Bite Size Economics No. 1 (repost)
'interest is the price of risk'!
If a higher interest rate is being charged there is more risk of non-repayment.
This is why some people are charged more for loans & why some 'investments' are offered with higher interest rates.
Knowing this helps make sense of loans & investments; and is a useful scam warning
If an interest rate is out of line, ask yourself, why?
Bite Size Economics No. 2 (repost)
'Money is trust'
Money is usually seen as a store of value or a means of exchange but these functions depend on its manifestation of trust.
We trust money is acceptable to others (in the form we want to use from paper money to digital payments); we trust its value is (in the medium term) relatively stable.
When our trust declines so does money's stability (inflation, barter exchange). So, without our trust money cannot work!
Bite Size Economics No. 3 (repost)
'markets are never free'
The idea that in some ideal world markets can be free misunderstands how markets work; they are dependent on property & contract laws shaped by the state (or in earlier times the local political authority).
Historically markets have operated without formal laws, but even then community trust & local authority set the norms for market interactions.
All markets are regulated the issue is how & by whom?
Bite Size Economics No. 4
'When inflation is falling prices are still rising'
It's widely assumed that when there is a fall in inflation, prices are dropping but that would be 'deflation'. Inflation is a rate of increase, lower increases are still increases.
Moderate inflation allows nominal prices to shift & change in relation to each other (due to market & technological shifts) with less disruption than if prices were held steady! Moderate inflation is fine!
Bite Size Economics No.5
'The rich don't spend enough'
The reason 'trickle-down economics' doesn't work is that while workers spend most of their income (a multiplier effect then passes money from hand to hand maintaining economic activity), the wealthy 'invest' much of their money in assets (mostly property of various sorts).
This 'investment' takes money out an economy, tying it up in speculative asset markets, with no multiplier spreading it around!
It not only takes money out of the economy, hoarding money in stock, land and similar assets drains government revenue.
Without real #WealthTax , capital gains come way too late, too low and are easily avoided through loans and other financial games. And of course, there is offshore hiding of wealth.
Low growth and government deficits come not from the welfare state or gov infrastructure spending, but from the rich not spending or paying taxes.
#TaxTheRich
Yup, completely agree
Emeritus Prof. Christopher May
TC Won't Give In To Lies