My Take on Econ

The question sounds more philosophical than economic, yet in macroeconomics, the aim is to make decisions morally and beneficially. Many people accept that socialism is more just than capitalism, because of obvious reasons. One of them is the ability to remove poverty in a nation by distributing all the wealth in the nation equally. I am here to say that this would not be moral or beneficial. Why is socialism not ethical? The way I see it, the conversion from socialism to capitalism requires many of the wealthy people to “give up” their wealth. No matter how hard they have worked, all their profits are now redistributed to the majority of people. This doesn’t seem fair, does it? The richest people in a free market economy are those who provide the largest value to the nation. For example, Bezos, set up amazon, employed 1.3 million people around the world and established the preferred shop for hundreds of millions worldwide. The people who find value in using amazon, use it. Throu...

 DISCLAIMER, THIS IS MY VERSION OF AN ECONOMIC THEORY, I AM DOING A THOUGHT EXPERIMENT AND DO NOT TAKE MY WORD IN THIS SCENARIO, I AM JUST A 17-YEAR-OLD MAKING UP A SCENARIO AND USING SOME ECONOMICS AND GENERAL KNOWLEDGE TO SIMULATE WHAT HAPPENS, thank you and enjoy!  Picture yourself in 2522, assume that humans have been able to grow to be a type 1 civilisation on the Kardashev scale: we are able to completely control the Earth, able to harness as much energy as we desire as well as the control over any natural disasters, with the ability to mine asteroids in the asteroid belt for their endless resources, where there are no shortages of food or anything else. What will economics look like? In a world where there are no shortages, the basic economic problem does not apply. As there are no shortages, there is no need to allocate resources efficiently, the issue of scarcity is no longer, and most wants are satiated. Thus, I present the problem of abundance. In a utopian soci...

  This school is one of the more recent schools of economics as it surfaced in the 1930s. The theory was developed in the aftermath of the great depression. John Maynard Keynes , an economist from Cambridge University, neither supported the free market or the communist ideals. Instead of this, he took ideas from both and made a new idea of thinking. Keynesian economics . This branch of economics suggests that the government has the power to protect the economy from the harsh peaks and troughs in the business cycle using monetary and fiscal policy . This would be done by government spending in recessionary troughs and taxes in economic booms. There were more theories such as the multiplier effect . Fiscal policy Fiscal policy is a method of controlling the economy as a macroeconomist such as Jerome Powell in my last blog. Fiscal policy is all about taxes and government spending . There are two methods of using fiscal policy, expansionary and contractionary fiscal policy . The de...

Last month, in the US, the Fed (Federal reserve bank of the USA) chairman Jerome Powell changed his stance on “transitory inflation,” which he believed was the state of inflation in America, and now claims that inflation is no longer transitory. What does this mean? What does the phrase transitory inflation mean? First things first, transitory inflation refers to momentary inflation hikes, which would not make a mark on the economy in the form of higher inflation rates. The Fed chairman claimed that the Quantitative Easing (QE) that the Fed had been doing in order to stimulate the economy after the fallout of the pandemic would not leave a lasting impact on the US economy, thus it would be transitory inflation. Realistically, transitory inflation has little to no negative aspects outside of inflation increasing temporarily. Like an inflationary lump and then the inflation would not be significant in the grand scheme of things and thus not a big issue and the public should not panic...

  Austrian The Austrian school of economics, founded by Carl Menger, saw that the world was evolving and for the first time in history, people were making a positive impact on society and playing a “positive sum game”. Before the industrial revolution the primary economic objective was to obtain a larger share of the pie. But during the industrial revolution people saw times of economic growth without the requirement of taking a piece of the pie from a different nation. This caused a fault in mercantilism to become apparent. There was a possibility to make the pie bigger. This led to the Austrian school of economics amending the theory of mercantilism and changing it to individualism. This was a large contribution to the free market theory. The Austrian school of economics was revolutionary in terms of macroeconomic theories. They also gave insights to the laws of supply and demand, the theory of money creation, and the operation of foreign exchange rates.   Laws of...

 Classical school There have been various schools of economic thought throughout history, but I will be focussing on three over the next few posts, which I find the most fascinating: Classical , this blog; Austrian , the free-market (capitalist) school (next blog), and  Keynesian ; the school which has the most supporters in the modern world (next-to-next blog). The classical school of economics, founded by the father of economics, Adam Smith, in the late 18 th century. This was the school which revolutionised economics as its own separate study , different to philosophy. The classical school of economics made a vast number of contributions to economics. Such as, the law of marginal utility . This law states that the more of something you buy/obtain, the less useful it is to you. This can be shown by using kettles as an example. If you were to buy one kettle, it would be very useful as you can now boil water efficiently. If you were to get two kettles, the second would ...

So today I will be talking about investment funds Venture Capital Funds Hedge Funds Venture capital is a method of benefitting smaller start-ups by investing money into them. This is so that the business can use the VC’s investment to upscale their business, this allows the VC to make a profit as the business grows . Venture Capital may possibly the most difficult type of investing to succeed in as the Kauffman Foundation stated that 62% of venture capital funds fail to exceed stock market returns. Let alone the substantial size of investment required, which is anywhere between $1 Million and $5 Million. Meaning that it would be practically impossible for individuals who don’t fall in the Ultra-high-net-worth bracket to invest using this strategy. On the other hand, there are very high returns as The National Bureau of Economic Research has stated that in VC, 25% is the average return per investment. The top quartile of VC funds have an average annual return ranging from 15% to...

 There are a variety of investment types, I am not talking about crypto currency but more about traditional, predictable investment, for example: ·          Equity ·          Bonds ·          Property What is Equity ownership? Equity is when you purchase a miniscule fragment of a company, therefore having ownership in the losses and profits the company made. If a certain individual or company owns large amounts of equity in a company, they become a shareholder. The owner of a business is simply the person with the largest amount of equity in a company. For example, Elon Musk is the largest shareholder of Tesla and thus the owner of the business. Stock is just traded equity. How do investors assess whether they should invest? They first judge which of the companies are worth investing in by looking at their finances (oversimplification, too much infor...

 What are monopolies? What are monopolies? A monopoly, by definition, is a business that is the majority owner/producer/seller of a certain product (usually essentials) and has the power to leverage high prices as there is no free-market competition. As a traditional monopoly does not have any significant competitors to be forced set reasonable prices. Example of a monopoly. Monopolies are very rare at present because of anti-monopolistic government policy. But the most notable one was John D. Rockefeller’s company  - “The Standard Oil company and trust”- an American oil-producing, transporting, refining, and marketing company established in 1870. Standard Oil controlled 90% of the US oil market in 1880, a mere 10 years after it started. But how do businesses like Standard Oil gain monopolies?  Standard Oil, like many other monopolies, grew in power and wealth through horizontal integration; by purchasing rival businesses in the refining sector and through...

This is a tale of a nation previously ravaged by the most devastating war in history and has been struck with the most powerful bombs ever used in active warfare. With all its cities damaged and factories destroyed, Japan emerged from the ashes of its history in World War 2. With help from the allies, notably Britain and USA, Japan experienced one of the largest economic booms ever seen. Between 1953 and 1965, Japan achieved a sustained growth rate of 9% annually - meaning that the size of the economy almost tripled in 12 years. Moreover, the Japanese government re-invested its newfound wealth back into the nation and built highspeed railways, airports, and metro systems, which would all contribute to the success of the nation. Japan took advantage of globalisation and leveraged its position as the world’s low-cost manufacturer. Their tech and car industries were booming as with the nation’s businesses being known internationally. However, in the 1990s, it all stopped. The GDP of Jap...