Skip to main content

Slow Money and Fast Money

I am no economist, so I find the concepts of M1, M2 ... M4 a little tough to understand. However, based on my own thoughts, I have come up with a new kind of money supply classification - that of fast money and slow money (which overlap but are the same as private and public money).

Slow Money can be defined as money kept in form of long term reserves and used for projects with long gestation periods having assured but low rate of return. Typically, this is money kept in Fixed Deposits, Savings Bonds or other forms of Government borrowings. Such money is often used by the Government or its agents to build infrastructure or institutional framework for the country.

Fast money is typically investor money - invested in ventures with potentially high returns but as much higher risk and with short to medium term return cycle. Such money - as is obvious from its definition - is typically invested in equity or other risky assets like venture capital funds, usually used for ventures whose sustenance may not be assured but could potentially give very high returns.

It may be easy to confuse slow money with public money and fast with private, however - while there may be a lot of overlap - these are not exactly corresponding terminologies. For example, private equity invested in huge infrastructure projects like refineries or utilities may be slow money. The investors in such projects do not intend to withdraw their equity for a long time, but at the same time may not expect the same rate of returns which they expect for other investments.

The central idea in defining these monies is to emphasize that an economy needs both Slow as well as Fast money to grow. Fundamentally - slow money contributes towards increase in the standard of the economy/country as a whole while fast money contributes towards increasing the standard of individual citizens/investors.

Read Part II and Part III

Comments

  1. Excellent post. Nice way to make people financially literate.

    ReplyDelete

Post a Comment

Popular posts from this blog

How will travel industry transform post-Covid

Unlike philosophers, journalists and teenagers, the world of entrepreneurship does not permit the luxury of gazing into a crystal ball to predict the future. An entrepreneur’s world is instead made of MVPs (Minimum Viable Product), A/B Tests, launching products, features or services and gauging / measuring their reception in the market to arrive at verifiable truths which can drive the business forward. Which is why I have never written about my musings or hypothesis about travel industry – we usually either seek customer feedback or launch an MVPised version and gather market feedback. However, with Covid-19 travel bans across the globe, the industry is currently stuck – while a lot of industry reports and journalistic conjectures are out, there’s no definitive answer to the way forward. Besides there is no way to test your hypothesis since even the traveller does not know what they will do when skies open. So, I decided to don my blogger hat and take the luxury of crystal gazing

A Guide to Privacy on Social Media [apps]

The recent announcement by WhatsApp to update its privacy terms - and 'accept or leave the app' stance - led to an exodus of users from Whastapp to competing, privacy-conscious apps such as Telegram or Signal. A week after the exodus began, Whatsapp clarified its stance - and WhatsApp's CEO went about providing a long Twitter clarification . And then, many returned, many who considered moving stayed put on Whatsapp. This post is meant for those who are still sitting on the fence - it clarifies questions like: What is this all about? What do I do? Is Whatsapp safe? I've heard Telegram is Russian - so how is it safer than Whatsapp? I can't move because my business contacts are on Whastapp - how do I secure myself? PS: I've modeled this post based on several conversations I've had with friends and family on this subject, dealing with the chain of questions they ask, then objections they raise, then clarifications they seek - and finally the change resistance

Ekla Chalo re

Watched "Bose- The forgotten Hero" on Saturday. Gem of a movie and probably the best of Shyam Benegal. Subhash Chandra Bose has always been an inspiring character in the history for the youth. This post however is not about the movie, its about the lead song 'Tanha Rahee' which is based on the poem 'Ekla Chalo Re' by Gurudev Rabindranath Tagore. I had pasted the English translation of this poem on my blog earlier. http://the-complete-man.blogspot.com/2004/12/tsunami-times_30.html However, yesterday I found the original bengali text of the poem and found that the meaning in the above translation was not exact. So I have endeavourer (with the help of Shubham ) to re-translate it into English and Hindi by myself. Here is the output of my work: Bengali Jodi Tor Dak Soone Keu Na Asse Tobe Ekla Chalo re Ekla Chalo Ekla Chalo Ekla Chalore Jodi Keu Katha Na Kai Ore Ore O Abhaga Jodi Sabai Thake Mukh Firae Sabai Kare Bhay Tabe Paran Khule O Tui Mukh Fute Tor Maner Kath