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Economics AMA, Part Whatever

ResponsiblyIrresponsible
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7/11/2015 11:02:46 PM
Posted: 1 year ago
So, here's the punchline: I'm bored; I assume, because you're on DDO on a Saturday night whilst you could be doing something more exciting, that you must also be bored; and we're in the economics forum -- and, as we all know, economics is predicated on mutually-beneficial exchanges.

There's an upcoming election season, after all. Ask away! If you have questions, I have answers. If you don't like my answer or think it's written in economese, tell me and I'll try to rephrase it so that it's accessible.

Cheers,

Joey
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ResponsiblyIrresponsible
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7/11/2015 11:07:55 PM
Posted: 1 year ago
I mean, really guys, don't send me your questions at the same time. Really, I need breathing space, and with these forty-some notification a minute, I really lack that comfort.

Lol.

I may turn this into a mini-FAQ in the interim. That's how bored I am.
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ResponsiblyIrresponsible
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7/11/2015 11:47:14 PM
Posted: 1 year ago
k, FAQ, go.

1. What is economics?


Economics is a social science -- often called the "dismal science" -- predicated on the allocation of resources amid scarcity. The basic logic that dates back to Adam Smith and David Ricardo is that people are, generally speaking, rational actors who seek to maximize utility, and those societies must make decisions on the production, distribution, and consumption of those resources: "how to produce, what to produce, and for whom" rank amongst Paul Samuelson's "economic problem."

2. What role does the government play?


This is fairly straight-forward, though boils down to some extent to semantics -- and horrible finance professors and corporate tycoon often get these points fundamentally wrong.

Anyway, the main role of government in economic policy is fiscal policy: the government taxes us to pay for stuff like roads, bridges, highways, education, and more that we need, though the question of (a) what it spends it on; (b) how much it spends; (c) how it gets that money; and (d) who pays are usually contentious and may boil down to value judgments.

3. What is the Federal Reserve, and why did I exclude it from my answer to (2)?


I excluded it from (2) because the Federal Reserve is not an arm of the government. It was created by Congress via statute in 1913 and Congress exercises oversight, but it's an independent institution -- though the term and I several others often use is "quasi agency."

Anyway, the Fed is the central bank of the United States charged with managing the money supply, inflation, and interest rates. It's required by Congress to seek out two objectives: maximum sustainable unemployment (unemployment rate near the natural rate of unemployment) and price stability (inflation of two percent). The Federal Open Market Committee (FOMC), or the deliberative body which makes monetary-policy decisions, is composed of seven Governors -- including a Chair, currently Janet Yellen (whom I met, and I'm happy to report is as pleasant as she is brilliant) -- who are appointed by President Obama and confirmed by the Senate, as well as 12 presidents from from the 12 Federal Reserve districts disseminated across the country. Of those 19, only 12 vote on policy decisions at a time: this will always include the seven governors and the president of the New York Fed. From there, the remaining bank presidents alternate each year.

4. Is Ron Paul right about the U.S. dollar?


No, Ron Paul is a charlatan at best and an intellectual invalid at worst, as is his predecessor, Frederich von Hayek.

Ron's case is that there's secretly 9 or 10 percent price inflation, and as a result other countries are going to drop our dollar -- that, once its status as the world reserve currency runs its course, we're doomed to hyperinflation and a vicious balance-of-payments crisis, and thus we should switch off the dollar and buy gold and silver now!

He's wrong. The indexes he points to from "free market economists" are likewise nonsense. Here's the main problem with the bulk of the indexes I've seen: they account for volatile movements that don't speak to underlying inflation trends. Recall that inflation is a rate of change in prices, usually matched by the rate of change in wages -- the difference between the change in a nominal (quoted in current dollars) variable and a real (adjusted for inflation, or using base-year dollars) is the rate of inflation, so insofar as prices fully adjust, real variables don't change.

Now, if I turned the economy off and then turned it back on, I technically reduced prices to 0. If they shot back up the next day -- ignoring the fact that I can't divide by 0, of course, so let's say they fell to a fraction of a penny -- even to the prices they were at, we're going to see a massive rate of change. That doesn't in any way speak to underlying trends. In much the same way, if home prices absolutely tank because they were overly inflated by a housing bubble such that they deviate from fundamentals, their declines don't speak to underlying trends in inflation, nor do their subsequent rise -- which we expect to be robust and above normal trends, in much the same way that GDP numbers temporarily grow above trend after a period of low resource utilization.

The problem with Ron Paul and his friends is that they're not stupid; they're intellectually dishonest. They only care to look at asset prices when they're rising -- i.e., when they support their narrative that inflation caused the crisis (ignore that the economy didn't overheat in *any way* in 2002-2007 and NGDP was essentially on trend). Inflation in the morning, inflation in the evening, inflation at morning, inflation at breakfast, lunch, and dinner. That's a PaulBot for you.

Inflation has actually been far below target recently. Some of that is a result of a positive aggregate supply shock, which is generally a good thing because we expect it to improve productive capacity and boost real incomes and thus consumption -- though, insofar as falling energy prices reduce capital investment in sectors which intensely use oil, it may b a net negative. It may also reflect underlying slack in the labor market and thus in overall aggregate demand, and that signals that both the Fed and the Congress have room to lean against it, lest they waste the economy's unused capacity and risk undermining it's long-term potential.

That's all for now -- more to come in a bit if the muse once more strikes me.
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ironslippers
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7/12/2015 12:12:06 AM
Posted: 1 year ago
At 7/11/2015 11:47:14 PM, ResponsiblyIrresponsible wrote:
k, FAQ, go.

1. What is economics?


Economics is a social science -- often called the "dismal science" -- predicated on the allocation of resources amid scarcity. The basic logic that dates back to Adam Smith and David Ricardo is that people are, generally speaking, rational actors who seek to maximize utility, and those societies must make decisions on the production, distribution, and consumption of those resources: "how to produce, what to produce, and for whom" rank amongst Paul Samuelson's "economic problem."

2. What role does the government play?


This is fairly straight-forward, though boils down to some extent to semantics -- and horrible finance professors and corporate tycoon often get these points fundamentally wrong.

Anyway, the main role of government in economic policy is fiscal policy: the government taxes us to pay for stuff like roads, bridges, highways, education, and more that we need, though the question of (a) what it spends it on; (b) how much it spends; (c) how it gets that money; and (d) who pays are usually contentious and may boil down to value judgments.

3. What is the Federal Reserve, and why did I exclude it from my answer to (2)?


I excluded it from (2) because the Federal Reserve is not an arm of the government. It was created by Congress via statute in 1913 and Congress exercises oversight, but it's an independent institution -- though the term and I several others often use is "quasi agency."

Anyway, the Fed is the central bank of the United States charged with managing the money supply, inflation, and interest rates. It's required by Congress to seek out two objectives: maximum sustainable unemployment (unemployment rate near the natural rate of unemployment) and price stability (inflation of two percent). The Federal Open Market Committee (FOMC), or the deliberative body which makes monetary-policy decisions, is composed of seven Governors -- including a Chair, currently Janet Yellen (whom I met, and I'm happy to report is as pleasant as she is brilliant) -- who are appointed by President Obama and confirmed by the Senate, as well as 12 presidents from from the 12 Federal Reserve districts disseminated across the country. Of those 19, only 12 vote on policy decisions at a time: this will always include the seven governors and the president of the New York Fed. From there, the remaining bank presidents alternate each year.

4. Is Ron Paul right about the U.S. dollar?


No, Ron Paul is a charlatan at best and an intellectual invalid at worst, as is his predecessor, Frederich von Hayek.

Ron's case is that there's secretly 9 or 10 percent price inflation, and as a result other countries are going to drop our dollar -- that, once its status as the world reserve currency runs its course, we're doomed to hyperinflation and a vicious balance-of-payments crisis, and thus we should switch off the dollar and buy gold and silver now!

He's wrong. The indexes he points to from "free market economists" are likewise nonsense. Here's the main problem with the bulk of the indexes I've seen: they account for volatile movements that don't speak to underlying inflation trends. Recall that inflation is a rate of change in prices, usually matched by the rate of change in wages -- the difference between the change in a nominal (quoted in current dollars) variable and a real (adjusted for inflation, or using base-year dollars) is the rate of inflation, so insofar as prices fully adjust, real variables don't change.

Now, if I turned the economy off and then turned it back on, I technically reduced prices to 0. If they shot back up the next day -- ignoring the fact that I can't divide by 0, of course, so let's say they fell to a fraction of a penny -- even to the prices they were at, we're going to see a massive rate of change. That doesn't in any way speak to underlying trends. In much the same way, if home prices absolutely tank because they were overly inflated by a housing bubble such that they deviate from fundamentals, their declines don't speak to underlying trends in inflation, nor do their subsequent rise -- which we expect to be robust and above normal trends, in much the same way that GDP numbers temporarily grow above trend after a period of low resource utilization.

The problem with Ron Paul and his friends is that they're not stupid; they're intellectually dishonest. They only care to look at asset prices when they're rising -- i.e., when they support their narrative that inflation caused the crisis (ignore that the economy didn't overheat in *any way* in 2002-2007 and NGDP was essentially on trend). Inflation in the morning, inflation in the evening, inflation at morning, inflation at breakfast, lunch, and dinner. That's a PaulBot for you.

Ron Paul is an alarmist and rightly he should be. although going to extreme can turn the centrist such as myself away.

Inflation has actually been far below target recently. Some of that is a result of a positive aggregate supply shock, which is generally a good thing because we expect it to improve productive capacity and boost real incomes and thus consumption -- though, insofar as falling energy prices reduce capital investment in sectors which intensely use oil, it may b a net negative. It may also reflect underlying slack in the labor market and thus in overall aggregate demand, and that signals that both the Fed and the Congress have room to lean against it, lest they waste the economy's unused capacity and risk undermining it's long-term potential.

I beleave inflation for good/services is well healed. My concerns are for lack of inflation in personal earnings.

That's all for now -- more to come in a bit if the muse once more strikes me.
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
ResponsiblyIrresponsible
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7/12/2015 12:19:49 AM
Posted: 1 year ago
At 7/12/2015 12:12:06 AM, ironslippers wrote:
Ron Paul is an alarmist and rightly he should be. although going to extreme can turn the centrist such as myself away.

There are things to be alarmed about: a dollar crisis isn't one of them.

I beleave inflation for good/services is well healed. My concerns are for lack of inflation in personal earnings.

It isn't healed; it's been far below target for well over 6 years, and clocked in at about zero this year. The bulk of that is a function of weak demand, which is even more troubling.

Indeed -- average hourly earnings have reverted to roughly a 2-percent trend line. Some other measures such as the ECI or the ECECI show that the average numbers, which are distorted by changes in the relative composition of the labor force, may be a tad off, but wage gains have been crap. Most of that, though, is a function of weak demand, low price inflation, and probably weak productivity.
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ironslippers
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7/12/2015 12:28:59 AM
Posted: 1 year ago
At 7/12/2015 12:19:49 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:12:06 AM, ironslippers wrote:
Ron Paul is an alarmist and rightly he should be. although going to extreme can turn the centrist such as myself away.

There are things to be alarmed about: a dollar crisis isn't one of them.

I think both mine and Ron Pauls case we more alarmed of the shrinking middle class

I beleave inflation for good/services is well healed. My concerns are for lack of inflation in personal earnings.

It isn't healed; it's been far below target for well over 6 years, and clocked in at about zero this year. The bulk of that is a function of weak demand, which is even more troubling.

Though I agree I beleave that property inflation is a dominate factor relating to all. No I'm not saying theres a bubble

Indeed -- average hourly earnings have reverted to roughly a 2-percent trend line. Some other measures such as the ECI or the ECECI show that the average numbers, which are distorted by changes in the relative composition of the labor force, may be a tad off, but wage gains have been crap. Most of that, though, is a function of weak demand, low price inflation, and probably weak productivity.

These topics are interdependent
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
ResponsiblyIrresponsible
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7/12/2015 12:34:02 AM
Posted: 1 year ago
At 7/12/2015 12:28:59 AM, ironslippers wrote:
At 7/12/2015 12:19:49 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:12:06 AM, ironslippers wrote:
Ron Paul is an alarmist and rightly he should be. although going to extreme can turn the centrist such as myself away.

There are things to be alarmed about: a dollar crisis isn't one of them.

I think both mine and Ron Pauls case we more alarmed of the shrinking middle class

I agree on this, though I don't think that's Ron Paul's message. He claims that *inflation* is wiping out the middle class. That couldn't be further from the truth. Higher inflation would benefit the middle class.

I beleave inflation for good/services is well healed. My concerns are for lack of inflation in personal earnings.

It isn't healed; it's been far below target for well over 6 years, and clocked in at about zero this year. The bulk of that is a function of weak demand, which is even more troubling.

Though I agree I beleave that property inflation is a dominate factor relating to all. No I'm not saying theres a bubble

Housing prices have been strong recently, as have rents -- in fact, they've accelerated a whole lot recently -- though homes account for about 2/3 of most homeowner's balance sheet, so they're crucial when looking at net worth, collateral, and household spending patterns as sturdy home patterns are consistent with stabilization in consumption spending, and most recoveries are actually driven by the housing market. The current recession, where the housing market lags the broader economy, is actually a severe anomaly.

Indeed -- average hourly earnings have reverted to roughly a 2-percent trend line. Some other measures such as the ECI or the ECECI show that the average numbers, which are distorted by changes in the relative composition of the labor force, may be a tad off, but wage gains have been crap. Most of that, though, is a function of weak demand, low price inflation, and probably weak productivity.

These topics are interdependent

Wage inflation and price inflation, or the lack of inflation and the declining middle class? I'd agree on both.
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ironslippers
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7/12/2015 12:37:25 AM
Posted: 1 year ago
expand on the difference between finance and economics, if you would
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
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7/12/2015 12:40:13 AM
Posted: 1 year ago
At 7/12/2015 12:37:25 AM, ironslippers wrote:
expand on the difference between finance and economics, if you would

Sure.

Economics is much broader than finance. Economics is the entire system of resource allocation, production, consumption, etc., wherein finance is one sector -- albeit a very important one -- within that system, which involves interest rates, inflation, portfolio diversification, etc. Basically, finance is the mechanism by which businesses acquire capital to expand and thus to hire people, so in a lot of ways it's the driving force behind the broader economy.
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ironslippers
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7/12/2015 12:55:46 AM
Posted: 1 year ago
At 7/12/2015 12:40:13 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:37:25 AM, ironslippers wrote:
expand on the difference between finance and economics, if you would

Sure.

Economics is much broader than finance. Economics is the entire system of resource allocation, production, consumption, etc., wherein finance is one sector -- albeit a very important one -- within that system, which involves interest rates, inflation, portfolio diversification, etc. Basically, finance is the mechanism by which businesses acquire capital to expand and thus to hire people, so in a lot of ways it's the driving force behind the broader economy.

Do you beleave the US is too reliant on finance than the other sectors. It seem since QE the dollar has just been folded over and over without actual ending up in allocation, production, consumption, etc.,
What ever happened to compounded interest, I think derivatives are too dominate and have had the risk removed through the repeal of the Glass-Steagal act.

and Oh yeah...... I'm more an artist than a scientist
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
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7/12/2015 1:02:47 AM
Posted: 1 year ago
At 7/12/2015 12:55:46 AM, ironslippers wrote:
At 7/12/2015 12:40:13 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:37:25 AM, ironslippers wrote:
expand on the difference between finance and economics, if you would

Sure.

Economics is much broader than finance. Economics is the entire system of resource allocation, production, consumption, etc., wherein finance is one sector -- albeit a very important one -- within that system, which involves interest rates, inflation, portfolio diversification, etc. Basically, finance is the mechanism by which businesses acquire capital to expand and thus to hire people, so in a lot of ways it's the driving force behind the broader economy.

Do you beleave the US is too reliant on finance than the other sectors. It seem since QE the dollar has just been folded over and over without actual ending up in allocation, production, consumption, etc.,

Maybe not too reliant, though definitely far too complex, which is part and parcel of why financial volatility has such wide-ranging global ramifications.

What ever happened to compounded interest, I think derivatives are too dominate and have had the risk removed through the repeal of the Glass-Steagal act.

I agree entirely.

and Oh yeah...... I'm more an artist than a scientist
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ironslippers
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7/12/2015 1:22:09 AM
Posted: 1 year ago
At 7/12/2015 1:02:47 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:55:46 AM, ironslippers wrote:
At 7/12/2015 12:40:13 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:37:25 AM, ironslippers wrote:
expand on the difference between finance and economics, if you would

Sure.

Economics is much broader than finance. Economics is the entire system of resource allocation, production, consumption, etc., wherein finance is one sector -- albeit a very important one -- within that system, which involves interest rates, inflation, portfolio diversification, etc. Basically, finance is the mechanism by which businesses acquire capital to expand and thus to hire people, so in a lot of ways it's the driving force behind the broader economy.

Do you beleave the US is too reliant on finance than the other sectors. It seem since QE the dollar has just been folded over and over without actual ending up in allocation, production, consumption, etc.,

Maybe not too reliant, though definitely far too complex, which is part and parcel of why financial volatility has such wide-ranging global ramifications.

Globalization was sold as having just the opposite effect.
Do You beleave that the central banks are trust worthy and/or recognize the effect they have on the majority. We seem to get deeper and deeper down the rabbit hole.
Though I beleave the US would be the last to fall, inter-dependence is of great concern. This is related to my first post on DDO why would a country invest in another country. NOTE i'm still mulling this one over.

What ever happened to compounded interest, I think derivatives are too dominate and have had the risk removed through the repeal of the Glass-Steagal act.

I agree entirely.

and Oh yeah...... I'm more an artist than a scientist
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
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7/12/2015 1:34:31 AM
Posted: 1 year ago
At 7/12/2015 1:22:09 AM, ironslippers wrote:
At 7/12/2015 1:02:47 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:55:46 AM, ironslippers wrote:
At 7/12/2015 12:40:13 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:37:25 AM, ironslippers wrote:
expand on the difference between finance and economics, if you would

Sure.

Economics is much broader than finance. Economics is the entire system of resource allocation, production, consumption, etc., wherein finance is one sector -- albeit a very important one -- within that system, which involves interest rates, inflation, portfolio diversification, etc. Basically, finance is the mechanism by which businesses acquire capital to expand and thus to hire people, so in a lot of ways it's the driving force behind the broader economy.

Do you beleave the US is too reliant on finance than the other sectors. It seem since QE the dollar has just been folded over and over without actual ending up in allocation, production, consumption, etc.,

Maybe not too reliant, though definitely far too complex, which is part and parcel of why financial volatility has such wide-ranging global ramifications.

Globalization was sold as having just the opposite effect.

As leading to less complexity in the global finance system?

Do You beleave that the central banks are trust worthy and/or recognize the effect they have on the majority. We seem to get deeper and deeper down the rabbit hole.

Generally speaking, yes. We do get further down the rabbit hole, but generally monetary policy is the solution.

Though I beleave the US would be the last to fall, inter-dependence is of great concern. This is related to my first post on DDO why would a country invest in another country. NOTE i'm still mulling this one over.

I mean, the reason to invest in another country is either (a) to reach for yield or (b) to forge trade patterns which will be be particularly beneficial once the other countries develops or its economy grows.

What ever happened to compounded interest, I think derivatives are too dominate and have had the risk removed through the repeal of the Glass-Steagal act.

I agree entirely.

and Oh yeah...... I'm more an artist than a scientist
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ironslippers
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7/12/2015 2:38:25 AM
Posted: 1 year ago
At 7/12/2015 1:34:31 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 1:22:09 AM, ironslippers wrote:
At 7/12/2015 1:02:47 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:55:46 AM, ironslippers wrote:
At 7/12/2015 12:40:13 AM, ResponsiblyIrresponsible wrote:
At 7/12/2015 12:37:25 AM, ironslippers wrote:
expand on the difference between finance and economics, if you would

Sure.

Economics is much broader than finance. Economics is the entire system of resource allocation, production, consumption, etc., wherein finance is one sector -- albeit a very important one -- within that system, which involves interest rates, inflation, portfolio diversification, etc. Basically, finance is the mechanism by which businesses acquire capital to expand and thus to hire people, so in a lot of ways it's the driving force behind the broader economy.

Do you beleave the US is too reliant on finance than the other sectors. It seem since QE the dollar has just been folded over and over without actual ending up in allocation, production, consumption, etc.,

Maybe not too reliant, though definitely far too complex, which is part and parcel of why financial volatility has such wide-ranging global ramifications.

Globalization was sold as having just the opposite effect.

As leading to less complexity in the global finance system?

More like the strong would support for the weaker and would prevent global collapse.

Do You beleave that the central banks are trust worthy and/or recognize the effect they have on the majority. We seem to get deeper and deeper down the rabbit hole.

Generally speaking, yes. We do get further down the rabbit hole, but generally monetary policy is the solution.

I'm supportive (was) of QE but the near zero, zero and negative interest rates I beleave are damaging and risky, because of pension and other like related investments that promised 8%+ return before 2008, aren't these investments now at a higher risk? As a layman it's illogical give away money and simultaniously seek a return for your money.

Though I beleave the US would be the last to fall, inter-dependence is of great concern. This is related to my first post on DDO why would a country invest in another country. NOTE i'm still mulling this one over.

I mean, the reason to invest in another country is either (a) to reach for yield or (b) to forge trade patterns which will be be particularly beneficial once the other countries develops or its economy grows.

I do follow that, and you explained it well on that post (though I had to read numerous times) but I have this uneasy feeling that its the equivalent of betting against your team instead of investing in your team. as a layman its illogical. Though I suppose you could bet on against your team to invest in your team further down the road (again I'm still warming up to the idea)


What ever happened to compounded interest, I think derivatives are too dominate and have had the risk removed through the repeal of the Glass-Steagal act.

I agree entirely.

and Oh yeah...... I'm more an artist than a scientist

I'm starting to repeat myself (not only that I'm sounding like an idiot).

Thanks, and I'll try to get more involved and educated regarding your posts.
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
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7/12/2015 5:26:08 AM
Posted: 1 year ago
At 7/11/2015 11:47:14 PM, ResponsiblyIrresponsible wrote:
k, FAQ, go.

1. What is economics?


Economics is a social science -- often called the "dismal science" -- predicated on the allocation of resources amid scarcity.

By dubbing econ "dismal science" adherents exaggerate; The "dismal"'s fine - it's "science" where they patently prevaricate.
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ResponsiblyIrresponsible
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7/12/2015 9:14:16 AM
Posted: 1 year ago
At 7/12/2015 5:26:08 AM, ShabShoral wrote:
At 7/11/2015 11:47:14 PM, ResponsiblyIrresponsible wrote:
k, FAQ, go.

1. What is economics?


Economics is a social science -- often called the "dismal science" -- predicated on the allocation of resources amid scarcity.

By dubbing econ "dismal science" adherents exaggerate; The "dismal"'s fine - it's "science" where they patently prevaricate.

No one is calling it a hard science.
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Prodigy0789
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7/12/2015 10:47:32 AM
Posted: 1 year ago
Answer this for me; will China remain an economic powerhouse for the years to come, or will there be a stagnation, and maybe a descent?
ResponsiblyIrresponsible
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7/12/2015 10:52:22 AM
Posted: 1 year ago
At 7/12/2015 10:47:32 AM, Prodigy0789 wrote:
Answer this for me; will China remain an economic powerhouse for the years to come, or will there be a stagnation, and maybe a descent?

China is in a bit of a precarious position. Its growth forecast have been chopped by about 3 percentage points -- which doesn't factor in the impact of the recent loss of $2.4 trillion in stock-market wealth, though if I actually understood the psychology of financial markets I'd be in a different business. On top of that, there are a number of structural issues in China, mainly its focus on an export-driven model and its lack of open markets, that are restraining its potential.

I think it'll remain a powerhouse, surely, though fears of it eclipsing the U.S. will likely not pan out.
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