Economics Lesson 1 : Economic growth causes inflation i.e. increasing demand and lack of sufficient supply causes inflation.
Economics Lesson 2 : A slow-growth economy leads to a decline in inflation.
Milton Friedman : “Inflation is a monetary phenomenon – Control the growth of money supply and thus control inflation.” » Read more: The Lessons of Milton Friedman
A simple enough post. Here’s how Thomas Carlyle defined economics in 1849 : “Economics is dreary, desolate and indeed quite distressing, what we might call by way of eminence, the dismal science.”
Why then should we even be interested in it? Joan Robinson, another prominent economist in the 1930s and 1940s said that one has to learn economics in order to avoid being deceived by economists ($800bn bailout, TARP anyone?). Herbert Stein, another economist said ” Economists don’t know very much. Other people, including the politicians who make economic decisions, know even less about economics than the economists do. » Read more: Understanding Economics
According to Mr. Friedman, the Great Depression did not occur primarily as a result of the stock market crash of the 1930s but mainly because of the lack of intervention of the Federal Reserve. When the Bank of the United States in New York crashed on December 11, 1930, he says that the Federal Reserve should have intervened and flooded the country with liquidity and hastened to ensure that no more failures took place. Instead, they were silent observers of an imploding economy and persisted with a lackluster monetary policy. » Read more: What Milton Friedman would’ve thought of today’s recession
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