Politics is the politician who puts together the opinions of the group and makes a rule. The person who does that is called a politician. The economy is a series of activities from making things to be bought and sold to people who need them, to buying and using them.
For example, make vegetables, deliver them to the market, buy vegetables from the market and eat them, or create an amusement park and have customers visit the park and enjoy riding a roller coaster.
Economics and Politics: Basic Definitions
The Role of Politics in Economy
It is the role of politics to make rules for the production of goods, the production of goods, the distribution of goods to people, and the consumption of goods used.
For example, if there are chemicals that should not be used during production, it is the job of a politician to gather the opinions of experts and compile them into rules (laws).
It is the job of politicians to create laws that will not abuse new technologies and other harmful things.
The role of politics, as well as how to deal with various foreign affairs, also responds by incorporating the opinions of various people, and this is called diplomacy.
So, if the politicians are blurred without any decision, the economy, technology, and foreign situation are changing every moment, and the current law becomes useless over time. In a straightforward example, PCs and mobile phones did not exist 50 years ago, but now everyone has it, and there are many crimes using it.
Primary financial institutions in China said the Chinese economy still has strong resilience despite mounting pressure. Among the increasing pressure is related to debt swelling and the ongoing trade war with the United States (US).
The PBOC (Peoples Bank of China) added that many Chinese households saved more, the business community was vibrant and there were large financial institutions that functioned well and many policy tools. The PBOC statement was revealed in a report on financial stability.
China: Economy ‘still operating within a reasonable range
“The PBOC will increase the flexibility and coordination of financial supply in serving the real economy while preventing financial risks,” the PBOC said, as quoted by Xinhua, Saturday, November 30, 2019.
On the other hand, the Chinese central bank placed so much stress on the significance of the financial market in preserving China’s real economic climate. At the PBOC meeting chaired by PBOC Governor Yi Gang, conference participants agreed that the financial sector had offered stable support to the real economy in 2019.
However, according to a statement released after the meeting, achieving stable macroeconomic and financial operations still faces a number of challenges, the downward pressure on the economy continues to increase, and social credit still faces pressures of partial contraction.
Yi said ongoing efforts must be made to strengthen counter-cycle adjustments and increase credit support for the real economy. He underlined that the increase in money supply and combined financing must be in line with nominal GDP growth.
“As for M2, the extensive gauge of the money supply which involves cash in circulation as well as all deposits, increased to as much as 8.4% YoY to 194.56 trillion yuan (around USD27.7 trillion at the end of October, PBOC data show.
M2 growth is the same as growth at the end of September. However, 0.4 points higher than the same period last year. Its growth this year is basically in line with nominal GDP growth.
Furthermore, Yi urged that the financial sector can play a full role in the role of the LPR mechanism in reducing real lending rates and continue efforts to increase bank lending capacity by replenishing capital.
“China will continue to implement wise monetary policies and see banks contribute more to financing the real economy,” the PBOC statement said
On a side note, while China’s economic climate is highly affected by its financial sector, the support of its primary institutions is overwhelming. And even if loans to the public is not easily accessible (except for settlement loans like car accident loans), they still manage to keep a strong economic climate.
Forex signals are suggestions for going into a trade on a pair of currency, typically at a certain value and time. These signals are either produced manually by an analyst or automatically by a Forex robot provided to a forex signal service subscriber.
Factors Affecting Currency Values
But, similar to most commodities, forces of demand and supply in the market impact the prices of currencies. Sequentially, these forces are affected by numerous factors wherein they sometimes raise demand or supply bringing about a fluctuation in the value of the currency.
Whatever influences money flow in a nation or between nations may affect the values of a currency. Below are three of the major factors that impact the price of a currency:
The currency value of a nation is determined by its economic status. Usually, a budding economy is the basis for a currency that’s stable wherein it is valued greatly compared to others. Whichever factors that influence the progression of the economy, whether in a positive or negative manner also have a bearing on currency prices.
There are numerous economic signs that must be thought through prior to making a decision on a forex trade. These signs exemplify different economic aspects. As the overall condition of the economy influences the value of the currency, these signs are quite beneficial in identifying how the prices of currency will turn out given the present conditions of the economy.
Policies Of The Government
The economy of a country is always being assessed by its government and act on it. Policies are formed and carried out by its government to boost existing economic conditions throughout a positive movement and to remedy the disproportion if the condition of the economy isn’t faring well.
Most policies of the economy are under two types, the monetary and fiscal policies. The monetary policies affect the different elements of the financial framework of the country to better or uphold the economy. The country’s central bank executes the policies of the government by means of using numerous investment tactics in the markets.
Fiscal policies sketch out the government’s spending. Part of the fiscal policies is the yearly budget. It identifies the places where government spending will take place. Spending done by the government encourages the industries’ prospects as well as the economy’s segments.
Both fiscal and monetary policies have an effect on currency prices, however the influence of monetary policies is just about instantaneous.
Frequently, politics determines the route taken by an economy. Political turmoil or instability causes many ambiguities regarding the future and suppresses the growth of the economy and the value of the currency. An imminent election or warfare may bring about a careful and guarded investment tactic, lessening the flow of capital into a nation.
Moreover, a change in administration frequently subdues the currency’s price movement in the foreign exchange market. Up until the political outlooks of the new administration or leadership, fiscal and monetary policies as well as viewpoints on global trade clears, the markets don’t demonstrate a clear movement in the value of the currency.
A nation that is regarded as politically unstable won’t be an ideal or preferential partner for trading. This will have an effect on its forex trade and the currency’s value in this market. Conversely, a progressive and broadminded political leader as well as an unwavering leadership put forward amplified investments since the confidence of investors grows sturdier.
The IPE is a part of social science that aims to better understand global issues through the use of theoretical viewpoints and multifaceted tools. Even though it has primarily grown as a field under International Relations, it has now fully developed to stand alone. The University of Puget, there are more than 30 students who have finished a degree in IPE every year. The rising popularity of IPE is a result of the continuous breakdown of limitations that divides the economy, politics, and various other social sciences.
Progressively, the single most stressing issue that researchers and lawmakers are facing are those that can only be understood from various points of view. IPE brings down the walls that limit rational inquiry within the arena of social sciences. Therefore critical questions and issues could be analyzed with no disciplinary reference.
Audit office of the government gives fair warning regarding the decline in equity values that will knock out loan records.
Boosting the home ownership through the help of the government scheme has lead the authority to relevant market risk. In addition, this scheme had been utilized by some buyers as a risk which may lead to negative equity. Based on the data of the National Audit Office, with an estimated figure of around 70 percent of individual who used this scheme can buy properties without the assistance of the Help to Buy program of the government. Moreover, around 20 percent securing that from the government were not first timers. This create impact of economy to corporate credit.
What is Help to Buy Program?
“Help to Buy” is a program of the government introduced in 2013 in UK by the coalition party ofDavid Cameron. The main goal of this program is primarily to help more individuals to land on the equity ladder. However, political critics insist that this so-called program of the government has diffused the prices of the equity and at the same time the revenue of the house builders. On the other hand, the shortage problem regarding affordable homesexperienced failure in fixing it.
The “Help to Buy” program permits home buyers to render a deposit of as low as 5% on a newly build home. Subsequently, the buyer will have to receive an equity loan provided by the government to wrap the 40% of the equity value or the 20%. Traditional mortgage will cover up the balance from the equity loan which will be computed by the equity release mortgage calculator.
Help to Buy’s Total Investment
Since April 2013 until December of 2018, the “Help to Buy” program already catered 211,000 loans through the help of the Ministry of Housing and the Communities and Local Government. As estimated end date of the program, the “Help to Buy” scheme will end by 2023 in which the loan is also expected to peak. This program just opened the government to relevant market risk in case the equity values decrease. Moreover, this ties up an important financial capacity for the public.
Further, the government is expecting to regain its total investment rendered to this program by the year 2032. However, a reduction in the equity market could strike the value of its loan book. In addition, the auditor also gave warning that other buyers who used the scheme are also wanting to sell their properties. Afterwards, they also find their selves having equity of negative value.
Loans are could be very much beneficial to numerous individuals. For example, the American Pride Auto Accident Loans ease the financial load of individuals who have encountered such unexpected incident. However, there are certain loans that do help people along the way but ultimately become a problem.
In the United States, the leading cause of debt is on student loans where 45 million Americans are into about 1.5 trillion US dollars’ worth of debt on student loan. This encumbers the economy of the nation, since money that could’ve been spent on paying for basic needs, establishing businesses, or purchasing homes is rather expended on servicing debt.
Education Reform Plan to Forgive Student Debt
A bold reform plan on education was proposed by Sen. Elizabeth Warren. The proposal intends to forgive student loans of over 30 million Americans that amount to billions of US dollars. The program on debt forgiveness is only a fragment of a bigger program to make more accessible to everyone higher education.
These figures make it simple to comprehend why individuals are so perceptive regarding ideas for higher education to be tuition-free worldwide, but, those plans only does little for individuals who are at present struggling because of student loan debt.
This is probably why Sen. Elizabeth Warren publicized that not only will her plan on education would make colleges accessible to everyone regardless of financial capabilities but also lessen the debt that millions of Americans owe.
Sen. Elizabeth Warren is one of the Democrats presently running for the 2020 US presidential election. The education reform plan that she has announced hits on voluminous of the major democratic discussion points in propositioning that the federal government interpose and create two-year as well as four-year programs for undergraduates free of tuition at public universities. However, Warren’s proposal differs from others as she would as well forgive the debt of numerous Americans who have already graduated.
Warren’s proposal was likewise commended by Robert Reich, Former Secretary of Labor. On his page on Facebook, he mentioned that by disregarding debt on student loan, it would be an immense boost for the economy. Moreover, he also mentioned that it would permit millions of young individuals to invest in things such as purchasing a home or beginning a business.
What Experts Say About The Education Reform Plan
Brandeis University conducted an assessment and projected that, with the education reform plan, it would yield positive economic outcomes. By means of the abrupt deletion of such a great debt load from so numerous individuals, it would steer towards an economy that is consumer-driven, recovered and bettered credit scores, bigger home-purchasing rates and stability in housing, better and greater rates of college completion, as well as bigger formation of businesses.
Warren’s reform plan might end up being a sensible investment. In the US, the cost of a college education has over the years increased dramatically. Numerous proposals were set forward to resolve the issue, however, currently only as single plan exists to absolve the debt of individuals who have completed their higher education already.
It cannot be denied that the economy has a significant role in the development and progress of a country. The country is said to be advanced if it has a high level of economic growth, which is indicated by gross domestic product value or national income.
Not surprisingly, every country always tries to boost its economic growth so that it can create the welfare of the people and other sectors in the joint life of the state that can run smoothly and smoothly.
Hope does not always come true. Achieving economic growth is influenced by many external factors that cannot be controlled, such as market mechanisms and others. Therefore, there are times when a country’s economy enters a recession.
What is the economic recession?
In simple terms, an economic recession can be understood as an economic downturn.
As the name implies, which means sluggishness or deterioration, recession results in a simultaneous decline in every activity in the economic sector. Just mention employment, investment, and also company profits.
An economic recession caused a domino effect on each of these economic activities. When investment declines, the level of production of competitive products will also decrease.
The impact will be more due to termination of employment. Further, this requirement increases the people’s purchasing power which decreases which results in a decrease in company profits.
An economic recession is often indicated by a decline in prices called deflation, or in contrast to where product prices or domestic competition are increasing rapidly.
If it is not immediately addressed, the recession will continue for a long time to become an economic recovery, which can result in economic bankruptcy or a collapse of the economy. If the economy of a country has arrived at this crisis, then economic recovery will be more difficult.
The Stock exchange has an important role in the world economy by serving as the anchor of the modern national economic system. Stock exchanges enable companies to raise funds for expansion. They also give people a chance to make investments in corporations. Stock exchanges present order and control in imposing stock trading. Finally, all corporations linked to stock exchanges present tens of thousands of job opportunities. Let’s look into this further.
Provide companies the ability to grow and expand
Stock exchanges provide means for companies to come up with funds needed to expand their business. Whenever a company has a need to come up with funds, it could offer shares to the public for sale. They do this by having their shares of stock listed on the stock exchange. Investors can purchase publicly-issued shares, and the funds raised from investors are utilized to grow the company’s business, buy other companies or hire more employees. All of this adds to the economic activities that help boost the economy.
A chance for the people to invest
With stock trading, anyone can invest in the world’s largest companies. Large and small investors make use of stock exchanges to purchase futures offered by a company. For instance, the WOT ASIA offers a global market investment that brings next level investment directly to the investing public. If there is no place to concentrate on trading stocks, it is impossible for ordinary people to invest. The ability of common people to make investments in these companies can be an added income for investors. This increase in income contributes to additional economic activity because investors spend money.
Improved investor class
Stock exchanges provide order and guidance to the stock trading process. Without regulatory and shareholder protection, investors would be adamant to make investments in stocks. Because of regulations on stock exchanges, more people are involved in investor ratings because the average person has confidence in investing in stocks. Rich investors grow over time and can contribute even more towards the economy.
Provide great jobs and career opportunities
Every company involved in stock exchanges which include investment banks, brokerage firms, and financial news agencies employ the service of tens of thousands of men and women. The majority of works associated with the stock market are very well paid and promises a great career. Because of this, employees of these companies can promote economic activity.
How Do the Stock Market and the Economy Interact?
In the event that the stock exchange does not fully fulfill its obligation to oversee the stock trading process, the investing public may soon doubt the fairness and security of the stock trading game. When this happens, all the economic activity that the stock exchange creates is reduced and will cause a significant decrease in its overall economic activity. A stock exchange should ensure that investors are not abused and that investors will have that continuing trust and confidence in the system the stock exchange has created.