Financial Claims Within An Economy
In an economy it is a collective group of spenders
. There are three types of spenders. They are the governments, corporations or business firms and households.
What drives an economy is economic policy and how these units spend their money and how well their government takes advantage of the best forex trading climates. Money is the lubrication of economy. This is how properties are purchased and goods are traded off in the vehicle of currency. The problem was in the economy tends the reason for money was how to transfer the purchasing power of one unit to another unit to facilitate trade in services.
When it first started out in IOU was used as a written promise to pay a specific sum of money plus a fee for the privilege of borrowing money over a period of time. These IOUs are known as the financial claims. They are claims against someone else's money at a future date. To the recipient of a financial claim that amount of money is considered a liability and interest payments are the penalty for consuming before the income is earned. To the person that lent the money, the amount is considered an asset because it is earning interest for the person. Hence how any debt can have two faces depending on which unit you are looking at. In theory and to have an economy that is not out of equilibrium the total financial liabilities outstanding must equal the total financial outset.
When such a principle is violated economic chaos ensue. Things as high unemployment and high interest rates are symptoms of an economy thrown out of whack due to an unbalanced of liabilities and assets. Economic policy is supposed to be set to correct this imbalance. When economic policy only rewards those who further plunge the economy into the inequality then there is little hope for recovery and not even the best forex trading tips will be of much use to investors. Transparency in a treasury whether a government or business firm is of utmost importance for citizens or stockholders. Without such you can guarantee that malfeasance is taking place.
by: Rhab Hendrik
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