Julia Carle, Chapter 7, Question #7

After reading chapter seven of Naked Economics, I learned many new approaches of financial markets. Raising capital, storing and making profitable use of excess capital, insuring against risk, and speculation all are new ideas. Raising capital, to me sounds like raising the price of stuff we use to make consumer goods. When the capital rises, the individual needs to borrow money in order to pay for the capital that will make the consumer goods. Another new aspect of the financial market to me was the idea of storing and making profitable use of excess capital. I knew what inflation was before this, but Wheelan gave a good example about the sultan of Brunei sleeping with billions of dollars under his pillow, and one billion dollars in 1970 is worth 180 million dollars now. Insuring against risk is another new aspect of the financial market that I was unfamiliar with. I learned that financial markets help us to minimize the chances of us facing financial ruin.