Michael Kinsley writes in this week's Time:
We don't need a conversation about race. At least not now. What we need is a conversation about money. It becomes clearer by the day that this is not your grandmother's--or even Barack Obama's grandmother's--economic downturn. This time we start with a huge government deficit and record private debt, all run up when times were good and we should have been storing up acorns. This is one that begins with people losing their homes, which is usually the last act of the drama. This is one that is bringing back stagflation--that poisonous combination of economic slowdown and eroding currency we cured at a terrible cost back in 1981. When that red phone rings in the middle of the night, it probably won't be the National Security Adviser saying Osama bin Laden has struck again. It will be the Treasury Secretary reporting that markets have opened in the Far East and the dollar has become worthless.
He goes on to detail how completely, shockingly inadequate McCain's, Clinton's and Obama's response to the crisis has been. But he also points out that our political journalists "devote their wisdom to the minutiae of campaign strategy and are mystified to the point of terror about economics."
I plead guilty as charged, in my own way. What Barack Obama says, or doesn't say, about the economic crisis upon us is far more important than what he says, or doesn't say, about his racist pastor. Similarly, there's almost nothing that John McCain or Hillary Clinton could talk about that would be more important than the economic mess we're in. I get that intellectually, but because I'm far more interested in cultural issues, and far more able to have a meaningful discussion about them, that's what I think about and talk about. Not all journalists are as engaged on cultural issues as I am, but most of the ones I've worked with who don't work on the business desk are about as clueless as I am about economics.
I'd like to change that about myself. Can any of you readers who are smarter about economics suggest a couple of good books to read to explain economic basics in terms that a layman can understand? I don't expect to become an amateur economist overnight, but I would like to be able to read the economic news with greater understanding.
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Read Thomas Sowell's "Basic Economics" and "Applied Economics". They are easy to read and contain a wealth of invaluable information.
Real inflation is now around 4% per annum. And our government has reduced the discount rate to 2.5% per annum. So For every 100 dollars you're earning in wages (or have put into retirement savings) 12 cents a month gets "eaten up" before you can use it.
Um, maybe I'm missing something real basic here...but how do you get the last quantity (12 cents per month) from the first two?
Can any of you readers who are smarter about economics suggest a couple of good books to read to explain economic basics in terms that a layman can understand?
You can't go wrong by starting with Naked Economics by Charles Wheelan.
That's the book I always recommend.
I think Hazlett's book is a good econ intro but I don't think it will help you understand the current headlines. The economy is suffering from the bursting of the housing and financial derivative bubbles.
I recommend the second edition of Irrational Exuberance to understand the housing bubble. The blog calculated risk and the web postings of Dean Baker will give you up to date info.
Charles Morris has a new book that covers derivatives - I have not read it. The npr program Fresh Air had a good segment on 4/3 about derivatives. You should also google what Warren Buffett has said about them. Note that he has been a strong critic of derivatives for a long time.
I am not einstein nor was I an econ major. However, let's just look.
We have been printing greenbacks without any backing for how long? Basically our dollar is what .40, if that? Our country has run us into unheard of debt, the average household owes more than they own.
So the gvt just keeps on printing. If they stopped let the chips fall we might have a chance. At this rate we are talking total economic collapse. Both scenarios are terrible a depression worse than the one we refer to as the "great" OR total collapse. I opt for the first but I am afraid the second will occur. If the second happens we are pretty much "done." At least if they stopped now some would have a chance the dollar would still be solvent . Lesser of two evils.
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