Watch: An Overview of Economics
An economy is the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated.
What that means is an economy is made up of the individual and collective choices we all make on what is important, how we want to spend resources, and how we measure our progress as a countries on a finite planet. While economics is often thought of something that is focused on money, it is actually the system that is reliant on the social interactions between humans, the values we hold, and the culture that emerges from that.
Required: Overview of how economies work.
Required: Overview of how economies work.
Optional: A bit more in-depth overview on how Market Economies Work
Optional: A bit more in-depth overview on how Market Economies Work
Key Concepts
Money → symbolic tool that can be used anywhere good and services exchanges
Leveraging → macro taking on debts
Inflation → more money = lower value
Expansion → People and businesses spending more and taking on debt
Short Term Debt Cycle → 5-7 years
Gross Domestic Product → US wealth generation / number of people
Central Interest Rates → The rate at which commercial banks can take out loans from the central banks
Credit → Symbolic representation that usually and only be redeemed with debtor
Deleveraging → macro paying off debts
Deflation → less money = higher value
Recession → People and businesses spending less more and paying of debt
Long Term Debt Cycle → 75 - 100 years
Productivity → How much we produce collectively compared across the years
Stimulus → The government injecting money into the economy
Read and Watch: Economic Stories
Economics are often portrayed as physical forces that can be calculated, understood, and controlled. Due to human nature, this is not exactly the case. The economy is based on the fundamental relationships that exist between the complex social network of every human on the planet. Because this is economics are influenced not only by physical resources but also by stories, emotions, relationships, and networks that individually and collectively create the reality we live in. Every individual, group of people, country, and the international corporation is constantly changing the perception of the economy every day through the stories that are being told. Perception of what has value, what is scarce, and how the world "works" all shape our actions and choose which in turn creates the collective interactions of the economy.
https://www.youtube.com/watch?v=exdR6lhN4bk
Optional: How economics doesn't always take human behavior into account into account not rationalist behavior.
Read and Watch: Neoliberalism and Globalization
<aside> 💡 Globalization → The process by which businesses or other organizations develop international influence or start operating on an international scale. Think: "International supply chains, markets, and production"
Neoliberalism → A culture of policies of economic liberalization, including privatization, deregulation, free trade, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society. Think: "Market forces solve all problems government get out of the way
Financialization → The increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies. Think: Wall Street is more and more abstraction about debt and speculating on the future rather than pricing physical reality
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From 1940 to 1980 the United States and most of the western world used Keynesian Economics focused on using active government policy to manage aggregate demand in order to address or prevent economic recessions. The Regan Revolution and effects of globalization changed the US to switch to an ideology of free market economics.
This called for passive government engagement and a strong independent free market was relied on to fix social and economic problems. This ideology often called neoliberalism, allowed for the financial and consumer sectors to dominate the economy and culture due to the lack of regulations and government oversight. These changes created a culture of financialization where money became the primary metric of personal, cultural, and commercial success.