selling to latent demand:
LD > 0 ; LD = W + T
what latent demand is about in general is clear. what is wanted to been seen and heard, already thought about, to be experienced in real life. the tourism business flourishes, people travel around the world.
the business makes decisions. they know it will sell once available. promotion helps.
imagine it this way, you will see that, and this is the start of the process...
D < LD
when demand is smaller than supply, business becomes poor. whether this is because people take advantage of knowledge of latent demand and are quick to supply is another question. when supply for latent demand is realized, it is rarely at a price that is just right to clear the market immediately.
CLEARCHARGE
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Sunday, April 24, 2016
Sunday, July 26, 2015
An Economic Perspective: Level Middle Class
an economic perspective level middle class:
by this i mean really in the middle economically, it's both interesting from a behavioral economic view and from a social perspective, economists are interested in how they behave as agents in the economy, to judge what is happening right now and what will probably happen in the future.
by "level" read completely average, so employed, young probably or middle aged, a real consumer to be monitored. but how could an economically unactive or inactive person be considered middle class anyway? we assume that the middle class is the largest group today by income and wealth comparison.
what is the upper class? the richest, most powerful? economically this is true but social distinctions confuse the issue. there is a legacy that remains in the collective memory. that society economically observed is mobile or fluid is the case.
spending drives the economy. watch the young household, with children, they need all kinds of consumer goods and services, leisure and entertainment. the young tend to spend freely. older people, with retirement looming and no further income guaranteed, may be more cautious and become economically less important.
the level middle class make the pace. socially, of course, they are not necessarily a cohesive group, in that they mix only with each other, that's probably not the case. the 27 year old male, level middle class, working, average income, shops a lot, goes on holidays, has friends and family, may not stay in the same class all his life though.
level middle class demand is what determines a large proportion of supply in the economy.
CLEARCHARGE
by this i mean really in the middle economically, it's both interesting from a behavioral economic view and from a social perspective, economists are interested in how they behave as agents in the economy, to judge what is happening right now and what will probably happen in the future.
by "level" read completely average, so employed, young probably or middle aged, a real consumer to be monitored. but how could an economically unactive or inactive person be considered middle class anyway? we assume that the middle class is the largest group today by income and wealth comparison.
what is the upper class? the richest, most powerful? economically this is true but social distinctions confuse the issue. there is a legacy that remains in the collective memory. that society economically observed is mobile or fluid is the case.
spending drives the economy. watch the young household, with children, they need all kinds of consumer goods and services, leisure and entertainment. the young tend to spend freely. older people, with retirement looming and no further income guaranteed, may be more cautious and become economically less important.
the level middle class make the pace. socially, of course, they are not necessarily a cohesive group, in that they mix only with each other, that's probably not the case. the 27 year old male, level middle class, working, average income, shops a lot, goes on holidays, has friends and family, may not stay in the same class all his life though.
level middle class demand is what determines a large proportion of supply in the economy.
CLEARCHARGE
Saturday, May 16, 2015
The Problem of Macroeconomics
the problem of macroeconomics:
the base assumption of macroeconomics is rather that people behave economically in more or less the same manner or that the majority in what they do sway the economy such that we may frame theory so as to be workable. so to arrive at a model that explains what happens when variables under guidance are manipulated is to identify general economic patterns and to construct a framework for the economist to understand the open economy.
interest rates, money, marketable assets, property, these concern everyone in the open economy. theory on interest rates seemed applicable, but globalization and opportunity have spread and thus complexity has arisen and, because there are so many more choices now, it is hard to determine how and why the individual reacts to any change in any variable. the economist is left to speculate how interest rate moves in say, the Base Rate or Prime Rate, affect other interest rates.
may that be that credit card interest rates are beyond such interest rate moves by the government and thus so indicate they be purely in the domain of private banks who face the consumer? only recently has the market changed. the government aims to control inflation, also to boost economic output. given that output figures depend on the sum of money spent, it is one solution to increase the rate at which money is spent, that is, to increase the velocity of money.
herein lies the difficulty. i think to say that with more money you spend more is a general truth. but with less money, do you necessarily spend less? not everyone has the same ideas about money is the total problem. everyone has a unique spending history.
also the total problem with inflation is that it is always about inadequate supply of what is most demanded.
to add complexity to the argument, pro economists might like to arrive at different models for different types of economic agents. how many types are there? the spendthrift, the frugal, the vain?
CLEARCHARGE
the base assumption of macroeconomics is rather that people behave economically in more or less the same manner or that the majority in what they do sway the economy such that we may frame theory so as to be workable. so to arrive at a model that explains what happens when variables under guidance are manipulated is to identify general economic patterns and to construct a framework for the economist to understand the open economy.
interest rates, money, marketable assets, property, these concern everyone in the open economy. theory on interest rates seemed applicable, but globalization and opportunity have spread and thus complexity has arisen and, because there are so many more choices now, it is hard to determine how and why the individual reacts to any change in any variable. the economist is left to speculate how interest rate moves in say, the Base Rate or Prime Rate, affect other interest rates.
may that be that credit card interest rates are beyond such interest rate moves by the government and thus so indicate they be purely in the domain of private banks who face the consumer? only recently has the market changed. the government aims to control inflation, also to boost economic output. given that output figures depend on the sum of money spent, it is one solution to increase the rate at which money is spent, that is, to increase the velocity of money.
herein lies the difficulty. i think to say that with more money you spend more is a general truth. but with less money, do you necessarily spend less? not everyone has the same ideas about money is the total problem. everyone has a unique spending history.
also the total problem with inflation is that it is always about inadequate supply of what is most demanded.
to add complexity to the argument, pro economists might like to arrive at different models for different types of economic agents. how many types are there? the spendthrift, the frugal, the vain?
CLEARCHARGE
Monday, April 27, 2015
Comparative Economics: Comparate to What?
comparative economics comparate to what:
in each and every situation therein lies a problem. what has gone before and what will actually happen. economic constraints, comparate to repetitive economic acts of the past, limit what is expected in the market. because the economy changes, and yet we are held to our memory of what we as economic agents do, we hold little or no expectations for the change in economic direction.
when the bond market was large, corporate bonds, junk bonds what have you, private bank lending to corporations and companies was less as it crowded out debt supply in the interest rate market. interest rates are hotly debated now, which way they will move and when, whether interest rates will stay low indefinitely until there is rampant inflation or what? opinion is split. there are those holding debt who would welcome it, the split is between those who have indifferent memories of inflation and those who suffered under it. applying huge econometric models of macroeconomic behaviour seems futile thus, when everyone has their own political and economic agenda. the 20th Century AD was punctured by economic start stop and frustrated demand only satisfied during periods of mini economic boom time.
people want to see things. that is the latent demand of the past rather realized only in recent times, globalization of the media, the world wide web, the cloud, the press, expectations and economic gains. what was only shown on screen in pictures, many have lived in 3D, sampled the lifestyle, enjoyed the scenery, drunk the red liquid, felt young and alive, all because they lived out what they could only imagine.
some would like consolidation and standardization in the world of finance, easy asset to asset transfer, transferability is crucial to business. being able to do it all online instantly, the financial dream of many. business in the past was always an event, the right professionals, the right product, the right way to do these things! now it's about accessibility and ease! the internet changed everyone's opinion.
however, what they say is true the past repeats and why, we have the same economic acts happening in long cycles, a construction boom here and there, everyone wants a house of their own, a social boom, which is long reported after, and always a quiet period where it seems little business happening but private capital is being accumulated. human capital was always essential, the knowhow and experience contained often in only one man or woman, wherein lies the entire problem of economics, how to account for the actions of only a few participants in the global economy.
CLEARCHARGE
in each and every situation therein lies a problem. what has gone before and what will actually happen. economic constraints, comparate to repetitive economic acts of the past, limit what is expected in the market. because the economy changes, and yet we are held to our memory of what we as economic agents do, we hold little or no expectations for the change in economic direction.
when the bond market was large, corporate bonds, junk bonds what have you, private bank lending to corporations and companies was less as it crowded out debt supply in the interest rate market. interest rates are hotly debated now, which way they will move and when, whether interest rates will stay low indefinitely until there is rampant inflation or what? opinion is split. there are those holding debt who would welcome it, the split is between those who have indifferent memories of inflation and those who suffered under it. applying huge econometric models of macroeconomic behaviour seems futile thus, when everyone has their own political and economic agenda. the 20th Century AD was punctured by economic start stop and frustrated demand only satisfied during periods of mini economic boom time.
people want to see things. that is the latent demand of the past rather realized only in recent times, globalization of the media, the world wide web, the cloud, the press, expectations and economic gains. what was only shown on screen in pictures, many have lived in 3D, sampled the lifestyle, enjoyed the scenery, drunk the red liquid, felt young and alive, all because they lived out what they could only imagine.
some would like consolidation and standardization in the world of finance, easy asset to asset transfer, transferability is crucial to business. being able to do it all online instantly, the financial dream of many. business in the past was always an event, the right professionals, the right product, the right way to do these things! now it's about accessibility and ease! the internet changed everyone's opinion.
however, what they say is true the past repeats and why, we have the same economic acts happening in long cycles, a construction boom here and there, everyone wants a house of their own, a social boom, which is long reported after, and always a quiet period where it seems little business happening but private capital is being accumulated. human capital was always essential, the knowhow and experience contained often in only one man or woman, wherein lies the entire problem of economics, how to account for the actions of only a few participants in the global economy.
CLEARCHARGE
Tuesday, March 10, 2015
Economics: What Determines Interest Rates
what determines interest rates:
it has long been assumed that the government drives interest rates. for example, Base Rate is determined by government institution and this is still closely followed. is the government really in charge anymore, now in the early 21st Century AD?
up to recently, as and when the Base Rate was moved, private banks and the bond market would follow suit, within a day in an orderly manner, without the question of differing demand and supply for different financial products, be it money in the bank, yield assets, or revolving credit, or whatever the product was, becoming an issue.
the natural mechanism was like thus, the Prime Rate or Base Rate was adjusted, if you like, higher, so that the government trying to exert control over inflation, by reducing demand generally and in particular for money, decreased lending to private banks. private banks then increased their savings rates to compensate for this and bring in borrowing from private individuals. private individuals would then favour bank savings over bonds and thus bond yields would go up as well. has the government now lost control over general interest rates in the economy?
many people may have multiple borrowing products, be they property mortgages, revolving credit like credit cards, etc. any cursory research on the web shows that these interest rates vary widely. demand and supply for credit is often the main determinant of the particular interest rate. concern over debt repayment is another.
what determines demand for any borrowing product? the easiest to obtain may make it the most expensive. mortgages might be hard to get, while anyone in formal employment could get a credit card. it is as if there are invisible barriers to obtaining credit or loan sometimes.
how, for example, does demand for credit card debt drive government interest rates though? what is big demand in the economy anyway? high technology, tourism, social related services? the government may market bonds still and lend to private banks, but does it still play any role in the free market for those economic demands? older people are thought of as more cautious and why, they can't gain formal employment anymore yet still need an income source and bonds are often targeted to them. does traditional interest rate theory play any part for younger people? the credit card substitutes cash money. because credit card debt becomes expensive, people eventually prefer to save money, lowering private bank savings rates. as private banks can raise money from private individuals without recourse to borrowing from central government, the Base Rate must be lowered to compete with private bank interest rates.
ultimately though, from observing the consumer market, when a new product enters the market, and there is huge demand for it, this drives demand for money and thus raises interest rates, like the household machines the washing machine, the refrigerator, the computer, etc.
CLEARCHARGE
it has long been assumed that the government drives interest rates. for example, Base Rate is determined by government institution and this is still closely followed. is the government really in charge anymore, now in the early 21st Century AD?
up to recently, as and when the Base Rate was moved, private banks and the bond market would follow suit, within a day in an orderly manner, without the question of differing demand and supply for different financial products, be it money in the bank, yield assets, or revolving credit, or whatever the product was, becoming an issue.
the natural mechanism was like thus, the Prime Rate or Base Rate was adjusted, if you like, higher, so that the government trying to exert control over inflation, by reducing demand generally and in particular for money, decreased lending to private banks. private banks then increased their savings rates to compensate for this and bring in borrowing from private individuals. private individuals would then favour bank savings over bonds and thus bond yields would go up as well. has the government now lost control over general interest rates in the economy?
many people may have multiple borrowing products, be they property mortgages, revolving credit like credit cards, etc. any cursory research on the web shows that these interest rates vary widely. demand and supply for credit is often the main determinant of the particular interest rate. concern over debt repayment is another.
what determines demand for any borrowing product? the easiest to obtain may make it the most expensive. mortgages might be hard to get, while anyone in formal employment could get a credit card. it is as if there are invisible barriers to obtaining credit or loan sometimes.
how, for example, does demand for credit card debt drive government interest rates though? what is big demand in the economy anyway? high technology, tourism, social related services? the government may market bonds still and lend to private banks, but does it still play any role in the free market for those economic demands? older people are thought of as more cautious and why, they can't gain formal employment anymore yet still need an income source and bonds are often targeted to them. does traditional interest rate theory play any part for younger people? the credit card substitutes cash money. because credit card debt becomes expensive, people eventually prefer to save money, lowering private bank savings rates. as private banks can raise money from private individuals without recourse to borrowing from central government, the Base Rate must be lowered to compete with private bank interest rates.
ultimately though, from observing the consumer market, when a new product enters the market, and there is huge demand for it, this drives demand for money and thus raises interest rates, like the household machines the washing machine, the refrigerator, the computer, etc.
CLEARCHARGE
Sunday, January 30, 2011
Latent Demand in the Open Economy
latent demand in the open economy:
personal ambition dictates many consumer choices. a common demand may be frustrated by lack of supply and production means or by low savings or high interest rates. there are many indicators of interest rates in the modern open economy as there are many asset classes and forms of money or credit.
the herd instinct is one of the larger truths about the market, it may be that this clouds the issue of latent demand, be it either social or industrial, for example. the connection between people in the market may be wavering and lead to false indicators. the hot money is always chasing the next big thing.
CLEARCHARGE
personal ambition dictates many consumer choices. a common demand may be frustrated by lack of supply and production means or by low savings or high interest rates. there are many indicators of interest rates in the modern open economy as there are many asset classes and forms of money or credit.
the herd instinct is one of the larger truths about the market, it may be that this clouds the issue of latent demand, be it either social or industrial, for example. the connection between people in the market may be wavering and lead to false indicators. the hot money is always chasing the next big thing.
CLEARCHARGE
Wednesday, April 21, 2010
Money Creation and Destruction
money creation and destruction:
the initial creation of money is of course by government, which then flows through the economy, passing through many hands, and the government, through central banks, remains the ultimate creator of money. credit systems later evolve through private banks and their lending and the distinction may not be clear.
the increase in credit in economic systems and the decline of cash involvement and the rise in debt and risk in business deals, and the subsequent failures and bankruptcies thereof, results in loss of capital and what amounts to destruction of money and credit as failed economic projects must be written off. even cash sums involved may in effect be lost from the system as cash is hoarded in the event of risk.
successful business ventures create capital and only increase the flow of money and credit in the economy.
in recession, if we assume a decrease in the money supply, and the resulting deflationary consequences, can the government remedy the economic situation by creating money?
without money, the economy stalls.
CLEARCHARGE
the initial creation of money is of course by government, which then flows through the economy, passing through many hands, and the government, through central banks, remains the ultimate creator of money. credit systems later evolve through private banks and their lending and the distinction may not be clear.
the increase in credit in economic systems and the decline of cash involvement and the rise in debt and risk in business deals, and the subsequent failures and bankruptcies thereof, results in loss of capital and what amounts to destruction of money and credit as failed economic projects must be written off. even cash sums involved may in effect be lost from the system as cash is hoarded in the event of risk.
successful business ventures create capital and only increase the flow of money and credit in the economy.
in recession, if we assume a decrease in the money supply, and the resulting deflationary consequences, can the government remedy the economic situation by creating money?
without money, the economy stalls.
CLEARCHARGE
Sunday, March 28, 2010
Matching Demand
matching demand:
the match between demand and supply happens and there is a price, without this, there is no progress. often there is a distinction between what is stated and what may only be implied. as negotiations develop, this becomes clear.
say what the demand is! be forthright. be prepared.
when demand is great, and supply is little, and negotiations fumble, the realization strikes that the price is more. supply may happen and economic attention will be diverted to this rare resource.
what the demand is may be complex or it may be simple. what is the primary interest?
a beef sandwich? or a chicken sandwich?
type of bread? cheese? toasted?
matching demand may be inexact. requirements differ. timescales matter. individual sectors of the economy may proceed in an independent fashion for years, on their own plans and their own budget.
CLEARCHARGE
the match between demand and supply happens and there is a price, without this, there is no progress. often there is a distinction between what is stated and what may only be implied. as negotiations develop, this becomes clear.
say what the demand is! be forthright. be prepared.
when demand is great, and supply is little, and negotiations fumble, the realization strikes that the price is more. supply may happen and economic attention will be diverted to this rare resource.
what the demand is may be complex or it may be simple. what is the primary interest?
a beef sandwich? or a chicken sandwich?
type of bread? cheese? toasted?
matching demand may be inexact. requirements differ. timescales matter. individual sectors of the economy may proceed in an independent fashion for years, on their own plans and their own budget.
CLEARCHARGE
Monday, February 8, 2010
Core Statistics in Modern Life
core statistics in modern life:
core statistics in modern life include ratios such as supermarkets per community, restaurants, railway stations, clothes shops, televisions, computers....
indeed, key parts of the economy are food, transport, clothes, housing and communications. for example, what percentage of households in a community have one or more cars? how many telephones? how many pairs of shoes does the lady have?
not all communities are the same....
a residential area in the centre of a city is not the same as the leafy suburb in the outskirts of the city. how good is the communications network? how many outsiders pass through?
food is basic. there might be only one supermarket on or near the high street or main street. only one or two restaurants, a couple of fast food outlets.
transport is far more complex to analyze. is it the car, the bicycle, the tram or the bus or train? or even the plane or starship or boat or ship? fuel is a consideration.
housing is the industry which shows most the inequalities in society. the lord or lady of the manor versus the council house tenant or those living in the projects.
who has access to the web? how fast and reliable is the connection?
if we assume people live as couples....
for example, the two person household:
1 apartment:2 people
1 fixed line telephone:2 people
however what if they each have their own computer and line connection?
2 computers:2 people
core statistics are ever changing and explain much in society.
CLEARCHARGE
core statistics in modern life include ratios such as supermarkets per community, restaurants, railway stations, clothes shops, televisions, computers....
indeed, key parts of the economy are food, transport, clothes, housing and communications. for example, what percentage of households in a community have one or more cars? how many telephones? how many pairs of shoes does the lady have?
not all communities are the same....
a residential area in the centre of a city is not the same as the leafy suburb in the outskirts of the city. how good is the communications network? how many outsiders pass through?
food is basic. there might be only one supermarket on or near the high street or main street. only one or two restaurants, a couple of fast food outlets.
transport is far more complex to analyze. is it the car, the bicycle, the tram or the bus or train? or even the plane or starship or boat or ship? fuel is a consideration.
housing is the industry which shows most the inequalities in society. the lord or lady of the manor versus the council house tenant or those living in the projects.
who has access to the web? how fast and reliable is the connection?
if we assume people live as couples....
for example, the two person household:
1 apartment:2 people
1 fixed line telephone:2 people
however what if they each have their own computer and line connection?
2 computers:2 people
core statistics are ever changing and explain much in society.
CLEARCHARGE
Thursday, January 14, 2010
Financial Economics: Expected Returns
expected returns:
any project of economic interest requires capital, the timescales for expected returns are certainly important, not only is it a matter of satisfying initial credit claims but also determining the level of interest in the project. if i and my partners have to wait 14 years for the full level of expected returns, would we still be interested? what if it were only 4?
the larger the project, the more complex it becomes, in terms of asset classes formed and used and traded. financing or capital expenditure is key from the outset, not only to set up the venture but also to maintain the corporation. where does this capital come from? the credit/capital markets or from the forming partners. capital may be very expensive.
running costs may vary and can lead any company to bankruptcy. returns in the later years must be greater than costs.
R = Returns
C = Costs
R > C
CLEARCHARGE
any project of economic interest requires capital, the timescales for expected returns are certainly important, not only is it a matter of satisfying initial credit claims but also determining the level of interest in the project. if i and my partners have to wait 14 years for the full level of expected returns, would we still be interested? what if it were only 4?
the larger the project, the more complex it becomes, in terms of asset classes formed and used and traded. financing or capital expenditure is key from the outset, not only to set up the venture but also to maintain the corporation. where does this capital come from? the credit/capital markets or from the forming partners. capital may be very expensive.
running costs may vary and can lead any company to bankruptcy. returns in the later years must be greater than costs.
R = Returns
C = Costs
R > C
CLEARCHARGE
Friday, November 6, 2009
Open Economy
the open economy:
whilst we labour under regulation, the free movement of stock, people, trade and barter, in a sense, we assume....
that everything good is possible, hopefully that we need we get, the struggle is not in vain....
credit where credit is due
CLEARCHARGE
whilst we labour under regulation, the free movement of stock, people, trade and barter, in a sense, we assume....
that everything good is possible, hopefully that we need we get, the struggle is not in vain....
credit where credit is due
CLEARCHARGE
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