The meltdown in the financial markets that became manifest in earnest last summer has generated an incredible variety of commentary -- from Pollyanna to Chicken Little. Where the economy is headed is important to all of us. I will devote extensive space in the coming months to all sides and all aspects of the raging debate, and I will contribute my own evaluation. But it is important to study how these opinions are developed: what are the facts (actual occurrences and things) and are all relevant facts included, what is the context, what is the logic (the validity of the reasoning), and are the conclusions warranted in light of the foregoing?
The economic news and commentary is fast and furious, coming at a rate and volume that is almost impossible to digest. Furthermore, most commentators speak from their own perspectives and are rarely self-critical. Those who own gold mines obviously would like to see the price of gold rise. Financial advisers would like to sell you their services. Newspeople want to improve their stature in their corner of the news industry. Stockbrokers want you to buy stocks and bonds. Et Cetera. So it is all the more important to be skeptical and study the facts to verify any conclusions that are presented to you.
As for myself, I am retired, own my modest home outright and have retirement savings that probably are not near enough to sustain my pre-retirement standard of living to the end of my life expectancy. So my financial self-interest is not much different from the ordinary prudent middle class retiree.
While economics itself is fairly simple, the economic superstructure is extraordinarily complex. For example, one of the largest threats to your personal economic well-being is the stability of the multi-trillion dollar market in over-the-counter credit derivatives that is larger than the annual gross domestic product of the United States. Even more complex are the strictures that governments have placed on the free markets. These strictures distort rather than eliminate market forces, making it difficult to forecast the short term direction of the economy. I will attempt to make these complexities somewhat understandable.