What is a paper economy?

Paper economy generally concerns markets in which the value of assets is traded on paper, rather than the physical assets that change their hands. Those who trade with assets often do not intend to never take over a physical product. They simply hope to receive maximum profit from the commodity before the delivery contract is concluded. Another use of the concept of paper economy includes an economy based on job -based jobs that do not produce a physical product and therefore do not add much real value to the economy.

In the case of markets, most trade and profit realized are based on paper. If traders feel that a certain commodity will be more valuable when the time to deliver this commodity comes, they can buy as expected that the contract will have more value. This includes a large amount of risk because at some point the trader will have to sell a contract or take over the product. This could lead to the value of the product will decrease, the trader is lost.

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paper economy was in some cases criticized for artificial inflation of the product. Oil is one of the main examples of this. Many analysts feel that the value of the oil, when it is up or down, does not really need to reflect market conditions as defined by supply and demand. Despite this alleged contradiction, traders determine the price of contracts by purchasing and selling speculatively without the first hand knowledge of the real situation. In almost all cases, traders do it without ever wanting the product to be bought or sold.

The term paper economy can also apply, to some extent for stock exchanges around the world. Many times these buyers do not do so, because they may really want a share in a particular country. Rather, they simply try to make a profit on the basis of what accompanies that they think will increase the value. What they really do is the trade paper that makes it the default nAstiming the owner in society, albeit temporarily, whether it's their final goal or not. In general, they will never participate in shareholders' meetings or are actively interested in the company.

To a lesser extent, the term paper economy may apply to those who are in jobs like services such as secretaries and sales positions. These individuals do not produce a product, but simply take care of paperwork associated with more specific transactions. Whether these positions are valuable depends on the society and the value it puts on them. Economies based more on services than products are generally considered weaker and more susceptible to economic decreases, although there are always exceptions, because some services are basically more valuable than others.