The Structure Of A Financial System
A financial system is composed of borrowers and lenders
. Depending on their needs the households and corporations that make up an economy can either be deficit spenders or surplus spenders. For this reason a means of transferring purchasing power from one unit to another as needed and is in essence what creates the best forex trading. This is really the reason why we have the money or currency in the first place. It is a means of conveyance of production that has yet to be spent.
While this was workable several centuries ago it is no longer. Hence the reason why we have financial brokers and dealers. Any loan that is lent out the lender now has a financial claim on the future and, the borrower. Once financial claims have been issued they may be resold to other investors to aid in the search process of bringing buyers and sellers together, a number of market specialists exists. Brokers do not actually buy or sell securities, they only execute their clients' transactions at the best possible price. For this reason brokers provide only a search service and that they act as matchmakers who charge a commission fee, basically intermediaries and they can also give forex trading tips.
Dealers on the other hand create markets for securities. They do this by carrying an inventory of securities for which they stand ready either to buy or sell particular securities equity prices. Dealers make profits by selling from the inventory and on average so securities for a higher price than they paid for them.
If our nations were still primitive societies then a barter system would still be in place and needed by a currency system such as precious metals. Our economy is so advanced that the need for loans of large amounts of money are required just to function. It is because of brokers and dealers that this is able to occur. At some point this to will be succeeded by a new financial system that will meet the needs of those who make up the economy.
by: Rhab Hendrik
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