Quote:
Originally Posted by Zygote
out of interest, what do you recommend as good places learn?
http://www.federalreserve.gov/pf/pf.htm
And obviously a good macroeconomics textbook would be good. The problem with macroeconomics are twofolds. The first is that no one understands it well, so all you ever see are glimpses of someone else's incomplete understanding. The second is that if you only study macro, you get into the habit of thinking in terms and statistics as opposed to thinking in concepts and reality. GDP, unemployment rate, balance of payments, inflation, net international investment position, etc, etc are all just names and numbers - there's an economic reality they fail to capture completely. One abstract way to look at an economy is the set of all transactions (including production and consumption). All these other numbers essentially are derived from that and other ancillary information. So when you look at those numbers, it's important to think in terms of, what happened to these numbers, but what happened that are represented by these numbers. This is all common sense, but one that seems to evade almost all casual economists.
Thus, macroeconomics is ultimately about understanding the economy, not about knowing what the macreconomic terms are. The caveat being that when one does use the terms, one must be certain of their relationship to the reality and in what ways they may be representative or misleading. And in order to do that, one must be familiar with what sort of transactions are common, who does what, how organizations work. Common sense and an understanding of dynamic systems are important. If nothing else, darwinism is a good clutch to fall on, because if an organization has existed for some time, it must have some decent survival characteristics and if someone's employed somewhere, he must not have done something to get fired (and if it's obvious that he should, then you can extend this to his boss and so and so forth). All of this is really just common sense, but applying common sense everywhere consistently takes foresight and diligence.
Quote:
you basically said i was a factor that causes inefficiencies in market pricing. i think thats enough relevance.
You can cause inefficiencies in market pricing and still be +EV. This is the same thing as playing exploitative poker that's not game-theoretically sound. And the comment wasn't personally directed at you or anyone - it's just a general comment that market pricing is done by blind men touching various parts of an elephant (that they're not sure is an elephant) - the resulting price won't capture the appearance of the elephant.
Quote:
The fed funds rates are determined by market trading. The fed could be on stand by mode indefinitely with regard to open market operations as of tomorrow lets say. please explain to me why not, if not?
So they don't roll their repos and don't buy treasuries as they mature and they don't ship any money back to the treasury? Slowly, the monetary base will dwindle as all liabilities come home. The more interesting question is how quickly will large banks fail under that scenario. 2-3 days?