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Ask HN: How can I learn macroeconomics properly?

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41–50 of 141 posts

Re: Ask HN: How can I learn macroeconomics properly?

#41
Economics is an arena full of entrenched interests who exploit information asymmetry and regulatory capture to compete, at multiple scale factors. It is my strongly held opinion that rational analysis of "Economics" is not possible.

You've got the global scale, where nations compete, best described by Beau of the Fifth Column as a game of poker where everyone cheats to gain power.

You've got the corporate scale, where the boards of directors are political and overlap across most of the Fortune 500. Legally they are supposed to act in the Fiduciary interest of investors, but that is a polite fiction.

You've got the competing oligarchs, both foreign and domestic, engaged in their own egocentric excesses.

You've got the financial sector, which has distorted the price of money so hard that it effectively swallowed the economy, that the price signal is as effective as light trying to exit a black hole.

Not to mention the high frequency trading shenanigan's, where front running the market is accepted practice, bots with some huge bugs are given control over billions of dollars.

Oh, and the derivatives market, in which any corporation might have off the books obligations that exceed the annual sum of the world economy.

Economics is truly the dismal science.

PS: I fear I've been too optimistic in my outlook. ;-)

Re: Ask HN: How can I learn macroeconomics properly?

#42
Keep your focus primarily on the business you're interested in owning part of. Devour their quarterly reports, learn their business. That's a lot more important than trying to be an expert in macro economics. You only have so much time, macro economics is not a prime value point of focus. Be an expert - to the extent an outside investor can be - in the business you're buying into.

Predicting what the Fed is going to do is relatively easy. Look at the US debt. It's trivial to know what the Fed can and can't do accordingly. They're bound tightly. Beyond that, who cares if the Fed hikes rates by a quarter point. These things are meaningless if you're a serious long-term investor. If you're a flipper, a short-term trader, sure then it matters, because you're looking to trade on waves of short-term sentiment.

The Fed can: talk a lot about how they plan to raise rates, to try to talk asset bubbles down or otherwise restrain them. They use this bullshit talking approach a lot. They start jabbering about how they plan to raise rates far ahead of when they actually do it. They leaned on that con heavily after the great recession and stretched it a long ways, and they're still relying on it. That's because they can talk a lot and can't take a lot of actual action. Somehow the morons on Wall Street still haven't figured this out, that clown show still thinks the Fed can hike rates consequentially.

The Fed can't: actually raise rates by very much, because it'll crash the economy, smash the big asset classes, and make the giant pile of US debt more expensive (which the US Government can't afford to do).

Inevitably by the time the Fed gets around to a modest actual hiking program, we're in or near another recession, and like magic rates go back to zero, they get their excuse to reverse course (something always happens eventually, something they can point to to stop the hiking process).

The Fed and rates are one of the easiest parts of the equation. You can know generally what they're going to do over the next few decades, because you know their constraints. And you can know what the outcome of their behavior will be (Japanification + more asset bubble cycles).

Yeah, but what about inflation? Increasingly huge mountains of debt (which, up to a point, act as a potent heat sink for robbing economic expansion and inflationary pressure) plus mediocre US and global growth will drain that problem given a relatively short amount of time. The US is facing Japanification, not persistent 1970s style traditional consumer inflation. We'll be back to hearing about how the Fed would like to spark higher levels of inflation (ie they'd like to debase more of the US debt away faster).

Re: Ask HN: How can I learn macroeconomics properly?

#43
post #19

You probably want finance as much as macro. Take a master's degree (not sure if these are as common in the US as in Europe). This stuff is hard, you need to spend time on it. Failing that, follow the advice of lesswrong and read textbooks.

Textbooks won't tell you about Brent Johnson's Dollar Milkshake theory. They also won't have insight on todays inflation and whether it's more similar to the 1970s or 1940s. Textbooks are great for finance fundamentals, but shouldn't be the sole source of macro.

Re: Ask HN: How can I learn macroeconomics properly?

#46
post #25

Having read threads here on economics I can confidently say, don't start by asking a technology forum. That said, Romer's Advanced Macroeconomics, Acemoğlu's Intro to Modern Economic Growth and Ljungqvist and Sargent's Recursive Macro Theory are good books. But if you want to be a good investor, just put your money into index funds. You'll easily outperform a large majority. edit: in addition, the topics you're looki…

I suppose investors want to optimize "we told you before, we are right".

Re: Ask HN: How can I learn macroeconomics properly?

#47
My Economics A-Level helped me immeasurably in understanding the basics of macroeconomics, supply, demand, fiscal and monetary policy and the most valuable (for me at least) opportunity cost.

I've used Khan Academy to quickly get up to speed on totally unfamiliar topics. Seems they have a Macroeconomics course, probably a good place to start: https://www.khanacademy.org/economics-finance-domain/macroec...

Beyond that Investopedia is a fantastic resource for looking up the meaning behind financial terms.

Best book I've read on investing is A Random Walk Down Wall Street by Malkiel - if you're prepared to dive into Investopedia to explain the new concepts you'll inevitably encounter in books of this type you'll learn a lot: https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

Re: Ask HN: How can I learn macroeconomics properly?

#48
post #18

I don't think it's possible to learn macroeconomics "properly", in the sense that one can learn e.g. quantum physics "properly". I pick quantum physics because not every expert agrees on some of the tail end of theoretical things, but there's broad agreement on the main parts of it. Those main parts are more than the average person will ever need to use. This is not remotely true with respect to macroeconomics. It's…

You can still learn the theories. Even though they disagree most economists can look at some data and agree what Hayek, Keynes or Friedman would say about it.

Re: Ask HN: How can I learn macroeconomics properly?

#49
The best (as in not trying to sell you something, not pushing a political agenda, and not a bunch of weird conspiratorial philosophy) source for what you are after is listening to this podcast: https://macromusings.libsyn.com/ If you want to learn more about something you hear there, dig deeper.

Re: Ask HN: How can I learn macroeconomics properly?

#50
post #29

Perry Mehrling's "Money and Banking" [1]. What I enjoyed about this course is that Mehrling focuses on how the economy works _mechanistically_, on what is actually happening on balance sheets throughout the economy. For me, this really pulled back the curtain on exactly the stuff you mention above (interest rates, central banks, QE). [1] https://www.youtube.com/watch?v=KNEouYM5wRE&list=PLSuwqsAnJM...

Upvoting, I enjoyed the course as well.
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