Posted in personal finance, Uncategorized

Ray Dalio, in this video, explains quite explicitly and in a simplistic manner how economics plays a great role in our everyday life. No matter how naive you are or choose to ignore the reality, economics exist and it impacts and affects everything we do.

Today, there is a growing trend of purchasing and selling everything on EMI – from a house to a toy set, a home appliance to even a book! If everybody takes a loan without really paying for it, we end up creating more and more credit that is many times higher than the cash in the economy (the interest helps credit grow exponentially as the same money is borrowed and re-borrowed in cycles). How will we ever pay for it?

Sellers are ready to sell products without receiving the full price, buyers are willing to purchase and use the product without paying for it. The proposition is so lucrative for buyers that they sometimes, in some cases most of the time, end up buying things they do not even require or can do without. in the case of sellers, it is all about meeting the targets in books. let the money come in later. in reality, somebody has to pay for the good and services manufactured in the economy. if the manufacturer produces goods taking a loan, the buyers purchases on EMI, and both take loan from the bank, and both, because they have to pay loans and EMIs do not have the money to save and therefore keep in the bank, where will the banks get money from to give more loans! Think about it.

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