What is quantitative easing, and why does it matter? Will a Fed interest rate hike derail global growth prospects? How will the stock market respond to lower inflation? Will investors panic and induce a global asset selloff? These are the questions that keep Janet Yellen, America's most powerful woman, awake at night.
Read More
Gauge Market Sentiment
For young investors, the stock market can be a scary place. Making your first investments can be daunting, to say the least. For years, young investors have searched for reliable sources to find trustworthy financial information. Clearly, you’ve done your due diligence, as you are currently reading an Economix101 article.
Read More
The Fed's "Easy Money" Policy
Over the last several years, there has been a growing discrepancy between America's booming stock market and its sluggish macroeconomic growth. Even as GDP inches upward and the unemployment rate "declines" — due to a substantial drop in labor participation — the bull market has charged forward.
Read More
Keep Calm & Invest
The past few weeks have seen a sharp decline in stock prices, across the board, despite strong performance by a number of reputable companies and sectors. But despite the sudden change in direction, investors should not panic. The recent pullback in the markets, so far, resembles what is known as a “correction.”
Read More
The Follower's Dilemma
Game theory has been the subject of many recent discussions I’ve had with curious college students, aspiring economists, and adults alike. In general, the core concept is quite simple and boils down to a basic question: given a certain situation, what is your best response to another party’s action(s), assuming all actors are rational? Or, in other words, what reaction yields the recipient the highest possible utility (a measure of one’s satisfaction)?
Read More
The Importance Of Rationality
“Economics,” as I was told early in my undergraduate career, “is really just common sense, codified.” This seems true enough. Economics is fundamentally concerned with scarcity and opportunity costs—the intuitively obvious, yet often overlooked ideas that that there is no such thing as a free lunch, and that if you spend your money on one thing, you can’t spend it on something else. It gives us the tools to understand and measure these concepts in the world around us.
Read More