Posted March 29th, 2009
by admin
George B asked: What happens when someone pays his debt in a fractional-reserve banking system?
Is only his past debt subtracted from the reserve or also all subsequent debts that was loaned to other people with his initial debt?
For instance, a person A borrows 100$ then it becomes part of the reserve, then a person B can borrows from his deposit 80$, then a person C 64$, given a reserve requirement of 10% for banks.
Tags: Fractional Reserve Banking System, People, Person C
Posted in Economics | 1 Comment »
Posted March 28th, 2009
by admin
rainbowshamrock asked:
Should I bother with a 401k plan? Will the U.S. economy still be intact in twenty years? I mean, our resources are dwindling, peace seems much more fragile than ever, countries come and go (looking at history, how even the most powerful empires are not immortal)… This is a pessimistic perspective, but certainly a real concern of mine. Will I have my retirement money in the next twenty, thirty, or forty years?
Tags: 401k Plan, Pessimistic Perspective, Retirement Money
Posted in Economics | 1 Comment »
Posted March 12th, 2009
by admin
Marcello asked:
I am not speaking ideologically as I know that a general opposition to socialism of any kind makes sense - I am talking specifically about the practicality of it. Right now we have a huge meltdown that Canada seems to have fully averted as their banking system did not act with such ridiculous recklessness.
Tags: Canada Banks, Meltdown, Practicality
Posted in Economics | No Comments »
Posted March 11th, 2009
by admin
water_skipper asked:
How is fractional reserve banking different from naked short selling? When a bank lends more money than it has, isn’t that the same as a daytrader selling more shares than he has? Doesn’t that mean fractional reserve banks are really naked short selling the dollar?
Tags: Dollar, Fractional Reserve Banking, Money
Posted in Economics | 1 Comment »
Posted February 21st, 2009
by admin
Shahazad .N. Shaikh asked: Buying financial products is classed as ’saving’, as opposed to investment. The distinction is (in theory) clear: if money is converted into goods or services, it is investment; but, if you buy a bond or a share of stock, this transfer payment is excluded from the GDP sum. That is because the stocks and bonds affect the financial capital which in turn affects the production and sales which in turn affects the investments. So stocks and bonds indirectly affect the GDP.
Then why do people consider SENSEX as a barometer of gauging the performance of the Indian Economy ?
Tags: Gdp, Stocks And Bonds, Why Do People
Posted in Economics | No Comments »
Posted January 29th, 2009
by admin
water_skipper asked:
What was the PE of the stock market before and after the stock market crash of 1929? What I’m really wondering, was that stock market really a “bubble” crashing?
Tags: Market Crash Of 1929, Market Stock, Stock Market Crash
Posted in Economics | 1 Comment »
Posted January 14th, 2009
by admin
aks asked:
Government makes money (literally). But then there must be something productive done for a society to prosper so people serve each other through some service or product. However as such I or you cannot create money to pay for someone’s service/product. How is money created by governent released in market, on what basis government releases money? What is role of RBI ? when government releases moeny in market is it buying something in return but then who does it buy from ? Somehow, somewhere services/products created by society are finally getting to RBI (so that it can release money) but how ? Please explain.
Tags: Government Money, How Much Money, Rbi
Posted in Economics | 3 Comments »
Posted January 14th, 2009
by admin
Old Man fron Scene 24 asked:
I often hear economists saying some financial trend or another is being caused by the housing crunch or a hurricane or China building for the Olympics. But the massive amounts of money being directed to Iraq must be coming from somewhere and taking money from something else. Wouldn’t that much money leaving the US be a bigger hit on the economy than a storm in Texas?
What is being affected economically by the Iraq war?
Tags: Extra Money, Hurricane, Much Money
Posted in Economics | 3 Comments »
Posted January 14th, 2009
by admin
theMayne asked:
I understand how the Fed controls the Fed Funds Rate and I understand that injecting money into the system eases credit woes. However, if the Federal Reserve provides banks with more money, how does that money get translated into money in the money supply? Loans are only temporary, but the money supply increases consistently from year to year?
I understand how open market operations work, but what i don’t understand is how it contributes to the money supply. Money held at banks is not part of the money supply, so i don’t see how OMO’s can permanently increase the money supply.
Tags: Money Loans, Open Market Operations, Supply Loans
Posted in Economics | 4 Comments »
Posted January 14th, 2009
by admin
Loveen asked:
When the T-bonds in the Fed’s account mature, will the goverment pay to the Fed? If it will, how does the Fed use the money from the government? If the Fed then transfer the money to the government, does it mean that we all pay an inflation tax?
Tags: Mature, Money Transfer, Treasury Bonds
Posted in Economics | 1 Comment »
