October 1, 2013

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If money facilitates trading then wall street facilitates national weath. This wealth begins with Economic policy. The President, though his economic advisers, forms policy and authorises the Federal Reserve to pump cash into the economy, through the Treasury Department. With this liquidity, the first to benefit would be the banks, whom the Federal Reserve uses to funnel money to companies. The influx of cash is used to expand their businesses; these include investments in new technology, plant, equipment, as well as human capital. As companies expand they tend to increase their head counts. This behavior leads to lower unemployment and higher productivity as a measure of Gross Domestic Product, commonly know as GDP.

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If a high percentage of companies are hiring, it means consumer spending will increase and businesses will compete and garner a larger share than they previously had. Revenues therefore rises and profits as a by product. Shareholders are then also rewarded with higher share prices because money on the sidelines will now be deployed to buy limited amounts of available shares. Also, when the U.S economy does well, foreigners will want to participate and send more money to invest in our companies and our funds. These reactions push share prices even higher. Later in the cycle the new plants and equipment start to add to the bottom line and higher productivity is achieved. It is like being able to previously build 100 cars with 50 people in a month and now being able to build 200 car with 40 people in three weeks.

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The expense costs that the company saves from this kind of productivity increase goes to the bottom line, as profits, which sometimes allows the company to pay higher dividends to its shareholders.

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Now imagine 6000 to 8000 companies nationwide benefiting from this loose money policy. All companies in the Russell 2000 index and S&P 500 index contribute to GDP. Therefore our economy expands, our share prices expand and our overall financial positions is enlarged.

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The takeaway is that, if you do not invest in the markets you are potentially being left behind. Otherwise, you must attempt to keep up by owning securities or being a partner in some profitable enterprise. It is much easier to invest for those of us without the entrepreneurial gene. For those with the entrepreneurial gene, start a business! Do it now! Otherwise, hire a financial advisor, the service is well worth it. The next thing to do is start learning about investing your money. If you have no money invest your time in learning what money is. We cannot obtain something if we don't know what it is. You can do that on this website. Subscribe today! . If money was invented to facilitate trade then wall street is where the Trading and Money lives!

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Lastly, It is said of Goldman Sachs that, “ It is a giant vampire squid with tentacle wraped around the globe sucking up anything that remotely smell like money.” (Matt Taibi, Rolling Stones 2009 “The Great Ameican...Machine.)