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Wait; Stop; Take a Deep Breath – remember your basic macroeconomics



July 10, 2009 – Comments (7)

It is easy to get lost in the ridiculous chatter of business journalists posting stories, who essentially know no more than the average Fool. “V” or “L” shaped recovery? Monetary vs. fiscal policy? Whadyamean you only spent 5-10% of the “stimulus” money? Unemployment, but U3 vs. U1 vs. U6? Does TALF and PPIP count as the Treasury “printing money”, inasmuchas these are backed by securities?

Please: put down the website editorial or newspaper rant for a week or two. Nothing big will change in the interim. If you have any sort of objective text on macroeconomics, now is the time to re-acquaint yourself with it. No, the standard college text (like the one I had for Econ 101 at Cal, which was hopelessly pro-Keynesian) will certainly NOT do.

OK: where to get info? Try Investopedia’s tutorial for the Level 1 CFA exam. I also have a cheapie paperback that I like: “Macroeconomics”, published by Schaum’s and the author is Eugene Diulio. Whatever, make sure you get a truly objective author to guide you through these very complicated matters.

Please: macroeconomics and policy and what influences them is NOT a trivial subject. Where the US economy goes from here depends on these things. If you take your investments and your financial future seriously, you truly need to educate yourself. Do not rely on “experts” or “journalists” or whatever they are calling themselves today.


7 Comments – Post Your Own

#1) On July 10, 2009 at 8:51 PM, gunark (87.65) wrote:

How about you do your fancy learnings and when you're done come back and tell us whether FAZ is going up or down on Monday.

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#2) On July 10, 2009 at 8:58 PM, angusthermopylae (38.21) wrote:

Excellent.  First, figure out how an economy (or how several of them) should work, then start figuring out how events might influence that "model."

I was fortunate enough to have a high school history teacher who thought it worthwhile to include the economics of the times.  Everyone learned about Golden Trade Route at some point (sugar cane-slaves-rum), but probably most people weren't taught (or didn't pay attention to) the economics of the British Empire, the Spanish-American War, the Mexican-American War, or many others.

Recced, and I've got a new favorite player...

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#3) On July 10, 2009 at 10:51 PM, russiangambit (28.88) wrote:

> I was fortunate enough to have a high school history teacher who thought it worthwhile to include the economics of the times.

Wow, facsinating. I wish I had a teacher like that. We learned a lot of history at school, but nothing about the economy back then unless it was related to opression of workers. -((

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#4) On July 10, 2009 at 11:35 PM, JonBarleycorn (68.61) wrote:

OK, so Keynes said you can push on a string (or was that Reagan).

Anyway, the government really can print money, go further into debt, swab the decks with liquidity and, wait for it, spend us out of a recession. Can't they?

And, of course, this is a guaranteed, problem free solution to whatever ails us.

The thing is, the Keynesians are in control. We can't dislodge them. Never mind currency devaluation and hyperinflation, that's on some other dudes watch.

So, I say bend over and smile. At least these guys have a plan -- that's more than I can say for the last bunch.


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#5) On July 10, 2009 at 11:43 PM, catoismymotor (< 20) wrote:

Most excellent! Consider me a groupie!

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#6) On July 11, 2009 at 1:03 AM, bendlund (98.84) wrote:

Is there really a "basic macroeconomics?" It seems hard to me to predict or explain the behavior of an individual; what hope do you have to predict the interactions between the decisions of millions of people?

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#7) On July 11, 2009 at 4:30 PM, Gingerbreadman55 (26.74) wrote:

macroeconomics is not in the business of predicting what people will do. It merely explains how actions in certain areas can effect outcomes in others.

Simple supply and demand, coupled with macroeconomic money supply, foreign exchange, and international trade.

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