Just like buying direct from the source cuts out the middleman, sticking to a proven financial model works (for instance, if one purchased bank checks from the check manufacturer instead of the bank, you get faster service and a quality product at half off).
Finance economics looks at the allocation of resources over time; in an uncertain environment. It examines how money is traded now to create money in the future. It tries to gauge the amount of money transferred into the future, based on risks and uncertainties. It looks at how one party of the transaction can make a decision to affect the future outcome of the money transfer. And lastly, it examines how certain knowledge of the future can reduce uncertainty. Their safety ratings and bank checks seemed reasonable, so they thought.
When the housing boom started to slow and home values started dipping slightly, behavioral economics experts thought it was a logical progression for the over-inflated market to bubble and pop. One thing no one saw coming was the crumpling of so many giant bank and financial institutions over just a few months of time.
One of the criticisms of finance economics and macro economics theories is that it never considers how the inner-workings of bank and financial institutions can impact the larger economy. "That's the view of microeconomics theorists," they scoff. In turn, micro-economists are looking at how financial institution decisions affect consumer spending and behavior, rather than scaling up.
Critics say behavioral microeconomics fails to provide large-scale evidence of how these small factors affect large economies and they fail to offer up new economic paradigms in place of the old flawed systems. Perhaps the trouble with finance economics is also the trouble with any sort of economic field of study; these different schools of thought refuse to consider others' ideas. There are financial and behavioral economics professors. There are micro and macro economics theorists. The truth lies somewhere in-between these disparate ideas about how large and small-scale economies function and what variables affect them the most.
Finance economics experts have a lot of work to do. Now that they've acknowledged the potential devastation that "bubbles" can cause in the market, they must figure out how to manage those risks and limit the scope of the damage. They must study how liquid markets can suddenly dry up and determine which policies or actions could keep cash flowing freely and purchasing power strong.
For instance, when the real estate bubble burst, which was long expected as a natural progression, many investors hastily pulled all their money out of the stock market, which caused widespread panic and a domino effect of other investors who did the same. The question economists must ask now is how can they restore consumer confidence and keep it?
The Adam Smith model of pure capitalism shortens the pain and propels a faster correction for inefficient direction. The temptation to interfere by governments and politicians have rendered pure capitalism an eunuch.
Finance economics looks at the allocation of resources over time; in an uncertain environment. It examines how money is traded now to create money in the future. It tries to gauge the amount of money transferred into the future, based on risks and uncertainties. It looks at how one party of the transaction can make a decision to affect the future outcome of the money transfer. And lastly, it examines how certain knowledge of the future can reduce uncertainty. Their safety ratings and bank checks seemed reasonable, so they thought.
When the housing boom started to slow and home values started dipping slightly, behavioral economics experts thought it was a logical progression for the over-inflated market to bubble and pop. One thing no one saw coming was the crumpling of so many giant bank and financial institutions over just a few months of time.
One of the criticisms of finance economics and macro economics theories is that it never considers how the inner-workings of bank and financial institutions can impact the larger economy. "That's the view of microeconomics theorists," they scoff. In turn, micro-economists are looking at how financial institution decisions affect consumer spending and behavior, rather than scaling up.
Critics say behavioral microeconomics fails to provide large-scale evidence of how these small factors affect large economies and they fail to offer up new economic paradigms in place of the old flawed systems. Perhaps the trouble with finance economics is also the trouble with any sort of economic field of study; these different schools of thought refuse to consider others' ideas. There are financial and behavioral economics professors. There are micro and macro economics theorists. The truth lies somewhere in-between these disparate ideas about how large and small-scale economies function and what variables affect them the most.
Finance economics experts have a lot of work to do. Now that they've acknowledged the potential devastation that "bubbles" can cause in the market, they must figure out how to manage those risks and limit the scope of the damage. They must study how liquid markets can suddenly dry up and determine which policies or actions could keep cash flowing freely and purchasing power strong.
For instance, when the real estate bubble burst, which was long expected as a natural progression, many investors hastily pulled all their money out of the stock market, which caused widespread panic and a domino effect of other investors who did the same. The question economists must ask now is how can they restore consumer confidence and keep it?
The Adam Smith model of pure capitalism shortens the pain and propels a faster correction for inefficient direction. The temptation to interfere by governments and politicians have rendered pure capitalism an eunuch.
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