Kagege Kwanza and single digit borrowing

O

Okiya

Elder Lister
The economic lies these people soldto the masses.

Government is now borrowing at 17%. This means crowding out.

 
So this means that there will be less monies to borrow for private individuals i.e. you and me for example.

Supply & demand. Less capital available to loan = higher interest rates.

Remember most businesses run on credit.

So if you are running a hardware company, for example, and you need to do a stock refresh.

Typically You'd get a loan from Equity bank.

Use that to purchase goods.

Sell and pay offloan using proceedings from sale.

Same applies to the buyers side.

You go to the hardware store. You buy materials to build your business.

You use credit to pay for the work.

Then you use profits to pay off said loan.

And thats the economy.

Now, when one customer (GOK in this instance) takes up all the available credit.

Hardware guy has to sell at a higher price to you.

You have to build smaller/cheaper.

You charge more to pay off loan.

Because of the interest rates.

Hope that makes sense. :)
 
Cortedivoire said:
Please explain in simple English
Click to expand...
This is why, during Kibaki's time, the economy grew gangbuster.

He opened up credit facilities.

entreprenuers took advantage and built business.

You were also able to access cheap credit.

So you were able to afford to start your business etc.

And make money as a result.
 
Young_Turk said:
So this means that there will be less monies to borrow for private individuals i.e. you and me for example.

Supply & demand. Less capital available to loan = higher interest rates.

Remember most businesses run on credit.

So if you are running a hardware company, for example, and you need to do a stock refresh.

Typically You'd get a loan from Equity bank.

Use that to purchase goods.

Sell and pay offloan using proceedings from sale.

Same applies to the buyers side.

You go to the hardware store. You buy materials to build your business.

You use credit to pay for the work.

Then you use profits to pay off said loan.

And thats the economy.

Now, when one customer (GOK in this instance) takes up all the available credit.

Hardware guy has to sell at a higher price to you.

You have to build smaller/cheaper.

You charge more to pay off loan.

Because of the interest rates.

Hope that makes sense. :)
Click to expand...
AND when these loans come due.

Guess who has to give up more in taxes to pay government debt.
 
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