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Slow Money vs. Fast Money - Part III

The previous two posts [ 1 ] [ 2 ] which detail my analysis of slow and fast money clearly define that services which form the firmware of our society – infrastructure and utilities – those which are used as a public resource are targets for investment of slow money. Also, such investment is secure, usually subject to several controls and needs to be reliable and long term. As a corollary such investments are also conservative in terms of the return, and hence not suitable for profit booking. As a result we often find government or quasi government agencies (such as NGO’s) investing in such services. On the other hand, individual wealth – whether in form of PE / VC funds or in form in direct equity – which is aimed at booking high profits is never invested in such fundamental services. Hence, Banks and Insurance companies - because they form the basic fabric of public financial infrastructure - are also targets of slow money investments. It is for this very reason that Non-Banking Fi

Slow Money vs. Fast Money - Part II

Continued from here It is important that both the country and its citizen grow at reasonably matched pace and growth of one does not outpace the other. If a citizen's standard of living increases faster than that of the economy - s/he would be tempted to migrate to an economy/country which matches his/her standard of living creating a drain (brain drain being one of the manifestations). On the other hand, if the economy outpaces the citizen's personal growth, it may often lead to rise in economic disparities leading to social problems. Since, slow money contributes towards increase in the standard of the economy/country while fast money impacts the standard of individuals, it is imperative that both slow and fast money should coexist in the economy and in the right proportions. Also, fast and slow money should not be interchanged - otherwise it may produce bizzare results. For example: under communism the state insisted on investing slow money into business leading to settin

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 su