Hello all, I hope some of you might be able to recommend some economic books for beginners and the layman. Sorta like the feynman lectures is for physics.
The US mortgage crisis and the FED increasing interest rates, etc. just keeps me scratching my head
many thanks in advance
Astronuc
Jan31-08, 09:53 AM
The US mortgage crisis and the FED increasing interest rates, etc. just keeps me scratching my head Well, a book on economic theory probably won't help one understand the US mortgage crisis, but might shed some light the reasoning behind reducing interest rates.
The problem is theory vs actuality/practicality.
In theory, people are honest and markets are free.
The mortgage crisis and other problems were based on dishonesty and market manipulation.
Ronnin
Jan31-08, 10:43 AM
This was the book I used for my Banking class. It gives you some basics on how the fed system works.
Money, Banking and Financial Markets Roger LeRoy
Economist
Jan31-08, 11:51 AM
The problem is theory vs actuality/practicality.
In theory, people are honest and markets are free.
The theory has to be somewhat realistic. Economics (just like any science or social science) develops theory in order to explain the real world, and if they don't do a good job explaining and predicting, then they're thrown out.
Lastly, economics never assumes people are "honest" or that "markets are free." We assume people are rational but not honest, in fact, economists will often times say things like "talk is cheap" and "people can't always trust each other." We would expect people to be dishonest many times in which there is an incentive to do so. And with the free markets things, economists don't only study those either, they study many situations in which the market is limited in some way.
Economist
Jan31-08, 12:00 PM
Hello all, I hope some of you might be able to recommend some economic books for beginners and the layman. Sorta like the feynman lectures is for physics.
The US mortgage crisis and the FED increasing interest rates, etc. just keeps me scratching my head
many thanks in advance
Well, if I was you I'd start out with an understanding of microeconomics because it's really the foundation of most (all?) economics, and then you can move your way up. The stuff on the FED and interest rates will be more macroeconomics.
If you're looking for a simple and great textbook, I'd start with Paul Heyne's "The Economic Way of Thinking." Then you should get an introductory macroeconomics textbook.
Also, you could read some non-textbook resources. A lot of people like Steve Levitt's "Freedonomics." Another good way to learn economics is to read blogs, I've posted some that I go to below. You'd be amazed how much you'll actually learn from reading these blogs on a regular basis. By the way, there are many more blogs, these are just some that I enjoy, so if you don't like them look for others.
http://gregmankiw.blogspot.com/
http://www.cafehayek.com/
http://www.marginalrevolution.com/
Notice all these blogs have listenings of other blogs they like, so that's one way to learn about new ones.
Astronuc
Jan31-08, 12:03 PM
Lastly, economics never assumes people are "honest" or that "markets are free." We assume people are rational but not honest, in fact, economists will often times say things like "talk is cheap" and "people can't always trust each other." We would expect people to be dishonest many times in which there is an incentive to do so. And with the free markets things, economists don't only study those either, they study many situations in which the market is limited in some way. When I took economics 25+ years ago, the theory was simplistic - well it was a basic Intro to Economics, as opposed to an upper level course.
Presumably, people are looking at what really happens in the ecomomy.
A couple of days ago, I heard that the FBI is putting together an investigation of the subprime mortgage crisis, which would include mortgage brokers and banks. I'll have to find the source.
This is not the one I heard, but its similar:
FBI's subprime crackdown may expand to more firms
http://www.reuters.com/article/businessNews/idUSN3062482020080130
By James Vicini
WASHINGTON (Reuters) - The FBI's investigation of 14 corporations in a crackdown on improper subprime lending could expand to other companies, but the complex probes may take some time before any charges are brought, a federal law enforcement official said on Wednesday.
"Like any white-collar crime investigation, these are very complicated, time-consuming investigations involving the examination of numerous records and interviews of various people. They don't happen in a short period of time," the FBI official said.
mheslep
Jan31-08, 12:44 PM
The problem is theory vs actuality/practicality.
In theory, people are honest and markets are free.
The mortgage crisis and other problems were based on dishonesty and market manipulation.
I think I understand these reservations about markets, but thats a bit like saying 'in theory, all conductors are superconductors'. Practical electronics don't require superconductors any more than practical application of market theory requires all people to be honest.
Ronnin
Jan31-08, 12:57 PM
http://www.investopedia.com/
This is one of my favorites. They have a lot of good info and a searchable dictionary of finance/investing terms you hear dropped on TV and radio. Plus they have a great investing simulator.
Economist
Jan31-08, 02:33 PM
When I took economics 25+ years ago, the theory was simplistic - well it was a basic Intro to Economics, as opposed to an upper level course.
Presumably, people are looking at what really happens in the ecomomy.
You are right that sometimes intro and intermediate classes can be too simplistic and detached from the real world. It basically depends a lot on how it's taught. My intro economics class rarely dealt with any models, and we more learned a philosophical approach to understanding economics. Basically, we learned a verbal and graphical discription of the tools of analysis. I am also under the impression that they used to teach economics a lot differently back when you took it, by teaching it more mathematically from the beginning (now we wait until intermediate courses to do that).
Either way though, you are correct that some of the early classes can be very simplistic, but I imagine you find this in any discipline. You gotta learn to crawl before you can walk.
And yes, economists do care about the real world. It's just that it takes many years of preperation and study in order to really have the skills to do research.
EnumaElish
Jan31-08, 05:31 PM
Hello all, I hope some of you might be able to recommend some economic books for beginners and the layman. Sorta like the feynman lectures is for physics.
The US mortgage crisis and the FED increasing interest rates, etc. just keeps me scratching my head
many thanks in advanceWhat you need is an intro MACROeconomics (as opposed to micro) textbook; any college campus store will have a selection. Alternatively try Amazon.
If you are mathematically oriented, buy Branson's MACROECONOMIC THEORY AND POLICY. It is a textbook used in advanced undergrad and early grad courses.
Economist
Jan31-08, 07:26 PM
What you need is an intro MACROeconomics (as opposed to micro) textbook; any college campus store will have a selection. Alternatively try Amazon.
If you are mathematically oriented, buy Branson's MACROECONOMIC THEORY AND POLICY. It is a textbook used in advanced undergrad and early grad courses.
Hey EnumaElish, don't you think it's better for people to start off with Micro and then learn some Macro? It just seems to me that intro Macro material will make much more sense if you've already been exposed to Micro.
By the way, below I posted a link to my first Macro textbook. It's only 1 cent for a used copy on Amazon. This is a good textbook on Macro for a beginner, and another good thing is that there's a short primer on Micro for the first couple chapters.
thanks for all the replies,
I definitely have alot of reading ahead of me
EnumaElish
Feb2-08, 10:30 PM
Hey EnumaElish, don't you think it's better for people to start off with Micro and then learn some Macro? It just seems to me that intro Macro material will make much more sense if you've already been exposed to Micro.Technically they can start with macro, although the established practice is what you've stated.
DrClapeyron
Feb3-08, 11:18 PM
If you want economics, try something like Mankiw, f you want financial markets try Ronin's book.
AsianSensationK
Feb6-08, 12:48 AM
The Fed slashed interest rates actually. The rate at which banks can borrow to be precise. It's traditionally supposed to open up credit markets by lowering the "cost of capital" for banks. This is definitely more macro theory and finance than micro economics. Most of micro is probably a waste of time, save for a quick study of asymmetric information that most intermediate courses address.
But if you really want to get a good sense of what goes on with the US subprime mess and the Fed, you'll actually need to study finance along with economics (a subtle distinction, I know). You want to be familiar with how loan contracts are produced, what risks the fancy ARMS with pre-payment penalties are meant to alleviate, and what banks eventually do with your mortgage that caused them to face problems as people stopped paying on time.
A terrific book is called Bond Markets, Analysis and Strategies by Fabozzi. Watch out because it's expensive as hell. But it really towers above most.
andylim
Feb8-08, 11:40 AM
Wow thank you all again
and I will definitely check out the finance book you recommended too AsianSensationK, luckily my university library has a copy of it =)
Economist
Feb10-08, 11:57 AM
If someone wants to understand economics better, this may be a great place to start. I haven't read it, but I'm pretty sure it would be a good book for someone without much economics background.
Basically, the publisher (Atlantic Monthly Press) believes that there's many great books out there that many people have not read because the books are long and old (and therefore, the writing style is often difficult for people to understand). So, they had a brilliant idea that they should hire modern writers or experts to read the book and summarize the book in a couple hundred pages. They have done this with The Bible, Das Kapitals, The Origin of Species, and many other books.
Anyway, this particular book is written on Adam Smith's "The Wealth of Nations" which is approximately 1250 pages, and P.J. O'Rourke is able to explain the key points/ideas in approximately 250 pages.
mheslep
Feb10-08, 09:57 PM
...Anyway, this particular book is written on Adam Smith's "The Wealth of Nations" which is approximately 1250 pages, and P.J. O'Rourke is able to explain the key points/ideas in approximately 250 pages.
O'Rourke at Cato (http://video.google.com/videoplay?docid=-4783070607634715382&q=O%27Rourke+Wealth+of+Nations&total=5&start=0&num=100&so=0&type=search&plindex=1) expounding on the book.
Economist
Feb11-08, 11:21 AM
O'Rourke at Cato (http://video.google.com/videoplay?docid=-4783070607634715382&q=O%27Rourke+Wealth+of+Nations&total=5&start=0&num=100&so=0&type=search&plindex=1) expounding on the book.