The financial world we live in is just as wild, if not more, than the mountains and woods we walk through. We are told that the fundamentals of our economy are strong, but we can feel that something is wrong. My unique financial background and survival passion make Financial Survivalist and excellent place to learn and share.

Monday, November 24, 2014

So, I am getting my masters in economics. Let's just say I've learned a lot. I'm not negating everything I've ever said, but I definitely see things in a new light. For example, Keynes wasn't crazy. Gov't spending stimulates the economy. However, his model is based on numerous assumptions and definitely does not hold in an open economy. So what we are left with is a bunch of economic tools in our tools box, and problems that are still not clearly defined by modern economics.

With that being said there are some things that are pretty clear. Inflation is a big one. We know what causes it and it's not printing money. Well, the money supply is a factor, but not the largest. We also know how to control it and the cost to control it.

Also, sticky wages. The reason why I give Keynes any credibility is because I believe that prices are sticky (ie they take time to adjust). This is probably the most defining, but definitely not the only, difference between Austrian Economics and Keynesian Economics. I also don't believe that people act rationally, another important difference. Despite my beliefs there is ample data to support Keynesian economics, and it seems to me that Austrian Economics basically tries (stretches sometimes) to explain the differences.

Some have mentioned that maybe I've been brainwashed by my professors. Well, I'M NOT A LEMING! What the hell! Seriously? Actually my professors have been very good at presenting all sides of the argument. I even tested some of them by arguing the liberal point of view and I got squashed.

To sum everything up, calm down. There will be more financial crisis in the future, but it's not the end of the world. Do the "rulers" have everything under control? Of course not. Do they tell us all the truth? Of course not. But it's still not the end of the world.

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