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Central Banks

Definition: A country's main bank. The Central Bank holds a country's banking system by providing the currency of the country, notes & coins, and serves as a lender of last resort to the Commercial Banks.  The Central Bank is incharge of a country's monetary policy. This means to maintain Price stability by controlling inflation, ensuring steady GDP growth and achieve full employment in the economy. The Central Bank is independent from a country's government/regime and thus its operations are uninfluenced by the political climate/scene.  Examples: Fed - the Federal Reserve, Central Bank of the United States ECB - European Central Bank, Central Bank of the European Union  BoE - Bank of England, Great Britain's Central Bank BoC - Bank of Canada RBA - Reserve Bank of Australia and others How a Central Bank Influences an economy a) Macroeconomic goals - Large scale /Long term goals that include maintaining price stability & steady GDP growth.  b) Microeconomic g...
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Critical Thinking

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Often it is considered to be doubting yourself and your own thoughts when you start to question an idea or a solution you might have but I tend to disagree.  Many atimes while going on with my trading activities, investing or implementing a new idea/method, basically everywhere, I question my own idea severally. These questions do not have answers but rather lead to more questions and those questions lead to more questions and in the end now I start finding the answers myself and put the pieces together making my initial idea more accurate & more efficient. I'll relate this to trading. System Building . When forming your own trading system you might not know everything good that a trading system needs to have but by asking yourself questions you'll most probably figure out more than three quarters of all necessary elements of a trading system all by yourself even before doing any research.  New traders mostly have the habit of asking someone who they consider ...
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Monetary Policy Tools

Monetary policy is the control of the quantity of money available in an economy and the channels by which new money is supplied. Why not print a lot of money so everyone could be rich? Simple answer, inflation.  The supply of money is controlled so that there would be price stability. Steady economic growth with low inflation.  At the macroeconomic level, the amount of money circulating in an economy affects things like gross domestic product, overall growth, interest rates, and  unemployment rates .  At the micro-level, a large supply of free and  easy money  means more spending by people and by businesses. Individuals have an easier time getting goods and services thus there comes a problem of high demand but very limited supply thus inflation and in some cases Hyper inflation making a country's currency drop in value and valueless in some cases Back to monetary policies, now you have some idea of what they aim to achieve. mainly price stability, steady ...
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