How does the global economy work?
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Each time I watch the news reports about the economy crashing and politicians getting frantic I think to myself: Why don't the government just print more money to solve the crisis. I guess that would lead to an inflation but if they did it secretly no one would know about the extra cash would they. That's when I discovered that I needed to find out more about how the economy works, and google is giving me (Edit here) irrelevant stuff.. So can anyone here summarise how it works and post it in the reply. Thank you :)
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even if to summarise, it would still be a llloooonnnnngggg story
bcos it's not a simple thing ya know. -
don't be lazy pls
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Originally posted by Anthiadon:
Each time I watch the news reports about the economy crashing and politicians getting frantic I think to myself: Why don't the government just print more money to solve the crisis. I guess that would lead to an inflation but if they did it secretly no one would know about the extra cash would they. That's when I discovered that I needed to find out more about how the economy works, and google is giving me long answers from wikipedia and other sites which is simply too time-consuming to read. So can anyone here summarise how it works and post it in the reply. Thank you :)
there are several concepts that you need to master1. Human population is growing
2. Supply and demand
3. Intrinsic value and Economical value (Theory of value)
Really an econ assay...
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Okay I don't mind reading something long but I just can't seem to find a site that does that. I tried google and it gave me answers like "US economy" or "Communism" and stuff like that. Nothing about the world economy and how its interlinked. I'll try googling Lokey's suggestions now
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Google freemasons, illuminati and conspiracy in one go.
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ok here goes
When market down
Stocks market prices down
then can buy cheap
then after market recover
shares up.. is time to reap profits again
then down again. can buy cheap again
etc....
so is on and off thing one
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You can try some simple basic concepts first:
Economic Developments
Economic Patterns
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You may reach some red herrings in your search for economic truth, some of them are associated with USA right wing conspiracy propaganda like NWO or fed reserve crap.
Ignore them. They are pure rubbish.
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Originally posted by Anthiadon:
Each time I watch the news reports about the economy crashing and politicians getting frantic I think to myself: Why don't the government just print more money to solve the crisis. I guess that would lead to an inflation but if they did it secretly no one would know about the extra cash would they. That's when I discovered that I needed to find out more about how the economy works, and google is giving me (Edit here) irrelevant stuff.. So can anyone here summarise how it works and post it in the reply. Thank you :)
In simple explaination..."Global Economy" implies that all economies are connected by means of global resources/Supply, and global demand/needs. So One country growth help other to growth at different pace...Of course having said that one country fall sick....the rest of the world also got affected in areas such as Demand, Price/Value, thereby affecting employment, Income etc.Got that the key word is "Connected" The truth is out there you are not alone........
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Originally posted by Anthiadon:
Each time I watch the news reports about the economy crashing and politicians getting frantic I think to myself: Why don't the government just print more money to solve the crisis. I guess that would lead to an inflation but if they did it secretly no one would know about the extra cash would they. That's when I discovered that I needed to find out more about how the economy works, and google is giving me (Edit here) irrelevant stuff.. So can anyone here summarise how it works and post it in the reply. Thank you :)
Question
Government just prints more money to solve the crisis as long they did it secretly no one would know about the extra cash.
Answer
The economists both local and foreign will know as they keep track on the economic data including money supply of the country.
In addition, each note has a serial number and when the government just prints more money the public will come to know about it too.
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It's my personal belief that no one be left behind. Economics is quite a lengthy subject, at times even grads at uni may not even touch on it but focus on their core subjects instead. Thus many laymen may be slightly confused, and not sure which book to even focus on to understand what's really going on.
To comprehend global economics, you will have to start at the very basics of how economics came about.
1. The role of economics began when mankind became civilised and started to live in communities, went into farming and animal husbandry instead of living in caves and jungles as hunters.
2. The land provided food in abundance, more than a farmer could eat, thus they sold their excess harvests to others, for not all farmers grew the same crop - some are wheat, some are grapes to make wine, some are veggies, some are fruits, etc. From here trade was formed.
3. They not only sold to their own communities, they sold to other communities as well. The beginning years were barter trade, a pound of apples for a pound of wheat.
4. However, as these farmers were living in a community with agreed upon laws, they had their headmen or chiefs. The barter prices were largely left to them to decide within communities and beyond, so that none may lose out, as there will be issues of supply and demand based on good or bad harvests due to weather, earthquakes, wars, etc.
5. As civilisations grew, so did wealth of communities as there were plenty of Earth's resources to meet growing educated needs, such as gold, tin, rubber, etc.
6. The wealth of nations depended largely on the amount of gold each have, for gold does not rust or fade over time, unlike crops or other ferrous metals. It was precious. Many of these chiefs traded crops for gold instead of barter trade, and use gold to purchase other needs.
The chiefs created coins based on the value of gold they have in their treasuries, in exchange for the crops their farmers brought in to their trading centres. Such coinage can be used to make other purchases the farmer needs within their own community.
Ancient China used not only coins but pieces of written promissory notes as well. As it was difficult and dangerous to carry gold around the country, they used such promissory notes ( the beginnings of dollar notes ) for trade with others, promising the sellers an amount in gold that can be collected at any time at a certain place such as their bankers in specific towns. These notes can also be used by the seller to exchange for other goods with other sellers up to the value of the note.
It was believed that Marco Polo brought back such 'dollar' notes concepts to Europe after he visited Kublai Khan in China.
And from there, our present monetary system remained as it is - every dollar printed must be backed by gold or the amount of wealth valued. To print more dollar notes would be to devalue the currency, eg $1 = 1 ounce of gold, accepted by all international traders. To print 1 additional dollar yourself as a chief would mean your dollar is now worth only 50cts (1 ounce of gold divided by 2 dollar notes)
7. By the 70s, the gold standard was dropped by mutual agreement. Instead the US dollar was the standard of international trade, as US is the wealthiest and most stable country in the world, where anyone can encash his promissory note (US dollar) for gold, but no one does it for it is crazy to carry gold around. That note can and is recognised by every country.
Instead of gold, other nations hoarded US dollars or bonds instead. The amount a nation has is the value of its wealth, backed and held in faith that US will pay and can most certainly pay. It's raw resources alone is staggering.
8. With the monetary system based on US dollar trade squared away, the issue now would be - what is the global economy?
a. At its basic level, it simply means trade - the life source of the world - is now in the hands of MNCs instead of traditional govts who only regulates. MNCs provide jobs, manufacture and sell products anytime, anywhere globally with no borders for profits.
In the past, it had been govts who protected their own industries but with free trade, MNCs owes no allegience to any govt except to themselves, free to move into any country to create jobs and prosper, and contribute to the betterment of societies with their wealth creation, instead of olden days of inefficient and unproductive nationalistic protectionism.
Societies also prospers by the higher productive levels of competitive economic activities, generating higher tax returns for social spending.
9. The next issue TS might want to know is - what's in it for me, the common layman, with the global economy or globalisation.
PS: It is quite lengthy, I apologise. I had to keep it simple so that more may understand, and I do not claim my perceptions are correct. If there are any errors, it is mine, but I hope that I may have pique TS's or others' interest to go to the libraries to find out more. Globalisation is here to stay and best everyone understand it so that none gets left behind bewildered.
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ya ya ya.... summarise!!!!!!!!!!!!!!!!!!!!!!!!!
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Originally posted by FireIce:
ya ya ya.... summarise!!!!!!!!!!!!!!!!!!!!!!!!!
Now that's a challenge! hmmm.....
Global Economy system = Free enterprise cross borders to do biz
= increase in productivity for bottomlines
= create more wealth
= create more jobs
= less poverty
= boomz! Prosperity for all
PS: Students, do not copy this, you will surely get a grade F for this if not thrown out of class!
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hw cm u duno.
skool got teech.
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Originally posted by xtreyier:
Now that's a challenge! hmmm.....
Global Economy system = Free enterprise cross borders to do biz
= increase in productivity for bottomlines
= create more wealth
= create more jobs
= less poverty
= boomz! Prosperity for all
PS: Students, do not copy this, you will surely get a grade F for this if not thrown out of class!
Hi Mr Xtreyier,
Global economy is not simple as you explained.
There are real and financial flows of resources, goods, services and capital among the countries in the world. The financial flow is now made more complicated by the use of currency swaps, interest rate swaps, options, futures and so on.
TS, you can go to the library to borrow the book International Economics Relations by Hodgson and Herander to read. This book is basically descriptive in nature. There are little diagrams used or the use of mathematics.
After reading the book, you can proceed to read further on the book International Economics by Salvatore and the book is easy to understand. The book will make use of diagrams but with little use of mathematics.
Should you have further interest, you can proceed to the international economics models on the book World Trade and Payments by Caves and Jones and international finance and open economy macroeconomics by Batiz.
For international financial markets, you can proceed to read the book International Financial Markets and the firm by uppal.
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Originally posted by charlize:
Google freemasons, illuminati and conspiracy in one go.
I did and what do they have to do with the economy? -
Originally posted by noahnoah:
ok here goes
When market down
Stocks market prices down
then can buy cheap
then after market recover
shares up.. is time to reap profits again
then down again. can buy cheap again
etc....
so is on and off thing one
So if the market crashes, then goods will become cheaper and people will have to buy stuff to help the economy recover and things will become more expensive again? But what causes the market to crash in the first place, and if the market goes down won't people avoid spending too much instead. Will the market not recover then.
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Originally posted by Arapahoe:
In simple explaination..."Global Economy" implies that all economies are connected by means of global resources/Supply, and global demand/needs. So One country growth help other to growth at different pace...Of course having said that one country fall sick....the rest of the world also got affected in areas such as Demand, Price/Value, thereby affecting employment, Income etc.Got that the key word is "Connected" The truth is out there you are not alone........
Okay so assuming Sierra Leone runs out of diamonds in its fields, and the price of diamond shoots up, the economy of sierra leone would crumble, but wouldn't the economy of developed nations improve because diamond becomes more expensive, shops earn more money and the economy improves? So why would one country falling sick bring down the other, unless its like dog-eat-dog world between countries..
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Originally posted by Lee012lee:
Question
Government just prints more money to solve the crisis as long they did it secretly no one would know about the extra cash.
Answer
The economists both local and foreign will know as they keep track on the economic data including money supply of the country.
In addition, each note has a serial number and when the government just prints more money the public will come to know about it too.
So I guess countries like the DPRK which isolates itself from everywhere else will be able to print unlimited amounts of useless cash because no one can see what's going on.
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Originally posted by xtreyier:
It's my personal belief that no one be left behind. Economics is quite a lengthy subject, at times even grads at uni may not even touch on it but focus on their core subjects instead. Thus many laymen may be slightly confused, and not sure which book to even focus on to understand what's really going on.
To comprehend global economics, you will have to start at the very basics of how economics came about.
1. The role of economics began when mankind became civilised and started to live in communities, went into farming and animal husbandry instead of living in caves and jungles as hunters.
2. The land provided food in abundance, more than a farmer could eat, thus they sold their excess harvests to others, for not all farmers grew the same crop - some are wheat, some are grapes to make wine, some are veggies, some are fruits, etc. From here trade was formed.
3. They not only sold to their own communities, they sold to other communities as well. The beginning years were barter trade, a pound of apples for a pound of wheat.
4. However, as these farmers were living in a community with agreed upon laws, they had their headmen or chiefs. The barter prices were largely left to them to decide within communities and beyond, so that none may lose out, as there will be issues of supply and demand based on good or bad harvests due to weather, earthquakes, wars, etc.
5. As civilisations grew, so did wealth of communities as there were plenty of Earth's resources to meet growing educated needs, such as gold, tin, rubber, etc.
6. The wealth of nations depended largely on the amount of gold each have, for gold does not rust or fade over time, unlike crops or other ferrous metals. It was precious. Many of these chiefs traded crops for gold instead of barter trade, and use gold to purchase other needs.
The chiefs created coins based on the value of gold they have in their treasuries, in exchange for the crops their farmers brought in to their trading centres. Such coinage can be used to make other purchases the farmer needs within their own community.
Ancient China used not only coins but pieces of written promissory notes as well. As it was difficult and dangerous to carry gold around the country, they used such promissory notes ( the beginnings of dollar notes ) for trade with others, promising the sellers an amount in gold that can be collected at any time at a certain place such as their bankers in specific towns. These notes can also be used by the seller to exchange for other goods with other sellers up to the value of the note.
It was believed that Marco Polo brought back such 'dollar' notes concepts to Europe after he visited Kublai Khan in China.
And from there, our present monetary system remained as it is - every dollar printed must be backed by gold or the amount of wealth valued. To print more dollar notes would be to devalue the currency, eg $1 = 1 ounce of gold, accepted by all international traders. To print 1 additional dollar yourself as a chief would mean your dollar is now worth only 50cts (1 ounce of gold divided by 2 dollar notes)
7. By the 70s, the gold standard was dropped by mutual agreement. Instead the US dollar was the standard of international trade, as US is the wealthiest and most stable country in the world, where anyone can encash his promissory note (US dollar) for gold, but no one does it for it is crazy to carry gold around. That note can and is recognised by every country.
Instead of gold, other nations hoarded US dollars or bonds instead. The amount a nation has is the value of its wealth, backed and held in faith that US will pay and can most certainly pay. It's raw resources alone is staggering.
8. With the monetary system based on US dollar trade squared away, the issue now would be - what is the global economy?
a. At its basic level, it simply means trade - the life source of the world - is now in the hands of MNCs instead of traditional govts who only regulates. MNCs provide jobs, manufacture and sell products anytime, anywhere globally with no borders for profits.
In the past, it had been govts who protected their own industries but with free trade, MNCs owes no allegience to any govt except to themselves, free to move into any country to create jobs and prosper, and contribute to the betterment of societies with their wealth creation, instead of olden days of inefficient and unproductive nationalistic protectionism.
Societies also prospers by the higher productive levels of competitive economic activities, generating higher tax returns for social spending.
9. The next issue TS might want to know is - what's in it for me, the common layman, with the global economy or globalisation.
PS: It is quite lengthy, I apologise. I had to keep it simple so that more may understand, and I do not claim my perceptions are correct. If there are any errors, it is mine, but I hope that I may have pique TS's or others' interest to go to the libraries to find out more. Globalisation is here to stay and best everyone understand it so that none gets left behind bewildered.
So if I buy a 100 dollar bond I simply lend the USA 100 dollars and they have to return it whenever I ask? So whats the point of getting the bonds in the first place, why don't I just put it in a bank account. Also there's a couple of questions about the MNC I need to know.Is the MNC a global organisation or a group of businessmen.
How do they "create jobs" and "make countries prosper", they have endless amounts of cash to create factories and industries?
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Originally posted by Hello Kitty:
hw cm u duno.
skool got teech.
Not yet.. -
Originally posted by Anthiadon:
So if I buy a 100 dollar bond I simply lend the USA 100 dollars and they have to return it whenever I ask? So whats the point of getting the bonds in the first place, why don't I just put it in a bank account. Also there's a couple of questions about the MNC I need to know.Is the MNC a global organisation or a group of businessmen.
How do they "create jobs" and "make countries prosper", they have endless amounts of cash to create factories and industries?
T Bonds come with interest payments upon maturity. If it is redeemed at any time, you will miss out on the interest, just like fix-D. Bank accounts are private enterprises and many found out last year, it could collapse and their money wiped out.
But there is no fear that the US govt will be wiped out anytime soon. Their military might would have to collapse, their talented people emigrated away, their land suddenly offers up no more resources. Aint gonna happen anytime soon.
Multi-National Corporations are free enterprises biz made up of toms, dicks and harrys, public listed so as to get more investors in to provide more wealth so that they may expand their capable operations to the world.
An example:- Ah Seng Durian company can also be considered a MNC if he proves himself successful, sells great durian at prices the market will buy, list on the stock exchange after 5 years of profit, and with the shareholders money, expand his durian plantations and profitable operations in S.E.Asia.
MNC creation of jobs:- example:- Malaysia has many unused land. Ah Seng decides to buy or lease a few lots there. He used his shareholders money to research into better quality yields of durians.
After a year, his work bears fruits, and sells to a appreciative market who buys only his durians, disregarding even their own homegrown durians. With profits, he hires more workers and lease more land lots.
He works further on R&D, on his distribution and marketing channels and appeals to even more appreciative msians. The workers earn money, pay taxes. Ah Seng pay taxes and pay for the land costs, and everything else in his operations. Msia govt and commerce got a new better revenue.
The older plantations that were not productive, either gives up the land and workers so that Ah Seng can make better use of it all, and earn better revenue for everyone.
Multiply the above Ah Seng with hundred of thousands other companies like his style dealing in similar competitive products or different products venturing into different countries, and national economies that they come from and touch will prosper better and greatly productively.
Believe me, this is really very very brief. and only for simple layman understanding and if you write this for your exam, you will flunk for sure, nor will this simple understanding help you get a job.Better you sit for a course and obtain the degree if you want to find employment in economics
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What is so complicated? Its about buying, selling and making a profit!
As Lee012lee pointed out there is actually more to that...
The complications come in when you deal with transnational aspect of it. Different countries have different currencies, trading rules etc. Some have trade barriers some don't. Beyond that, its really just about the buying and selling. I consider capital to purchase labor when they start a new factory in China. =P
Maybe you can work from what a capitalist economy is first. Read wealth of nations by Adam Smith or wiki it. Read Karl Marx's critique of it as well.
Start off somewhere from the ground then work your way up to the international level.
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The global economy works in a money cycle. It would be too big of a picture to explain. A simple sequential formula would be money earned, money spent, money saved, money invested and money lent.