Back to the beginning: Do some basic reviews

 

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In my last post I identified one asset that we all share when wading into fields of knowledge that we are unfamiliar with.  We all have the capacity to understand a great many things.  We can understand many more things than we give ourselves credit for.  Even though we are not experts in a particular technology we can use our experiences to understand a situation well enough to make an informed decision.  This ability to understand things in no way implies that we know everything.  That is why we need to do some leg work.  This leg work allows us to understand the different elements of a field and how they affect us.

I listened to Jon Stewart's pod cast with Steve Hanke today.  After 10 minutes my head was about to explode.  Here is the link to the you tube site:

Jon Stewart, Steve Hanke

Steve Hanke is a professor of economics from John Hopkins University.  His input provides many examples of the issues we all face when trying to understand the nuances of a particular field.  I will probably be referring to it several times in the next handful of posts.  I will admit that my head was close to exploding trying to keep up with his theories on Money supply, velocity of money and inflation.  You really need to be a PhD in economics to follow his thoughts.  As I have stated before I am not an economics guru.

How does one make sense of this information.  My first step is to educate myself on the terms used in the discussion.  Watching the first 5 minutes of Jon's podcast the following terms were offered by Prof. Hanke:

Inflation

Hyper-Inflation

Monetary Supply

Money Supply

Goods

Services

Consumer Price Index (CPI)

There may have been more terms but these were the ones that stood out.  I have a pretty good idea of the difference between a good and a service.  Inflation is prices going up and the CPI has something to do with a theoretical basket of goods and services that we purchase. Before continuing, 2 cautionary warnings.  First, be brutally honest with yourself.  Do not assume you know it all.  Unless you are 100% confident in your understanding of a term review your knowledge of it.  Secondly and most important the goal at this point is education not confrontation.  You review these terms to provide a basis to eventually make sense of the entire presentation.  This will then allow for a much deeper understanding of the overall topic.  Referring to the Stewart podcast I would not be looking up "Money Supply" to dispute or even support something Professor Hanke said.  I am reviewing it to deepen my understanding of the term.

With these cautions in mind I can google the terms:

Inflation: The General increase of goods and services in an economy (Wikipedia)

Money Supply: Total amount of money-cash, cash, coins and balances in bank accounts-in circulation. (from google).

Monetary Supply: Same as money supply

Goods: Item that provides a human want and provides utility (linkedin site).  Definitely more to it than I thought

Services: an intangible act or use for which a consumer is willing to pay (Wikipedia)

Consumer Price Index (CPI): measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services (US bureau of labor and statistics)

By reviewing these terms I have accomplished 2 things.  One, I have a better understanding of the overall topic. Two I identify areas that I am still weak in.  Remember about being honest with yourself.  There is much more to "Goods" than I had expected and I am not comfortable with my understanding of money supply.  

This could be applied to other technologies.  In the Covid debate how many know what a virus actually is.  My last biology class was in high school.  When discussing climate change are you sure that you understand the term "climate"?

If simple goggle lookups are not enough then you may have to go a little deeper.  For me books are the  best source.  I was interested in the financial crisis of 2007 - 2008 and read several books on the topic.  The "Big Short" was excellent in providing a deeper understanding of the topic.  Books tend to go through several reviews before they are released.  This usually provides a clearer explanation of a topic. 

To summarize our tools thus far:

1.) We all have the ability to understand a great many things.

2.) Review information to deepen our understanding of a topic.  the goal is to understand not dispute or support.

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