[Zantigo]

Qtis, on 09 February 2012 - 09:41 AM, said:

Zantigo, on 09 February 2012 - 02:32 AM, said:

Wait, so these companies are failing because their run from one of.the few countrys that haven't taken a major hit in the economy?

Well lets put it this way: Sell a TV in Japan for lets say 100 000 yen. That's around 975 €. Now the average price of that range TVs are about 500 € in an EU country. They can't sell it at 975 € since people won't buy it (well at least not the amount needed for profit). Thus they sell it for lets say 600 €. That's already 375 € less than in Japan. Dum di dum, not being hit by the recession that bad in the home economy isn't really that big a deal if exports are far too expensive for other countries. This is also the reason why the Chinese yuan (spelling?) is also quite devalued. If the real price of yuan was in place, the prices of Chinese export products would probably be around 5x more.

tl;dr: Less profit for Japanese companies in countries where they export when the yen is valued high. That's pretty much everyone else.

Economics are hard, what ever happen to "I give you a chicken you give me a sword"

[FAST6191]

Are you genuinely asking for a full writeup of economics and/or the lesser concept of money?

As I understand it and skipping very large chunks of theory out

You describe a technique known as bartering which is probably the oldest form of trade and still exists (to the extent where part of it at least is taxed- in the UK at least one has to pay VAT which is somewhat analogous to sales tax if you are registered for it on bartered items) the trouble comes in I may not want your chickens (or I might say my sword is worth 4 and a half chickens) at this time meaning you have to speak to someone to trade your chickens for something I might want and it becomes a mess and even more so when scaled up to larger regions. Today I usually find it gets used for tax evasion (dodging paying taxes you are supposed to pay as opposed to tax avoidance which is using the tax system to reduce your taxes) or for labour but I am a fan none the less.
Abstracting this works well enough if using something rare and not so easy to produce (say gold) and later you can make it figurative by using tokens that can be traded in some central repository for the valuable substance (a concept known as backed currency or fiat money). This also has failings (although some call for a return for various reasons) so the paper eventually became valuable just because it is (of course gold has limited practical uses then and to this day give or take a handful of little blips throughout history so one could argue such a thing never truly existed).
Now the world was not and is not truly unified/globalised and even then some have eschewed the idea of money (several places, usually ones in serious economic hardship*, offer "local" currencies) to say nothing of the bitcoin stuff and related concepts but to get back on topic I might want something readily available in a given country so I get to change my money but there eventually came to be fluctuations between what things would be exchanged for and these fluctuations are controlled or at least attempted to be influenced by various parties that want it to change one way of the other (imports and exports were already covered but there is more) but also by projections of the future, the weather and more.

*if you have no money coming into an area but money going out as it is not self sufficient it can be a problem- again we come back to chickens not being ideal but also a somewhat related concept of the need for wealth creation and part of the reason some harbour a disdain for those that "shuffle paper" for a living and practices that encourage that to the exclusion of widget building and other such things (value adding processes) in favour of paper shuffling or in many cases retail.

Alongside this various concepts got discovered that allowed someone to make an awful lot very fast and people copied it (and then laws got introduced and often in a reactionary manner to avoid abuse) with one of the main ones being related to the I might not want your chickens idea which is liquidity or actual ability to put cash in the hand of someone that can do you a service/provide you an item bringing the idea of credit and investment into play. Credit is arguably governed by credit ratings (although the US seems to place a lot more emphasis on it than most other places) which are supposed to reflect how risky loaning someone some money is thus limiting how much they can borrow (if you need 2 million to build your new factory or page wages when waiting to make some profit but credit companies will only lend you 1 million because of your credit rating you might well go bust unless you can get some funds) and at what rates of interest they get charged (as anybody that has taken a loan of pretty much any form out will tell you that money is not free) which when dealing with the sums involved can add up to a lot of money that ultimately has to come from somewhere (usually the profits or assets of an entity), investment is a related concept where you ask people to put some money into your pot with the promise of a piece (proportional to what you payed in) of the hopefully significantly larger pie at a later date (and every so often after that) aka pay dividends (some companies and in the tech world most notably Apple do not share their pie/pay dividends but instead rely their share price increasing and allowing people to sell to others at a profit although this is also possible/quite viable/standard practice for shares that do pay dividends) and depending upon the type of shares you might also gain a bit of say as to what the company does. There is an awful lot more to credit and shares/investment than that but those are the broad strokes.

Wind in several hundred years of different people having different ideas, tax law (and differing tax law across the world- see the concept of tax havens with Eire/ROI being a fairly nice example), production costs, shipping costs, the invention of intellectual property and some less pleasant aspects of human nature and you have the field that is economics. The strange thing is though that these complex models do work quite well at a large scale compared to the simplistic models (the farmer in the field is probably quite happy to not get market cost if they can actually continue getting stuff done rather than dragging themselves to a market losing time to do it and likewise a factory is usually quite happy to not have to deal with the members of the public so you get middlemen but those middlemen need money to buy stuff in the first place so I might come along with my pile of money I want to see grown and say I will fund you what you need but 50% of your profits come back to me from now and until you go out of business/you pay me a large sum to relinquish control) at the cost of the odd very serious trainwreck.