The Bitcoin

An interesting phenomenon which surprised much of the world was the rise in popularity of the crypto-currency the bitcoin ฿. Today the price of a bitcoin is worth between $410.46 and $389.89 and have been at a similar price for the last 2 years. In November of 2013 it peaked at $979.45 and by October 2014, it had settled at roughly its price now of $400.

But what is the bitcoin and is its fate doomed?

The bitcoin is a digital currency which allows for the anonymous transfer of money across the internet. With conventional fiat money such as the British Sterling or the American Dollar, the Government is in control of printing and distributing money, bitcoin lacks a central government and relies on normal people or miners to create bitcoins by solving Maths problems and rewarding these with a certain number of the currency. It was created in 2009 by an unknown person known as Satoshi Nakamoto. There are no transaction fees and you do not have to give your own name, it acts almost like shares with a current price that can rise and fall.

This week a high-profile bitcoin developer Mike Hearn, a Zurich-based developer, has said that the currency has failed and that he will no longer be assisting in its development, He left his job at Google 2 years ago to focus on working on bitcoin software development, he until recently has been considered the next in the chain of influence after the mysterious founder.  Over the weekend, the price fell quite sharply by $50 dollars, but the price of a bitcoin is notoriously volatile due to it not being tied down to any Government or territory. In the meantime bitcoin does still remain popular and is being heavily developed, many premature shops accepting it as a currency, but it seems some questions will be asked over how the currency will work in the future.

An interesting side effect of the bitcoin is that the technology known as blockchain could assist communication between banks and banks computer systems leading to an increase in the speed of transactions for conventional banks and remove costs from the system meaning cheaper more efficient services for the users.

Mike Hearn's Blog Explanation: an interesting read.

https://medium.com/@octskyward/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.e5warci0r

A nice explanation about how Bitcoins work

https://simple.wikipedia.org/wiki/Bitcoin

An article about the future uses

http://www.bbc.co.uk/news/business-35370304

Expansionary Monetary Policy

Key Term: Monetary Policy is a process of changing interest rates or manipulating the money supply by the authorities to try and control the rate of inflation, maintain sustainable economic growth and influence the exchange rate.

A committee of 9 members on the Monetary Policy Committee (MPC) meet monthly and vote to decide future interest rates. If they feel the inflation rate is likely to go above the target due to economics growth then they will increase interest rates to moderate demand and keep inflation low. 


Expansionary Monetary Policy or reducing the base lending rate will increase aggregate demand (AD=C+I+G+(X-M)) as:

• ·      It will make borrowing cheaper, therefore consumers will spend more on credit, which overall will increase spending, Equally firms will be more willing to invest money and borrow more.
• ·      Costs of borrowing such as mortgages become cheaper therefore people have more disposable income, causing an increase in consumption, therefore AD increases.
• ·      It makes saving money less appealing as people can gat a higher return in investment by spending and money in the bank is not increasing at the same rate as prices therefore consumers spend early to avoid additional expense.
• ·      Exchange rates will decrease as it becomes less attractive to save in UK banks. Therefore this decrease demand for the Pound Sterling and decreases the exchange rate.  This will also increase demand for net exports (X-M) as because exports appear cheaper and imports more expensive.

UK Regulators

In a market there are regulators which act as competition to help the consumer get a better deal. They make sure that people in the UK get the best from their industry and are protected from scams and sharp practices, while ensuring that competition can thrive. The law of the UK says their principal duty is to further the interests of citizens and of consumers, where appropriate by promoting competition.

Some of the "offices of" are:

Ofqual- Office of Qualifications and Examinations Regulation

Ofsted- Office for Standards in Education, Children's Services and Skills

Ofcom-  independent regulator and competition authority for the UK communications industries

Ofgem- the Office of the Gas and Electricity Markets

Ofwat- the Water Services Regulation Authority

Other regulators include:


Environment Agency (EA)

Financial Conduct Authority (FCA)

General Medical Council (GMC)

Civil Aviation Authority (CAA)

Office of Road and Rail (ORR)

Advertising Standards Authority (ASA)

British Board of Film Censors (BBFC)

Competition and Market Authority (CMA)

Independent Press Standards Organisation (IPSO)

Mobile Telecoms Market

Since the recent news of the UK's market decreasing with BT buying out EE and O2 attempting to buy out 3 there is also another deal which has recently taken out which I feel is a shame which is the loss of the Motorola brand. Motorola was a big player in the mobile phone industry in the era of the flip phone however it fell out of demand at the rise of smarter new technologies such as the launch of the iPhone in 2007. It was bought by Google in 2011 for $12.5 Billion and was relaunched with a new brand of phones known as the Moto range including the popular Moto G and X which were the closet handsets to the Stock android vision Google had and led to a revolution in a decrease in bloatware from other OEMs. In 2014 Google announced it was selling Motorola on to Lenovo for a mere $2.9 billion far less than they had spent 3 years earlier. However Google did keep hold of many of the valuable patents and trademarks regarding the company. In this time and since the Motorola brand has gone from strength to strength and are now popular in the cheeper range of the market and handsets can be found in almost every mobile phone shop. Now Lenovo has announced that they will no longer be launching phones with the motorola branding, they will instead be known as Lenovo phones retaining the "Moto" nickname and winged "M" logo. This means there is now less competition in the Market as another brand is being bought out being rebranded with a new company decreasing the competition in the market. At least for not in the mobile devices industry as it has been growing so well there are now lots of new companies entering the market with innovation many of which from the far east.

Unemployment

Causes of Unemployment

Frictional unemployment. This is unemployment caused by people moving between jobs, e.g. graduates or people changing jobs. There will always be some frictional unemployment as it takes time to find a job.

Structural unemployment. This is unemployment due to a mismatch of skills in the labour market. It can be caused by:

Classical or Real Wage Unemployment. This occurs when wages in a competitive labour market are pushed above the equilibrium. This could be caused by minimum wages or trades unions.

Demand deficient or ‘cyclical unemployment.’ This occurs when there is a fall in AD, leading to a decline in national income. For example, a European recession would cause less demand for UK exports – therefore UK firms will employ less workers 


Voluntary unemployment. Generous unemployment benefits may encourage people to stay on benefits rather than get work; this is sometimes known as “voluntary unemployment”.

Policies to reduce Unemployment

Fiscal and Monetary Policy (demand side)

If there is demand deficient unemployment, the government could try expansionary fiscal policy which involves cutting income tax to boost consumer spending and aggregate demand. Or the Bank of England could cut interest rates to reduce the cost of borrowing and encourage spending. Higher AD would lead to higher output and should encourage firms to take on more workers.

However, demand side policies may cause higher rates of inflation and will not reduce supply side unemployment, like structural unemployment.

Education and training. Structural unemployment could be solved by offering retraining and new skills for the long-term unemployed. This gives a better opportunity for the unemployed to find work in new industries.

However, it would cost money, and it may prove difficult for some older workers to retrain in new industries and develop new skills.

Better job information and interview practice. This could help reduce frictional unemployment by giving the unemployed better information about available job vacancies, and also offering tips for the unemployed to get work.

Lower benefits and taxes. Lower benefits and income tax may increase the incentive for the unemployed to look for work rather than stay on benefits. This could reduce frictional unemployment.

However, benefits in the UK are already quite low; reducing benefits may increase poverty but will not create any jobs.

Reduce minimum wages. If the minimum wage is above the equilibrium, reducing it to the equilibrium will enable firms to employ more workers, which reduces real wage unemployment.

However, demand for labour may be quite inelastic; cutting wages may just make firms more profitable.

Regional grants. These can help overcome geographical unemployment by encouraging firms to set up in depressed areas or helping workers to move to areas of high demand.

However, subsidies may prove ineffective for encouraging workers to move because they may be attached to their local community. Firms may have a similar reluctance to set up in depressed areas because of a lack of infrastructure.