Economy
Three Forces Drive the Economy
-
Productivity Growth
-
Short-term Debt Cycle
-
Long-term Debt Cycle
But before we go there, we should understand
Transactions
Transactions are basically the exchange of money or credit for products, services or financial assets between a purchaser and a seller. This is how all people, corporations, banks and governments work.
Price is essentially the product of total expenditure / sold quantity.
Transactions are the economic machine's building blocks.
You understand the entire economy when you understand how transactions work
The economy is the sum of all the transactions in it, simply.
The overall expenses in an economy are paid for by money and credit and are main drivers.
The Market, Government and Central Banks
The market is reflected by both purchasers and sellers making transactions, for instance, we have wheat markets, stock markets, steel markets, oil markets, etc. The whole market, or the whole economy, is the combination of all of these sub-markets.
The largest purchaser and seller is ofcourse the government.
We must, however, differentiate between the Central Government and the Central Bank.
The Central Bank, like the US Federal Reserve, manages the economy's amount of money and credit, which it does by controlling interest rates and printing currency.
When it comes to credit flows, the Central Bank is fundamental.