Financial Terms Explained Pt 3

As we progress to understanding the weird world of money, here are some financial terms worth noting.

Fractional reserve banking –  a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. A Bank loans most of the money to those they deem “worthy” from depositors’ accounts while having a fraction of their money (physical bills) on hand.

 

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You are seeing correct. This is a five billion dollar note issued in Yugoslavia in 1993.

Inflation – the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Paying more for the same services or goods [over time].

 

 

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Deflation – a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been. Paying less for same services or goods [over time].

 

All references can be found on www.investopedia.com 

 

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Financial Terms Explained (Pt2)

The main way we can protect ourselves in the world of finance has always been knowledge. Banks and financial agencies are masters of this and will employ “technical” terms, even use the law to rid you of your hard-earned dollars. Whatever country you belong to the financial language, however, remains the same. I will use bold italics to simplify the terminologies.   Here are three financial terms you need to know:

Ask – Ask is the price a seller is willing to accept for a security, which is often referred to as the offer price. The lowest price the seller is willing to sell the item you want.

Bid – A bid is an offer made by an investor, a trader or a dealer to buy a security, commodity or currency. It is the highest price you are willing to pay for the item that you desire to have.

Spread – A spread is the difference between the bid and the ask price of a security or asset. The gap between the asking (selling) price and the bidding (buying) price.

All references can be found on www.investopedia.com 

 

Financial Terms Explained (Pt1)

This will be a multi-part series to gain enlightenment with terms used in finance. For us to uncover the deception of the financial elite and see opportunities to gain we need an understanding of the terminologies of finance. I will use bold italics to simplify the terminologies when needed. Here are three financial terms you need to know:

Debt

The weight of debt if you do not know how to use it or get out under it

Debt – Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest. The total amount of money you owe to a person or financial institution.

Liability – A liability is a company’s financial debt or obligations that arise during the course of its business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services. Recorded on the right side of the balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues and accrued expenses. Anything that removes money from your pocket or increases expenses/cost to you. There are however exceptions to this as you won’t view your child or pet as an expense, right?

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Assets & Profits…we all want some!

Asset – An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. An asset can be thought of as something that in the future can generate cash flow, reduce expenses, improve sales, regardless of whether it’s a company’s manufacturing equipment or a patent on a particular technology. Anything that places money in your pocket or reduces cost/expenses.

 

All definitions can be found on www.investopedia.com