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Harry Potter and the Economics of Magic

The world of Harry Potter is one of fantastical spells, fearsome creatures and powerful witches and wizards. However, Harry and his friends are not immune from the very same economic factors and concepts that also affect us Muggles. Read on to discover the economics behind J.K. Rowling’s magical world.

The BitCoin: ‘In no one we trust’

Last year I wrote a few articles discussing the origins of money and how its development arose from the need to have some sort of commonly accepted medium for storing and exchanging value, led by governments who could enforce and guarantee the value of currency. ┬áMore generally, this is the case for the vast majority of assets as there must be some guarantee of value before a counterparty would be willing to make a trade: a stake in a company for shares, the right to collateral for debt and a government backing for fiat currencies. Rationally it doesn’t make much sense for people to use something without any form of intrinsic value or guarantee as a medium for exchange.

One of my interests is exploring these anomalies in the economy and it just so happens that such a currency has emerged: it is called the BitCoin, a virtual currency which can be created and used by running a program on your average home PC.

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The Euro Crisis (Continued): Time to make a choice?

It is now July 2012, almost three years since the chain of events that set in motion what is now called the Euro Crisis and surprisingly enough, the world is still waist deep in the middle of it. In my previous article I attempted to diagnose what was causing the breakup and why there was so little action taken, and regardless of whether it was for those reasons, just from looking at the EUR/AUD exchange rate it’s easy to see that the situation has been deteriorating continuously ever since the end of the global financial crisis and despite several attempts to change things, it has not really improved.

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