Russia, India and China). These countries will continue to drive much of the world’s population and economic growth moving forward, and will provide the opportunity for higher investment returns as well.
Unnatural Forces at Play in the Economy
Modern, ‘western’, capitalist economies all operate with a core element of central planning known as a central bank. The central bank’s role is effectively to manage the nation’s supply of money (in its most basic form as dollar bills, but also including various forms of currency not in circulation as well). It does this through various tools it has at its disposal, including the regulation of some key interest rates charged to major banks and the purchase and sale of various govnerment bonds from/to financial institutions. Most central banks state that their aim is to manage their nation’s inflation rate to remain within a target zone, but in reality the cental bank is also there to encourage economic growth and manage the financial system through a crisis such as that which occured globally in late 2008. Before we had central banks, many civilizations used gold as the primary form of currency. However, as economies developed, ‘banks’, or stores of gold, began issuing notes backed by the gold they had in storage. In those times, most of the gold held in the ‘banks’ was owned by the king. When the king owed other people or institutions money for performing a service for him or selling him a good, he’d pay them with the notes issued by the bank that were backed by a stated quantity of gold. Kings soon realized that they could reduce the quantity of gold that backed the note, but still pay people with the same amount of notes, so that they king was effectively paying people less for