Article 8: The Silver Age of the Central Banker

The author of this article thinks that people in the market think that central bankers are responsible for the outcome of the market. He says we moved from a Golden Age of the Central Banker to a Silver Age where monetary policy does not affect markets in the same ways as before. It mentions how now, each country is responsible for deciding on the monetary policies their country's, making it seem like a competition among Central Banks. The author thinks that this is occurring due to massive global debt. He claims that it is all due to global trade volumes that peaked in Q3 or Q4, and has not been discussed nor acknowledged by WSJ or FT articles and CNBC. The article discusses how it is incredibly rare for their to be a decline in export volumes, particularly a decline that is shared by every major economy in the world. He claims that the United States is already in a recession, one almost as bad as the Great Recession. He believes that the global trade values of Asia, the U.S., and Europe are all contracting at the same time, leading to global growth contracting on a structural basis.

Article 6 Review

It is interesting to read about contemporary issues having studied the necessary content to understand them in more depth. This article by David Stockman is focusing on the BLS is overestimating the seasonal adjustment for jobs in December, making the economy look like it is in far better shape than it really is. Stockman exposes the truth behind the headline that hundreds of thousands of jobs were added to the U.S. economy in December, saying that the BLS added large numbers to the figure for “seasonal adjustment” that’s highly unreliable. Quarterly figures for GDP are also seasonally adjusted, but we learn the specifics of how that is done in the article. . Stockman, once again using his sarcastic tone, he ridicules BLS for overstating the number. In order to obtain the seasonal adjustment they usually get, Stockman calls BLS out for creating too many jobs. As this past December is much warmer than those from before, the seasonal adjustment should not have been changed as much as it did.It relates to what we’re studying because quarterly figures for GDP are also seasonally adjusted, but we learn the specifics of how that is done in the article.It is interesting to read about contemporary issues having studied the necessary content. I found the article very informative, however I believe much of what he writes is biased at least slightly.

article 7 reviewn

The article talked about how the Bureau of Labor Statistics is able to alter statistics and give the public biased data. The article says that  the unemployment rate appears to be 5.5 percent, which looks good because so many people have left the labor force. But the information was said to be misguided. According to the article, last year’s average unemployment rate should have been 11.4 percent instead of 6.2 percent. The reason for the shrinkage in the labor force is that baby boomers are retiring. However, there are is a large group of men between the ages of 25 or 54 who are no longer in the labor force even though they have finished school and have not yet retired. To solve the issue, the government has provided more food stamps, health care, and disability benefits, which has decreased the incentive for people to find jobs. The solution is to move the provision of welfare benefits back to the states, who can better evaluate which residents need help. Whenever possible, regulations should be left to the states so that these rules can be better streamlined and adapted to geographic and demographic circumstances

Chapter 27: The Basic Tools of Finance

This chapter talks about how people decide whether or not to invest. It defines finance as the field that studies how people make decisions regarding the allocation of resources over time and the handling of risk. This chapter introduces a way of calculating the present value, which is the amount of money today that is needed using prevailing interest rates, to produce a given future amount of money. Using the same equation, one can calculate the future value which is the amount of money in the futrue that an amount of money will yield, given prevailing interest rates. The equation is true if the account is compounding, or an accumulation of a sum of money where the interest earned remains in an account to earn additional interest. Chapter 27 also deals with how risk aversion, or the dislike of uncertainty influences people's investments. Examples include car, fire, health, and life insurance. It discusses some of the issues that insurance companies face such as adverse selection and the moral hazard.

Saving, Investment, and the Financial System

This chapter discuses the financial system, which is the group of institutions in the economy that help to match one person's savings with another person's investment Financial markets are basically where both the savers and borrowers interact and it includes the bond and stock markets. It talks about the difference between a bond and a stock. A bond is basically a loan that has a date by which it will be payed back with interest rate. A stock is an investment in which the lender owns a part of the company that is the borrower, and it owns a portion of all the profits. The chapter also talks about important identities which include privte saving, public saving, budget surplus, and budget deficit. Investment refers to the purchase of a new capital, like buildings or equipment. It also introduces the topic of the market for loanable funds which is the market in which those who want to save supply funds and those who want to borrow to invest demand funds.

Chapter 24: Measuring the Cost of Living

Chapter 24 introduces the concept of consumer price index. Consumer price index is used to measure the the overrall cost of the goods and services bought by a consumer. This chapter also talks about how the inflation rate, which is the percentage change in the price level from the previous period is important. Like always, there are flaws in using the CPI but it helps give an idea of how prices are changing over time. The producer price index is a measure of the cost of a basket of goods and services bought by a firm and it can help predict changes in the consumer price index. Another key concept in the chapter is the nominal interest rate. The nominal interest rate is as usually reported without a correction for the effects of inflation. The real interest rate is the interest rate corrected for the effects of inflation. Also, indexation is the automatic correction of a dollar amount for the effects of inflation by law or contract. 

Chapter 23: Measuring a Nation's Income

Chapter 23 discusses how macroeconomics deals with the economy of every country, not just of an individual firm or market. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets simultaneously. It addresses and measures the total income of everyone in the economy (GDP), the rate at which average prices are rising (inflation), the percentage of the labor force that is out of work (unemployment), total spending at stores (retail sales), or the imbalance of trade between the United States and the rest of the world (the trade deficit).GDP, which is gross domestic product and how it is measured. It talks about how it is used to compare the well-being of other nations.The GDP of a country only includes things that were made and sold within the country, so it excludes any exports. Imports have a negative value on GDP. The chapter talks about how it is difficult to actually use GDP as an accurate measure of a country's well being because it excludes benefits from things such as the elimination of pollution. To understand how the economy is using its scarce resources, they divide G (devoted as Y) into four components: consumption (C), investment (I), government purchases (G), and net exports (NX): Y= C + I + G + NX. This equation is an identity, which must be true because of how the variables in the equation are defined.