Financial System

The financial System makes it easier to trade.

Why there is a need to make trade easier?

People trade because they differ in what they have and in what they want. What you have in abundance or can produce easily is may be scarce and valuable for someone else.

Lending is a form of Trade. When you lend, you give up purchasing power now in exchange for purchasing power in the future.

There are two possible ways to trade- credit trading and cash trading.

Credit trading involves the exchange of value for a promise.

Cash trading involves the exchange of value for value.

Banks create money.

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