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Truth in Economics

Dr. Zaus

Lifer
Oct 16, 2008
11,770
347
126
Truth in Economics
What do you want to know more about?

I am a PhD student majoring in international finance and organizational behavior.

I find it offensive that in troubled times like these that the ?viewers at home? are presumed to be too stupid to understand how the world works. I am interested in covering topics in economics that are important to people and covering said topics in a way that brings about greater lucidity, not obscurity.

My intent is to explain things in a way that a reasonable person should be able to understand. Further my intent is to give a fair look at any disagreement in the field so that if you have an opinion, no matter what it is, it is an informed opinion.

So what do you want to know more about? Please choose an option and then explain what it is, in specific, you would like a scholarly look taken at.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
International economics because I still find it interesting that the West seems to disproportionately hold so much wealth over the rest of the world. Next, macroeconomics.

Micro don't interest me terribly and economic theory seems to be overly mixed with politics and culture and social influences that it is very difficult to distill it to its truths.
 

Dr. Zaus

Lifer
Oct 16, 2008
11,770
347
126
Originally posted by: Skoorb
International economics because I still find it interesting that the West seems to disproportionately hold so much wealth over the rest of the world. Next, macroeconomics.

Micro don't interest me terribly and economic theory seems to be overly mixed with politics and culture and social influences that it is very difficult to distill it to its truths.
Just wondering:
If i could give the honest/scientific-basis of the various points of view that political entities base their ideology on, would that interest you?
 

Cattlegod

Diamond Member
May 22, 2001
8,687
1
0
Here is one I posted in another thread, I'd like to get your take on it. Trickle down effect vs. taxing the rich/businesses and distributing it:

I'm a supporter of trickle down, but I wonder if any studies have been done to show that they are essentially equal. What I mean is that if you tax the rich/businesses more, they hire less but the lower people spend more so they rich can hire more and make more money. Or if you tax the rich/business less, they hire more, creating more jobs for lower income people and the now the lower income have more jobs and income thus buy more.

Seems like it doesn't matter what way it is executed so long as it is done in moderation -- is there a tipping point somewhere?
 

Dr. Zaus

Lifer
Oct 16, 2008
11,770
347
126
Originally posted by: Cattlegod
Here is one I posted in another thread, I'd like to get your take on it. Trickle down effect vs. taxing the rich/businesses and distributing it:

I'm a supporter of trickle down, but I wonder if any studies have been done to show that they are essentially equal. What I mean is that if you tax the rich/businesses more, they hire less but the lower people spend more so they rich can hire more and make more money. Or if you tax the rich/business less, they hire more, creating more jobs for lower income people and the now the lower income have more jobs and income thus buy more.

Seems like it doesn't matter what way it is executed so long as it is done in moderation -- is there a tipping point somewhere?
Good question.
The truth of the situation is a lot deeper than anyone who says ?trickle down doesn?t trickle? might think, though a ?supply side? only point of view is just as half-witted as believing that you can tax companies to no end and not see prices rise.

To honestly answer any debate, the truth is on a continuum.
 

Atreus21

Lifer
Aug 21, 2007
12,007
571
126
Originally posted by: DixyCrat
Truth in Economics
What do you want to know more about?

I am a PhD student majoring in international finance and organizational behavior.

I find it offensive that in troubled times like these that the ?viewers at home? are presumed to be too stupid to understand how the world works. I am interested in covering topics in economics that are important to people and covering said topics in a way that brings about greater lucidity, not obscurity.

My intent is to explain things in a way that a reasonable person should be able to understand. Further my intent is to give a fair look at any disagreement in the field so that if you have an opinion, no matter what it is, it is an informed opinion.

So what do you want to know more about? Please choose an option and then explain what it is, in specific, you would like a scholarly look taken at.
"Stupid" is a bit strong. I believe that average people, even some people with college degrees, lack a basic understanding of macroecon, and I can't blame them. Micro is at least intuitive. Macro, however, had more math involved, and seemed less intuitive.
 

gevorg

Diamond Member
Nov 3, 2004
5,075
1
0
I voted for macroeconomics and here is my question:

Based on current events such as doubling of deficit from 5T to 10T, very low interbank interest rates, and hundreds of billion dollars of free money to the banks, what is the likelihood of U.S. dollar inflation rate to become >10% in the near future? Why or why not?
 

tfcmasta97

Platinum Member
Feb 7, 2004
2,003
0
0
Originally posted by: DixyCrat
Originally posted by: Cattlegod
Here is one I posted in another thread, I'd like to get your take on it. Trickle down effect vs. taxing the rich/businesses and distributing it:

I'm a supporter of trickle down, but I wonder if any studies have been done to show that they are essentially equal. What I mean is that if you tax the rich/businesses more, they hire less but the lower people spend more so they rich can hire more and make more money. Or if you tax the rich/business less, they hire more, creating more jobs for lower income people and the now the lower income have more jobs and income thus buy more.

Seems like it doesn't matter what way it is executed so long as it is done in moderation -- is there a tipping point somewhere?
Good question.
The truth of the situation is a lot deeper than anyone who says ?trickle down doesn?t trickle? might think, though a ?supply side? only point of view is just as half-witted as believing that you can tax companies to no end and not see prices rise.

To honestly answer any debate, the truth is on a continuum.
Trickle down gets down eventually but the theory behind that is over 50-100 year timelines, and in a global open economy with so much competition, I'd say taxing the rich much more and enabling better establishment of capital/infrastructure is by far the better way to bring wealth to the middle class. I also feel that the higher tax rates of the rich better capture the true costs of infrastructure in that the government undersupplies positive public goods while oversupplying those with negatives attatched to them. Internalizing infrastructure costs to the rich makes sense because the infrastructure itself is most used by the large corporations that need to get their workers to and from work, and better internalizes maintenence costs of the infrastructure as they are the ones damaging the roads [big rigs transporting things tearing up roads that are costly to repair.] The dynamics of trickle down economics fail to recognize the damage to the markets by reducing competition and giving monopoly power over markets where money is better used to extract rent [increasing so much 'advertising costs' relative to R&D because it is so profitable to abuse the monopoly power] shifting the equilibriums of economies to unfavorable positions for the general populations, but rather providing unbalanced power and making easier for the rich to maintain their grasp over the masses.


Your opinion(s) on this?
 

venkman

Diamond Member
Apr 19, 2007
4,950
11
81
i only have my masters in finance and majored in econ as and undergrad so I'm not as cool as the OP ;).

Originally posted by: gevorg
I voted for macroeconomics and here is my question:

Based on current events such as doubling of deficit from 5T to 10T, very low interbank interest rates, and hundreds of billion dollars of free money to the banks, what is the likelihood of U.S. dollar inflation rate to become >10% in the near future? Why or why not?
One thing I've realized over the years is that finance/economics is too much of a normative science to predict properly. The fundamental theories would tell you that yes, with all of these things, Inflation would jump up, but the reality of the situation can be very different. To put in very simple terms, you can tie inflation down to supply and demand. When the supply of money goes up, the price of money goes down, which means money buys less stuff, and you have inflation. At the same time these same factors can also cause a decrease in the supply of money. For example, there is only a set amount of money available to be purchased or borrowed in a given time period and runaway deficit spending means the US government must borrow a bigger chunk of this limited pool. This is known as the crowding out effect.

That brings us to demand and more importantly consumer/investor confidence. Lets say you and I are completely convinced that US inflation is about to sky rocket. We are going to immediately dump our dollars for gold/oil/Euros or some other asset. Now multiply that by thousands or even millions of investors. It becomes a self-fulfilling prophecy. Every is convinced inflation is going to happen so they act in a way to protect themselves from it and those actions themselves cause high inflation even when the fundamentals don't support it.

So what will happen? I think we will have some inflation, but I don't think it will be run away inflation as I think there will be enough regulation put in place to keep investor confidence in the dollar strong.

OP, I've always been a strong proponent of microeconomics over macro economics. Efficient allocations of resources, externalities, and utility are concepts that i believe should be taught to every high school student as it is vitally important in understanding the role of government taxation and spending and the role that we as consumers, investors, and tax payers play in an economy. Without understand externality, how does one understand government subsidies? Without understanding efficient allocation how does one understand taxation, government spending, and trade deficits? Without understand utility and supply and demand, how does one understand fiscal and monetary policy? I would also recommend avoiding the theory (Austrian, Keynsian, Classical etc) as it isn't all that relevant other than giving people a background of where the ideas come from.

 

jackace

Golden Member
Oct 6, 2004
1,307
0
0
I voted Macroeconomics because that is the larger picture that affects most Americans.
 

dullard

Elite Member
May 21, 2001
22,965
1,218
126
I think most people have a reasonable grasp on the very basics of macro and micro. When I took those classes (technically, a couple classes of each), they were all just common sense and didn't really include anything that I didn't know already.

While economic theory is interesting, and even someone with a bit of economic education like me certainly doesn't understand much of it, economic theory is just too abstract.

That leaves the option of international economics. I think this area is of importance to most people and it is very much an unknown.
 

Mursilis

Diamond Member
Mar 11, 2001
7,756
11
81
Originally posted by: Atreus21
Originally posted by: DixyCrat
Truth in Economics
What do you want to know more about?

I am a PhD student majoring in international finance and organizational behavior.

I find it offensive that in troubled times like these that the ?viewers at home? are presumed to be too stupid to understand how the world works. I am interested in covering topics in economics that are important to people and covering said topics in a way that brings about greater lucidity, not obscurity.

My intent is to explain things in a way that a reasonable person should be able to understand. Further my intent is to give a fair look at any disagreement in the field so that if you have an opinion, no matter what it is, it is an informed opinion.

So what do you want to know more about? Please choose an option and then explain what it is, in specific, you would like a scholarly look taken at.
"Stupid" is a bit strong. I believe that average people, even some people with college degrees, lack a basic understanding of macroecon, and I can't blame them. Micro is at least intuitive. Macro, however, had more math involved, and seemed less intuitive.
"Stupid" isn't strong enough. The Washington Post published a study a few weeks ago in which less than half (2 out of 5) of Americans know that we have three branches of gov't and can name them. WashPost article. The average person is dumber than a box of rocks, or at least chooses to be amazingly uninformed.
 

alchemize

Lifer
Mar 24, 2000
11,489
0
0
I know this isn't the question you asked...but this is P&N where going off topic is not only expected but required.

My perspective on economics is that it is much like the weather (only less predictable but can be influenced).

While it is relatively easy to predict things like "a snowstorm that hit Colorado yesterday will hit kansas today", the massive amount of variables makes it impossible to say if it will be a rough winter or not.

Your thoughts?
 
Feb 16, 2005
13,796
4,812
136
I will freely admit that my grasp of economics is pathetic, but I would love to get a well explained overview at some point. Macro being the one to spark my interest the most.
 

AreaCode7O7

Senior member
Mar 6, 2005
931
1
0
Since it seems to me kind of basic that the stock market can't go up forever and it would be bad if it did, what would a good balanced DOW be when all this dust settle? What would the impact be if it were higher/lower than that ideal?
 

Dr. Zaus

Lifer
Oct 16, 2008
11,770
347
126
Originally posted by: Farang
Karl Marx - really smart, or genius?
Let's just say he's not a Harvard MBA like bush.

I'm getting some useful stuff here, I've started work on an overview of macro economics.

would a good balanced DOW be when all this dust settle
1.)each company in it should be the value of all the money that company is going to make for the rest of time
2.)adjusted for inflation (keeping in mind growth vs said inflation)
3.)multiplied by some amount taking into account that company's likelihood of going under vs the return you can get on a government treasury bond.
4.)then divided by the number of outstanding shares.

do that for each company in the Dow and add up the value: whalah, a 'good balanced price'.

only problem is that 1, 2 and 3 are judgment calls you have to make based on how you think individual organizations and individuals in organizations are going to behave.

That said, with some good investigation and choosing 20 or so stocks in different sectors you can put together a well diversified portfolio that will reduce the risk you suffer. I have a personal fondness for 'drip' funds and mature companies that pay out reasonable dividends.

... just keep in mind that calculus is a lie and 1/infinity is NOT zero.
 

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