This is Dr Osman attitude so don't be suprised by my wide ranging topics. My mind is so 'large' I love to feed it diverse knowledge(science, economics, state craft, business, military, religion, philosophy) thru discussion and 'growth' only, I am not as interested in 'destructive' discussion.
Let's discuss economy and agree first on the concept. It's defined as 'consumers, markets, businesses, govt holistically). These factors are involved in the economic architecture. My main discussion point wants to revolve around the 'central bank' and it's role in the economy and the instruments used on banks regarding money supply.
I am aware in each given year their will be spending/transactions in the economy and the money supply needs to compliment it(not over or under supply) it.
I am aware the largest spending and transaction will involve 'consumers' spending in the market, government budget spending for it's policy, debt servicing requirement, housing purchase, unemployment levels(greater demand). Anticipated private investment confidence levels or investor low confidence. These areas will need the correct money supply and that makes perfect sense to me.
The area that doesn't make sense to me is the following due to my limitations.
1. Interest rates set by the central bank. Say the central bank sets interest rate of 5%, does that mean all banks will need to pay the central bank back 5% on the principal and therefore will need to set interest rates to the public for loans to 10% and gather up the difference for itself and it's repayments to the central bank?
I read interest rates are determined based on economic conditions(to support growth n loans or to discourage it higher interest rate) and it's a tool to curb inflation, but surely their must be other factors involved to set interest rate. Is it simply to slow down or increase economy? Is the interest rate just a 'common' baseline for all banks to adhere too when giving loans out?
2. What does the central bank do with the interest collected from banks. Store in vaults? assets? mix?
3. What other regulatory functions does a central bank do on private banks?
We need to understand this field even non-economists, even at a 'theme' level and have economists work out the details involved in the theme.
I am big fan of economists who look at the whole market-govt policy-consumers-businesses holistically as a 'eco system' working together and creating 'measurement' variables to measure the economy as a whole each year. I just want u guys to clarify how u know the variables your using are indeed accurate or the margin of error involved?
If u understand macro-economics it will be useful tool for investors to know when to invest and where in the market and when not to do and revert to 'storage defensive investments even tho the growth is low, it's not killing ur wealth either'.
There was 1 good Ogaden economist on here but his no longer here, is there others?
Let's discuss economy and agree first on the concept. It's defined as 'consumers, markets, businesses, govt holistically). These factors are involved in the economic architecture. My main discussion point wants to revolve around the 'central bank' and it's role in the economy and the instruments used on banks regarding money supply.
I am aware in each given year their will be spending/transactions in the economy and the money supply needs to compliment it(not over or under supply) it.
I am aware the largest spending and transaction will involve 'consumers' spending in the market, government budget spending for it's policy, debt servicing requirement, housing purchase, unemployment levels(greater demand). Anticipated private investment confidence levels or investor low confidence. These areas will need the correct money supply and that makes perfect sense to me.
The area that doesn't make sense to me is the following due to my limitations.
1. Interest rates set by the central bank. Say the central bank sets interest rate of 5%, does that mean all banks will need to pay the central bank back 5% on the principal and therefore will need to set interest rates to the public for loans to 10% and gather up the difference for itself and it's repayments to the central bank?
I read interest rates are determined based on economic conditions(to support growth n loans or to discourage it higher interest rate) and it's a tool to curb inflation, but surely their must be other factors involved to set interest rate. Is it simply to slow down or increase economy? Is the interest rate just a 'common' baseline for all banks to adhere too when giving loans out?
2. What does the central bank do with the interest collected from banks. Store in vaults? assets? mix?
3. What other regulatory functions does a central bank do on private banks?
We need to understand this field even non-economists, even at a 'theme' level and have economists work out the details involved in the theme.
I am big fan of economists who look at the whole market-govt policy-consumers-businesses holistically as a 'eco system' working together and creating 'measurement' variables to measure the economy as a whole each year. I just want u guys to clarify how u know the variables your using are indeed accurate or the margin of error involved?
If u understand macro-economics it will be useful tool for investors to know when to invest and where in the market and when not to do and revert to 'storage defensive investments even tho the growth is low, it's not killing ur wealth either'.
There was 1 good Ogaden economist on here but his no longer here, is there others?
Last edited:
