Global economics, monetary policy, and other simple topics
July 10, 2019 8:46 AM   Subscribe

I was reading this NY Times article from yesterday about the risk of an imminent recession and I realized that I lack the economics grounding to really comprehend what's going on. What resources would you recommend that would help me fix this?

Preferred sources: free books, YT videos, websites and the like. I could probably buy a book or two as well if they are really good.

My current level: I took macroeconomics 15 years ago and got a B+.
posted by miltthetank to Society & Culture (6 answers total) 7 users marked this as a favorite
 
To give some context, here are some statements from the article that I didn't quite understand. If you have specific answers for these, that's great and I'm interested, but I'd also like to see resources that would give me the ability to answer these questions, and others like them, myself.

"Major central banks have failed to hit their 2 percent inflation targets during this expansion, heightening the risk that prices will slip dangerously low come the next downturn": what's wrong with low prices during a recession?

"Mr. Trump suggested last week that central banks were in something of an arms race, saying on Twitter that China and Europe were manipulating their currencies to gain an edge over the United States": what kind of edge can one get by manipulating currency? How is this done, and how might this cause or impact a potential recession?
posted by miltthetank at 8:58 AM on July 10


prices will slip dangerously low

This is explained here. In short, in a recession the central bank wants stimulate the economy with low real interest rates. With low inflation, their ability to do so is constrained.

manipulating currency

Explained here. For example, a weaker dollar increases international demand for U.S. goods because they are cheaper (from the perspective of foreign buyers).

Here are several reliable free online texts from CORE economics.
posted by Mr.Know-it-some at 9:31 AM on July 10


Mr.Know-it-some's links are great! For your first question, though, I read the statement to refer to the risk of deflation. See here. Deflation during a recession is bad because it can turn into a downward spiral that is difficult to stop with just low interest rates/stimulus.
posted by odin53 at 10:14 AM on July 10


Ray Dalio's How the Economic Machine Works is a must-see.

Also, Kai Ryssdal's Marketplace podcast is an excellent daily roundup of economic trends and business news.
posted by invisible ink at 1:52 PM on July 10


The Economist has a free podcast that regularly covers these topics; although it may present similar challenges to the NYT article that you posted in that it glosses over fundamentals that you may not have. But listening on a regular basis should help to improve your fluency.

Kai Ryssdal Marketplace is a good suggestion; although personally I find the delivery to be annoying and disingenuous.
posted by seesom at 2:26 PM on July 10 [1 favorite]


Can I (gently) suggest that you don't read too much into what they say, because honestly expecting the causation of inflation rates (and the insanity of officially targeting a specific interest rate number) or monetary policy to directly cause optimal economic outcomes is silly, but they do it anyways and speak authoritatively as though what they are saying is real. Here is Congress woman AOC making the same point to the Fed:

http://nymag.com/intelligencer/2019/07/aoc-is-making-monetary-policy-cool-and-political-again.html

Here is another point (this one is slightly more fringe) about inflation rate targeting:
https://thefaintofheart.wordpress.com/2016/09/14/bernanke-interest-rate-junkie-and-inflation-targeting-nutter/

In short, saying that they are 'targeting 2% inflation' , which implies that values between say 1% vs 5% are 'wrong' and that 2% is somehow correct, is total nonsense.
posted by The_Vegetables at 10:25 AM on July 11


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