principle of Exchange Rate Movement'"

But when the first joint-stock company was created 400 years ago, shareholders' meetings were primarily for discussing dividends.
Even back then, shareholders and inside directors would fight over dividends.
This is the story of the Dutch East India Company, founded in 1602.
When the East India Company first issued stock, it promised to pay out 5% of its capital to shareholders every time it made a profit, but it never kept its word.
Instead, he used the money to expand his business, including buying new ships.
Minority shareholders who did not receive the dividends they wanted staged protests, denouncing management for not paying proper dividends.
---From "Part 3, Chapter 1, 'Stocks, Opening the Door to Investment'"

Private equity funds can do things other funds can't.
For example, you can acquire control of a company by purchasing a large amount of bonds or stocks from a failing company and transform it into a sound company.
Then you resell it and make a profit.
Since not all private equity funds perform this role, private equity funds for this purpose are called PEFs or private equity funds.
Corporate mergers and acquisitions, one of the most important issues in the market, are actively occurring as private equity funds restructure insolvent companies.
---From "Part 3, Chapter 2, 'Funds, Building a Big Ship'"

However, compared to the value of the currencies of smaller countries, Bitcoin may actually be more stable.
In addition to Bitcoin, there are many different coins emerging these days. Some of them are created by trustworthy multinational corporations, while others are pegged to the US dollar.
These cryptocurrencies may be less volatile than the currencies of smaller countries.
---From "Part 3, Chapter 4, 'The Present and Future of Finance'"

The growth of derivatives has played a major role in the expansion of financial markets.
The financial market rapidly expanded as futures and options, which are made by further processing securities, increased.
The derivatives market is now more than seven times the size of global GDP.
We've already entered an era where giant hedge funds manage more money than the national budgets of small countries, and this trend will only intensify.

---From "Part 3, Chapter 4, 'The Present and Future of Finance'"