There are two types of capital that can be discussed, financial and investment. Investment capital would include such things as equipment and machinery that allows for production of goods and services. We will focus on the financial part for this discussion.
That is the available pool of money that is available to business for expansion or new ventures.
While this is thrown into the Macro area on a normal basis, I am going to use it for a Micro application.
Looking at the available capital and its corresponding price interest: pick one of the following to think about and then add your thoughts.
- National Debt
- Federal Deficit
- Federal Reserve Discount and Federal Funds Rates
What impact do you see these have on the cost of doing business and what may have been some of the unintended consequences that have occurred because of our current mindset with the cost of capital?