To be used for general economics questions that are in some way related to personal finance, the subject of this site. Avoid asking questions that are speculative in nature, academic, or unrelated to personal finance.

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3
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4answers
370 views

How are the best way to make and save money at 22 years old

I am currently 22 years old, I work as an insurance biller and make about 800-900 dollars every two weeks cash. I have no expenses because I still live with my parents but I'm trying to branch out on ...
0
votes
1answer
42 views

How does the debt:GDP ratio affect the country's economy? [closed]

I was surpriced when I saw the debt of USA has raised to more than 100% of its GDP. But I saw other countries like Japan having over 250% of its GDP. And a lot of countries have debt near 100% of GDP. ...
0
votes
1answer
88 views

perpetual bond that yields 0%

As far as I understand perpetual bonds are endless and don't mature. So why would anybody invest in one that does not yield? You don't know when/if they are going to pay.
0
votes
2answers
51 views

Brent crude vs. USD market value [closed]

correlation != causation, but Brent crude and the USD are completely on twinkie paths Brent Crude USD exchange rate Why is it that when the price of oil drops, not only do you have more money to ...
1
vote
2answers
45 views

How do I calculate Future value adding fund charges?

Here is the statement on the NEST website. "We take a small percentage of the money going into your pot known as a contribution charge. This amount is 1.8 per cent." They then also charge £15 ...
-4
votes
2answers
120 views

How does the world - in aggregate - generate a non-zero return? [closed]

Given the sum of two entities' wealth remains the same after any given transaction, how do these entities grow in value as a whole? For example, if I grew some corn in China and sold it to the US for ...
1
vote
1answer
176 views

Why can't poor countries just print more money? [closed]

I know this is a really silly question that is really obvious, but what's stopping a country from just printing out a few more billion of their own currency and then using that money to buy goods from ...
5
votes
1answer
143 views

Why adjust for inflation annually, as opposed to realising it after the holding period?

Why do investors offset their annual returns against inflation, when inflation isn't realised until the end of the holding period (when the investor is actually spending the money)? An example: ...
5
votes
4answers
1k views

What exactly is a “derivative”?

I haven't been able to find exactly what a derivative means. It seems to be some sort of cross of insurance, stock, and lay-a-way. When I try to look it up, all I find is all the problems not ...
0
votes
2answers
94 views

What are the “perfect” conditions for selling a small private business?

As the title says. What the general opinion seems to be is that now is the best time ever to sell a small business because of low: interest rates, tax rates, and inflation, plus many large M&A ...
2
votes
0answers
49 views

What is the economically rational way to fund leasehold property management?

I am trying to find a company to manage the block of flats (apartment building) I live in. What is the economically rational way to pay for property management services, According to traditional ...
16
votes
8answers
3k views

What's an economic explanation for why greeting cards are so expensive? [closed]

Greeting cards sell for about $5-6 per card. For what is basically a piece of paper, that's pretty expensive. Yet, they're not exactly well protected. Anyone with photo editting software could ...
0
votes
1answer
121 views

calculation of real inflation rate in india?

How can I figure out the real rate of inflation in india? If I don't believe CPI as real and practical? We get the CPI numbers as inflation rate, but in my views those numbers are not the real one. I ...
4
votes
6answers
509 views

What is the opposite of a sunk cost? A “sunk gain”?

Here's an example of the sunk cost fallacy: You decided to buy a solar panel because you heard that you can make money from them over time. Unfortunately, you didn't do enough research and bought an ...
-1
votes
1answer
49 views

Is there more money in pockets or in banks? [closed]

In America, or the world at large, is there more money in people's pockets---i.e., not within banks or institutions, etc.---or in banks or institutions, etc? Provide evidence and reasoning.
-1
votes
1answer
61 views

Is there any historical example that a market is shrinking down after competition? [closed]

I heard a story saying that the advertising market shrink down after Google entered. I doubt this strongly because Google is doing so well with its ads, though I never know what's the older days like. ...
3
votes
2answers
273 views

Is there a reason to buy a 0% yield bond?

Right now I can get a 1yr government bond that yields 0%. Is there any reason to buy such a bond? E.G. If the broker holding my accounts goes out of business is my "perceived low risk portion" of my ...
2
votes
2answers
81 views

Why are real-term bond yields systematically declining, and what does it mean for investors?

I'm having hard time understanding what is causing the trend below: In theory, since it is inflation adjusted I'd expect the yield to fluctuate with the economic cycle, but not systematically drift ...
-2
votes
1answer
94 views

Comparing GDP across countries [closed]

I was talking with my friend yesterday and he said that India's GDP per capita is an indication that the country is poor. I thought that this statistic was misleading since the country's cost of ...
1
vote
1answer
440 views

Why do both stock and bond seem overvalued in 2014?

The general wisdom is that when stock is overvalued, bond is undervalued, and vice versa. Why are both suggested to be in a bubble in 2014? Also, if one believes in tactical allocation, what asset ...
0
votes
3answers
157 views

What is the meaning of “$N industry”?

For example, in the sentence "Semiconductor fabrication is a $100 billion industry.", what exactly is being said?
0
votes
1answer
204 views

Why was there a spike in disposable income in December 2012? [closed]

If you go to: http://www.tradingeconomics.com/united-states/disposable-personal-income and look at December 2012, there was a huge spike in disposable income. Does anyone know the reason for this?
1
vote
2answers
1k views

Why does the stock market index get affected when a terrorist attack takes place?

The way I see it, the stock exchange is a market where shares of a company are traded. These trades are triggered by individual valuations by participants of what an investment in a company would be ...
1
vote
2answers
202 views

What does “basis points” mean in this context?

I read this sentence: Egypt's central bank cut its benchmark overnight deposit rate by another 50 basis points to 8.75 percent, its second rate cut in two months. What does basis points mean ...
5
votes
1answer
229 views

What are good investments to use as hedges when the Federal Reserve draws down quantitative easing?

Basically I think it is quite obvious that quantitative easing (QE) will be pulled back eventually and countries will start to tighten their monetary policy. When that happens, what kind of assets ...
1
vote
1answer
89 views

Economics: negative consumer sentiment following failure to upsell

I was recently at a bricks-and-mortar shop selling some equipment. I knew exactly what need I had and had a mental picture of the product I expected to purchase. The store offered two different ...
5
votes
1answer
325 views

Equity prices during currency devaluation — Mexico 1994 [closed]

If I own a company whose assets are 100 barrels of oil valued at $10,000 in some currency, and the currency's value suddenly drops by a factor of two, I would expect that my company is now suddenly "...
2
votes
2answers
603 views

Why don't the employment rate and unemployment rate sum up to 1?

According to Turkstat, the Turkish employment rate was 44.9 and the unemployment rate was 10.1 in December 2012. I would expect the unemployment rate to be 1 - employment rate. How are those numbers ...
8
votes
1answer
306 views

What is the economic explanation for the high cost of weddings?

I'm currently organizing my wedding and it seems as soon as you mention the W word to any restaurant or caterer etc. the price immediately double. I'm not even kidding either - I've even gone to a ...
2
votes
5answers
1k views

Why could rental costs for apartments/houses rise while buying prices can go up and down?

In this U.S. city, I have the impression that the rents of apartments and houses always go up, say, about a 5% per year, while the prices of buying them fluctuates throughout the same years. If my ...
5
votes
5answers
50k views

Account that is debited and account that is credited

As a non-English-native person, I somehow find it difficult to understand the following: When an account is said to be debited, what does this mean? How does this differ from an account that is ...
1
vote
1answer
4k views

what is the meaning of allowing FDI in Insurance and pension funds

I want to know with respect to following news http://www.hindustantimes.com/business-news/WorldEconomy/Pension-insurance-get-FDI-boost/Article1-939798.aspx http://www.dnaindia.com/india/report_we-...
13
votes
2answers
558 views

Does high frequency trading provide economic value? [closed]

HFT is often bandied about in the media as a greedy activity that produces no real economic value. It's an easy to believe argument - certainly no ipods are directly created and no minerals are mined....
10
votes
2answers
388 views

What is the “Bernanke Twist” and “Operation Twist”? What exactly does it do?

I was reading the article Bernanke’s Twist Sharpens Year-End Anxiety Over Stimulus and In the article it says The Fed on June 20 extended its Operation Twist program to swap $267 billion in ...
12
votes
4answers
291 views

Is it normal to think of money in different “contexts”?

I find that my opinions on money are very different depending on the context. For example - I've got about $60,000 in my stock portfolio, so that fluctuates considerably (anywhere between several ...
7
votes
3answers
13k views

How and why does the exchange rate of a currency change almost everyday?

How does the exchange rate of a currency change every day? Why does that happen? Please explain to me with a naive approach and avoiding financial jargon.
10
votes
3answers
1k views

Who creates money? Central banks or commercial banks? [closed]

Which of these is a better description of money creation: Scenario 1: Central bank creates money Customer A deposits $10 at his bank. Customer B wants to borrow $100. The bank is in good standing ...
3
votes
2answers
499 views

As an investor what are side effects of Quantitative Easing in US and in EU?

If I understood well Quantitative Easing basically means a Central Bank prints out more money of its own currency. It seems simple to understand that it saves the country banks and the States by ...
18
votes
7answers
7k views

Why are interest rates on saving accounts so low in USA and Europe?

For example, in USA interest rates are 1-2% percents, while in Russia it is normal to have up to 8% anually for US dollars account. Same goes for Euro. For Russian ruble it can be up to 12%, but with ...
1
vote
2answers
813 views

What does “running a very large fiscal deficit” mean?

Recently I was reading an article on ft.com, and I came across this quote: They [yield on gilts and bonds] are particularly striking in the cases of the US and UK,which unlike Germany, run very ...
11
votes
1answer
275 views

WSJ article about CFDs - am I missing something?

In this WSJ article, it comments Traders held a net $22.6 billion in bets that the dollar will appreciate, a gain of 31% in net wagers over the previous week and the largest such position since ...
6
votes
4answers
1k views

Why can't the Fed lower interest rates below zero?

Ben Bernake said today that he can't lower interest rates further because they can't be lowered below zero. IIUC benchmark interest rates are determined by what someone is willing to pay in an ...
11
votes
6answers
13k views

Why does money value normally decrease?

When you save money in the bank, you expect interest on your investment. But if you invest, on, say property, gold, or other durable goods, you don't expect your house or gold to multiply. Why? Is it ...
6
votes
1answer
2k views

How much does taking a Microeconomics course help you understand the field of investing?

I took an AP (Advanced Placement) Macroeconomics course in high school, and the concepts were very interesting, but unfortunately I think it provided minimal help (or maybe it was because we barely ...
71
votes
20answers
9k views

In a competitive market, why is movie theater popcorn expensive?

I have seen some arguments claim that movie theater popcorn is expensive because the theater acts as a monopolist. However, this is only true after I have paid for a movie ticket. Before entering the ...
7
votes
3answers
579 views

Are large companies more profitable than small ones?

Economies of scale and scope indicates that a large company will in general be more profitable than a smaller one. Is there any statistical material that supports this? Of course, the interesting ...
6
votes
2answers
584 views

What is the difference between credit score and debt rating?

Why is it that the credit worthiness of individuals is tracked via 'credit rating (score)' while that of nations (soverign debt) is tracked via 'debt rating'?
13
votes
2answers
3k views

Does the United States really owe 114 trillion dollars? Please explain “unfunded liability”?

I would like to refer to the site USdebt.Kleptocracy.us (A visualization of United States debt) I'm just a little bit curious as to what these figures mean. I understand the 1 trillion dollar ...
5
votes
3answers
334 views

Why does the stock market consistently overreact to the business cycle?

It's been shown time and time again (e.g. in Stocks for the Long Run) that the most profitable time to buy stocks is when sentiment is poor and that stocks usually recover very quickly at the end of a ...
9
votes
4answers
4k views

How can all these countries owe so much money? Why & where did they borrow it from?

When I look at this long list of countries with debt, I get the feeling we've all been sold a load of manure. How can so many countries owe so much money? Generally speaking, why did they borrow it, ...