It should be obvious by reading my blog entries over the last few months that I’ve become interesting in aspects of economics. In an effort to understand the current financial crisis, I’ve been trying to read as many different viewpoints on the meltdown as well as general economic theories. To that end, I wanted to point out some of the books I’ve read recently. I’ll also give a rating based on what I thought of it.
Too Big To Fail – 4/5
This book discusses the meltdown from the viewpoint of the big financial institutions such as AIG and Lehman Brothers.
Aftershock – Protect Yourself and Profit in the Next Global Financial Crisis – 2/5
This book had a few pointers about how to survive the upcoming economic apocalypse, but a lot of it was fluff.
Lords of Finance – 4/5
This book gave an overview of some of the big financial players over the last 150 years or so. I thought it was a pretty interesting read.
Crash Proof 2.0: How to Profit From the Economic Collapse – 4/5
Some good pointers in here, many of which I had already read. But it was a good read.
How an Economy Grows and Why It Crashes – 5/5
I love this book, and re-read bits and pieces of it whenever I’m bored. It teaches basic economic principles using the story of a few guys on an island learning how to fish. The author, Peter Schiff, is a well known proponent of the Austrian school of economics.
End The Fed – 4/5
The Federal Reserve is a private/public entity in the United States that, despite reporting to Congress, somehow operates in almost complete secrecy. The Fed refuses to release information about where all the bailout money went, refuses to release any additional information about the M3 money supply (which details the expansion of the money supply, and indirectly the current levels of inflation), and also refuses to be audited.
Many people blame the Fed’s interventionist policies (and indirectly Keynesian economics) for the Great Depression, and pretty much every major massive depression since then. The US dollar has lost nearly 97% of its purchasing power since the Federal reserve was created.
This book presents arguments for why the Federal reserve should be disbanded.
Where Keynes Went Wrong – 4/5
The economic theories of John Keynes (now dead) have been adopted by many of the world’s leading countries (the economic game plan for the Kennedy, Johnson, Nixon, Bush, and Obama administrations have been rooted in Keynesian economics – by comparison, Reagan, who followed Austrian economics, was responsible for “bringing about one of the longest peacetime expansions in U.S. history” by exercising fiscal restraint and not giving into inflationary economics [wikipedia]).
In short, John Keynes believed the way to maximize the output of an economy was to prevent busts from occurring by stimulating the economy through government intervention. The primary methods to do this involve adjusting interest rates and by printing additional money to inject into the economy. By definition, John Keynes policies are inflationary, meaning that they “work” by constantly expanding the money supply (and eroding the value of savings).
Many people who follow the Austrian school of economic thought believe that Keynesian economics are massively flawed, and that economic
depressions recessions are required to reallocate investments that have been misallocated and to allow the economy to rebalance properly in terms of prices and wages. Their belief is that government intervention forces the economy into a unnatural state, and that injecting additional money into a failing economy simply causes asset bubbles (that should collapse based on fundamentals) to continue to inflate.
This book argues that John Keynes was wrong, using a lot of his own writings against him.