Those who listen to the financial news may have heard the term ‘Keynesian economics’ floated around. There may be some confusion as to what this is actually referring to. Discussions about the validity of this theory can become heated among economists so it is worth having some idea as to what is behind it all. A basic explanation will be provided here.
Instead of giving you a definition of economics, I’m going to give you an example that works on a microeconomic level but also helps explain macroeconomics by way of analogy. This week, we will look at your home and household budget as its own economic ecosystem.
Whenever people start talking about economics, something in the air changes. For most of us, the air becomes filled with a little buzzing noise that interrupts our train of thought and makes it impossible to actually understand what those trained economic savants are saying. Eventually, the buzz transforms into a completely formed thought–usually something along the lines of, “What should I make for dinner tonight?” Or, “I’ve got to pick up the dog from the vet.”
The concept of staggered contracting revolves around one primary topic: price. At a glance, staggered contracting seems like something only found in a parallel, Utopian dimension: prices don’t wildly fluctuate. In fact, under the definition of staggered contracting, prices don’t move at all in either direction.
In any economy, one thing is certain: the beginner investor is alive and well. In boom economies, this investor is filled with rampant enthusiasm and a desire to strike while the market is “hot” in order to get the maximum value possible. In recessionary economies, the beginner investor is still filled with rampant enthusiasm, albeit from a much different perspective. They are looking to come into the market while it’s down and make out like thieves in the night when it rises again. Perfect prediction is outside the capability of any human-created system, but the system of technical analysis allows us to come pretty close.
John Maynard Keynes called gold “the barbarous relic”. Now, long after Keynes’ school of economics became unfashionable, gold is once again in fashion, hitting an all time dollar record even when other metals and commodities have dived in price as a result of poor industrial demand. So what is driving the gold price?
Quantitative Easing is essentially the creation of money. As we live in a digital age, the money is not even printed any more but simply created on computers. How come we aren’t seeing prices rise?
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