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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2answers
102 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 ...
-1
votes
1answer
50 views

How much money in the UK? [closed]

How much money is in the United Kingdom economy? What I mean here is the total including cash, gold/silver reserves, real estate, brands, and really everything you could think of.
-2
votes
1answer
78 views

What is tapering and why does the Fed use it? [closed]

What is tapering and why does the Fed use it to help economic growth and control inflation? Can somebody please explain in layman's terms?
2
votes
2answers
57 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
52 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 ...
0
votes
1answer
238 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 ...
1
vote
3answers
97 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
78 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
323 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
123 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 ...
4
votes
1answer
211 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
77 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
266 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
301 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
265 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 ...
3
votes
3answers
618 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 ...
0
votes
1answer
5k 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
3k 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 ...
12
votes
2answers
391 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 ...
10
votes
2answers
287 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
261 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 ...
5
votes
3answers
2k 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
2answers
856 views

Who creates money? Central banks or commercial banks?

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
450 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 ...
14
votes
6answers
3k 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
325 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
209 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
675 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 ...
9
votes
6answers
4k 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 ...
5
votes
1answer
751 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 ...
61
votes
20answers
5k 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
322 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
368 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'?
11
votes
2answers
2k 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 ...
4
votes
3answers
259 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 ...
8
votes
4answers
1k 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, ...
5
votes
7answers
2k views

How credible is Stansberry's video “End of America”?

So, I stumbled upon this a couple of days ago. I've shown it to several friends. I have no idea what he is advising we do about it, I haven't paid him any money, and he doesn't pay me. What I ...
4
votes
3answers
272 views

How do economists gather retail price data, such as for tracking inflation?

How do economists track the prices of things like milk, produce, furniture and other retail products? Do they have people with clipboards going out to stores and gathering data? Scrape web sites? ...
6
votes
2answers
604 views

What is the opposite of Economic Bubble? [closed]

A deflationary event or.. ? Also, I'm interested in seeing if it's as negative as a bubble or it has positive effects.
7
votes
2answers
128 views

Does the currency exchange rate contain any additional information at all?

Pretty often I hear someone saying stuff like "The pound is worth more than the US Dollar" or "The Kiwi Dollar is worth less than the Euro". Well, technically it is correct that 1 pound buys me more ...
17
votes
9answers
1k views

Does gold's value decrease over time due to the fact that it is being continuously mined?

As one can see here ( How fast does the available amount of gold in the world increase due to mining? ), available amount of gold is increasing. That sounds similar to printing more money. I ...
7
votes
4answers
443 views

Economics Books [closed]

I'm absolutely a newcomer in economics and I wish to understand how things work in finance too. So, think of me as uninformed in these matters. I would like to find resources that discuss economics ...
4
votes
2answers
157 views

Would the effects of an anticipated default by a nation be mostly symbolic?

Given that the whole Greece saga has played out for a few years now -- and that most speculation is that Greece will default at some point -- if they finally do default, will it be mostly symbolic? ...
15
votes
8answers
833 views

How do you measure the value of gold?

With stocks in a company, when you do valuations, you can look at things like how much profit the company has made, or how much dividends it gives back, in order to get values with Price Earning ...
1
vote
1answer
61 views

What is the effect of a high dollar on the Canadian economy, investors, and consumers?

Is a high dollar good or bad for the Canadian economy? Are investors affected differently from consumers because of this?
15
votes
8answers
2k views

How does giving to charity work?

The title of this question is hopelessly vague, but here is what I'd like to know: I've always heard that even if you don't have much money, you should give to charity. It is tax-deductible. I'm ...
9
votes
3answers
2k views

How much power does a CEO have over a public company?

I want to invest in a public company and I want to know: Exactly how much power does the CEO has over what the public company does? Can a CEO control a public company even though he doesn't own a ...
7
votes
4answers
232 views

Fractional Reserve Banking and Insolvency

When talking about fractional reserve banking, if we take a contrived example. 1,000 people deposit US$1,000. Deposit total are $1m. Then the bank subsequently loans US$ 900,000 via a series of ...
11
votes
3answers
557 views

When people say 'Interest rates are at all time low!" … Which interest rate are they actually referring to?

When we talk of 'rising interest rates' or 'falling interest rates', which interest rates are we referring to? - The interest given to the individual by the bank on a savings account? - The interest ...
20
votes
5answers
1k views

Prices go up and salary doesn't: where goes delta?

I'm not sure that question is appropriate here, if it is not I will delete it. Question: I heard that in USA prices are rising, but salaries are not. This looks strange to me. It means that companies ...