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Economy is complicated, don’t pretend to understand it

December 30, 2010

   Now a days, everybody talks about Economics, from an average guy (like me) to economists at Harvard. Everybody is interested in how it’s doing how it will turn out. They ( well, most of the times the average people) have a really strong opinion about it, without fully understanding them. For example, a person has a brilliant idea that countries can decrease their deficit by printing a lot of money! Yay! Well, the only problem is that if you print money, the debt will go up. (simple law of supply and demand).

   This looks pretty straight forward eh? Well, not to some people, at least not to the Brazilian government back in the days (not now though, they’re great now). So here’s the thing, there are only a few percentage of people who lives in our planet actually understand how it works. Graphjam makes it quite clear:

http://graphjam.memebase.com

   But here is the bad new, ordinary people who have “strong opinions on the economy” IS part of the… wait for it economy. And without proper knowledge, people can seriously mess it up. The entire real estate bubble thing? The banking and financial system screwing up? All those are due to our imperfect knowledge of the market (in my opinion). If we have truly understood what the entire banking and fiddling around with money means, the recession may not have been that severe. Better, an entire country may not have gone bankrupt (yeah, I’m referring to Ireland and Greece. No offence but the economic policy is just not well thought out enough.)

   So guys, here’s my advice. Don’t pretend to know economics. The truth is, nobody fully understands how it works. Not me, not you, not even the Harvard scholar sitting and analyzing the data, not the bankers that’s sitting in the Wall Street, not Barack Obama, not Osama Binladen, not David Cameron. We’re a part of it sure, but we would never be able to understand it FULLY (we do understand it partly, at least the Harvard scholar and most of heads of the state do).

   Having realize that we don’t know anything is the first step. Because we don’t know anything, we can be Cautious (Or you may decide that there’s no risk so jump in anyways…) when you are, you either try to understand it or take less risk. Either way, it’s going to get better.

   We’re a part of the mechanism so don’t pretend to know it. Try to understand it instead. It’ll make it much much better.

Anyhow, song of the day:

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