The Modern Economy Writing Assignment: Money Makes Money (Essay Sample)

Money Makes Money
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Money Makes Money
By definition, money is the accepted medium of exchange in the modern economy. Additionally, money is usually the store of value especially given its convenience in terms of liquidity. There is a general belief that the rich in the society gets richer while the poor get poorer (Moseley, 2015). Aside from the negative connotation, such a phrase has, there is a need to look at it from the general principle which states that “money makes money." In essence, the underlying concept behind the phrase is that sound financial management and investment are likely to increase the cash position of an individual or a business entity.
The general principle of economics "money makes money" should be confused with other unpopular versions that pity the rich against the poor. Rather, an interpretation should be made on the basis of economic sense it makes and its relevance in the world today. Various investment opportunities exist that can yield great returns; yet, people do not have the financial resources to go for such options. At the end of the day, it is those with high financial liquidity which makes the wise investment decision and reaps heavily from their strategies. While most people would want to equally benefit from the immense investment opportunities, the lack of capital thwarts their dreams (Moseley, 2015). For instance, there are those who put their money in a savings account and wait for interests. Granted that the return on investment is positive, such savings can grow. Moreover, the concept of compound interest even makes the strategy quite appealing. In the long run, the investors make their money, and the cycle continues.
Templar (2013) posits that it can be quite surprising for those some money as they watch it grow. Specifically, he cites the concept of compound interest as just one of the various ways that money attracts money. Furthermore, Templar (2013) mentions that it is the wealthy that mostly seem to get the idea of compound interest while the others do not. However, there is a caution that people should just not spend all their money without proper calculations. For money to work for an individual, they have to set aside for investment purposes. In addition, successful generation of profit should not be the end game of an investor; rather, they should reinvest their funds for even more promising returns. In the long run, investors who make informed decisions get to taste the fruits of their labor.
In sum, the general nature of the modern economies makes it possible trading companies to make a lot of money without necessarily selling anything. However, such events occur when their favorable movement of the market. Unfortunately, ther...