○○○
asset ⪢⪢
Each transaction consists of a buyer exchanging money or credit with a seller for goods, services or financial assets.
#economy
19887
SHARED
○○○
collateral ⪢⪢
In the event that he can't repay, he has valuable assets to use it as collateral that can be sold.
#economy
19901
SHARED
○○○
complacent ⪢⪢
Those who are inventive and hard-working raise their productivity and their living standards faster than those who are complacent and lazy. #economy
19904
SHARED
○○○
credit ⪢⪢
When borrowers promise to repay and lenders believe them, credit is created. #economy
19899
SHARED
○○○
debt ⪢⪢
Debt is because it allows us to consume more than we produce when we require it and it forces us to consume less than we produce when we have to pay it back. #economy
19906
SHARED
○○○
due ⪢⪢
As mentioned, swings around the line are not due to how much innovation or hard work there is. They're primarily due to how much credit there is.
#economy
19908
SHARED
○○○
economy ⪢⪢
An economy is simply the sum of transactions that make it up and a transaction is a very simple thing. You make transactions all the time. Every time you buy something, you create a transaction.
#economy
19886
SHARED
○○○
fluctuate ⪢⪢
Productivity matters mostly in the long run but credit matters mostly in the short run. This is because productivity growth doesn't fluctuate much. So it's not a big driver of economic swings.
#economy
19905
SHARED
○○○
government ⪢⪢
A central government that collects taxes and spends money and a central bank which is different from other buyers and sellers because it controls the amount of money and credit in the economy.
#economy
19895
SHARED
○○○
lay ⪢⪢
We'll look at these three forces and how laying them on top of each other creates a good template for tracking economic movements and figuring out what's happening now.
#economy
19885
SHARED
○○○
lender ⪢⪢
Lenders usually want to make their money into more money and borrowers usually want to buy something they can't afford like a house or a car or they want to invest in some thing like starting a business.
#economy
19897
SHARED
○○○
market ⪢⪢
A market consists of all the buyers and all the sellers making transactions for the same thing.
#economy
19893
SHARED
○○○
needless ⪢⪢
The economy works like a simple machine but many people don't understand it or they don't agree on how it works. And this has led to a lot of needless economic suffering.
#economy
19882
SHARED
○○○
price ⪢⪢
The total amount of spending drives the economy. If you divide the amount spent by the quantity sold you get the price.
#economy
19891
SHARED
○○○
principal ⪢⪢
Borrowers promise to repay the amount they borrow called the principal plus an additional amount called interest.
#economy
19898
SHARED
○○○
productivity ⪢⪢
Over time we've learned that accumulated knowledge raises our living standards. We call this productivity growth.
#economy
19903
SHARED
○○○
spending ⪢⪢
Credit spends just like money so adding together the money spent and the amount of credit spent you could know the total spending.
#economy
19890
SHARED
○○○
swing ⪢⪢
Debt swings occur in two big cycles. One takes about 5 to 8 years and the other takes about 75 to 100 years. While most people feel the swings, they typically don't see them as cycles because they see them too up close - day by day, week by week.
#economy
19907
SHARED
○○○
zillion ⪢⪢
Though the economy might seem complex, it works in a simple mechanical way. It's made up of a few simple parts and a lot of simple transactions that are repeated over and over again a zillion times.
#economy
19874
SHARED
-