Applied Economics

Categories: Econ, Education

Since the study of economics has only marginal benefit in the real world (Warren Buffett, the greatest investor in history, said "if I spend fifteen minutes a year thinking about the economy, I'm spending about ten minutes too much on it"), the word "applied" has to be put in front of it. Economics is more of a religious study, revolving around why things happen. It often is a terrible predictor of what things are coming.

So when economic theories can find some raison d'être and get applied in the real world, it is actually cause to celebrate. At least for economists wondering why they spent all those years getting the PhD.

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Finance: What is economic cyclicality ("...13778 Views

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Finance allah shmoop What is economic cyclicality All right Well

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if you looked at the history of growth and decline

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in the u s economy you think it was run

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by a bunch of knuckleheads Meat would poop and poop

00:16

all in congress Now surprisingly o r maybe not In

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fact economic cyclicality is a reflection of resource glut and

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then scarcity and the willingness of buyers Teo you know

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buy stuff that is when times were good consumers and

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businesses by things hire workers consume commodities at office space

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and factories until there is a shift in tastes and

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sentiment You know like the horse industry before henry ford

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came along anyway Sometimes the shift that triggers an economic

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cycle comes from the government like when times air too

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good there's usually rampant inflation People in companies will simply

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choose to just pay up the extra two bucks a

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foot to a rent office space The company can pass

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on that extra cost by raising its prices to customers

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from eighty dollars a year to ninety dollars and nobody

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will notice until they do Yeah the government wanted desperately

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to cool inflation in the nineteen seventies so the fed

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raised short term borrowing rate costs dramatically from somewhere in

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the three to four percent range to closer to like

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ten percent And the cost of renting money became so

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expensive And because companies were highly leveraged borrowing money to

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build factories and hire workers and expand that well then

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everything contracted with leverage right So they had all this

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debt and revenues went down They still to pay the

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dead and well that was a bad scene So inflation

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was contained at the cost of a vastly cooler economy

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So things contract then like a scared turtle or a

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you know like when it do jumps in a cold

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ocean and all right But then eventually one brave alligator

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emerges to see if it concrete's back up under the

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top of the food chain and eat some chickens or

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dear Whatever alligators eat what do they eat anyway And

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the consumer starts buying things adding risk rever been reducing

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it and the cycle takes off again gets picture You

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know it's the circle the circle of life round and

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round It goes where it stops Well actually we do 00:02:15.523 --> [endTime] know Circle of economy

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