Any business or individual has to strive for positive REAL RETURN ON invested, otherwise how can the savings/ money/ debt be created for further investments into ventures that in turn create superior returns. Any entity failing to do that will lose capital an in terms of a business only further capital injection through debt or diluation of equity, can fresh capital be invested into a concern. Same applies to individual entirties as well...
Governments across the world are different creatures !! Since they can print their own currency, they create credit out of nowhere when in either current or trade deficit and thus paper over the problems....
This artificial money created then leads to misallocation of capital and speculators aboud, finally the boom results in a spectacular bust because the lower capital cost resulted in misallocation with returns not being able to sustain the system.....
Thus - for businesses - its pertinent to have superior ROE and for individuals as well.
Governments across the world are different creatures !! Since they can print their own currency, they create credit out of nowhere when in either current or trade deficit and thus paper over the problems....
This artificial money created then leads to misallocation of capital and speculators aboud, finally the boom results in a spectacular bust because the lower capital cost resulted in misallocation with returns not being able to sustain the system.....
Thus - for businesses - its pertinent to have superior ROE and for individuals as well.
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