Economics

Microeconomics is an interesting class to sort of poke the brain with. In fact, it's a great class to sort of set up the infrastructure for more advanced information to build on. Economics is a labyrinth in the mind. Professor K. made a diagram yesterday that showed that government has amassed a vast number of tools to avoid and/or combat inflation, deflation, recessions, and depressions. In addition, we have the Federal Reserve Bank which can lend money to the US Gov't and US domestic economy, when needed. Having been blasted through a storm of heated whirlwind of capital injections - stimulus money - one can see that this can be a danger, especially if they know that no one in the government has a pragmatically clear, specific set of solutions to a financial crisis. But given we currently know how to solve the financial crises of the past (Liquidity traps! Think Japan, their banks back during the 1990s were unwilling to lend and without lending to the banks to lend to people/businesses...), we should be at ease and not panic. We have encountered a recession like no other because it is a combination of a housing bubble bust, inflation, and liquidity trap (if anyone whose an expert reads this, please, I'm not trying to be a pundit. I'm trying to evaluate the useful number of tools we have now, compared to the 1940s.

Controlling interest rates is of course, one such important tool the Fed has been using for a while. To encourage spending to 'jump-start' the economy, the Fed lowers interest rates. Inversely, raising interest rates cools off an economy that is growing too fast. Perhaps the Fed had done so during the stock bubble crisis earlier in this decade, but now, one worries constantly about our trade deficit with China (are we trying clean up the housing bubble burst by creating another bubble?).

Increasing the money supply also tends to tweak the same thing but we cannot just burn money (yes we can, actually).

The list goes on but one account that no book has taken into account (because it's recent news) is that China may 'dump' American dollars, which will in turn, deflate the dollar because there will be less in circulation for people to use to buy items, which will significantly affect demand of most products. Paul Krugman (my economic guru) provides an excellent analogy in his book to model our economy and help laymen like ourselves understand jargon most economic experts like to guide us with. Even children can understand economics now by reading his book Depression Economics. Maybe he should make an economics book specifically for children though. ANYWAY, an important note Prof K. (the other one) noted was that if they are to begin 'dumping' US dollars, prices for oil will go up but I forget why. Oh yes, OPEC's oil can only be traded with US dollars. In Hawaii Nei gas is about $3.30 per gallon. Over here it's something like $2.57 per gallon. Bah

Upon observing the events of last year, I was inspired to further my studies with economics. Our administration is WORKING. They must have ground their coffee from those beans in Jack and the Beanstalk. But mastering economics requires a lot of memory which cannot be acquired through repetitive action, like learning how to sword-fight, surf, or commandeer ships. You need to sit down and read a ton of books and write papers, staying up unreasonable crazy hours. Economic skills cannot be gained in any ol fun way, unfortunately. Kind of makes a man want to drop out of college and just join a rock band or something. Or become a freelance writer. Or something easier than being an economist. The longer you look at economics, the more you realize what money is - a buffer between our basic needs: food, drink, shelter, etc. People like to hoard it and that may be called greed. Others call it security. Some call it Chinese-ness. Penny pinching, saving up. Then spending it all on some huge 90lb vases and fuel-inefficient cars.

Ending this post (FINALLY), I would like to think that something really important transcends all this 'much ado about nothing' with money - and that is something you can probably realize if you watch the movie Michael Clayton or the Pursuit of Happiness - it's this feeling that if you survive unconventionally through the economic turmoil and woes of the world, the self-criticisms that build up inside of you all wash away. Plus love. Yeah, that's important too. In fact, that's probably more important than that part two lines up about surviving unconventionally and with the self-criticisms washing away... yeah, this guy needs some sleep and a WEEKEND