
Narrative Economics [pdf] - dnetesn
http://cowles.yale.edu/sites/default/files/files/pub/d20/d2069.pdf
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lend000
+1. I don't think any popular "economic narrative" has ever truly matched an
event -- these events are rarely so simple. The original Great Depression
narrative (which is unfortunately taught to kids in school) is that it was
brought on by the instability of unadulterated, speculative capitalism, and
saved by the New Deal. What a travesty! Hoover and FDR managed to protract a
recession that was at least partially caused by tight, at the time
experimental monetary policy by the Federal Reserve, into a decade-long
economic catastrophe, unparalleled in modern history (with help from a
drought). But even the Monetarist argument and Austrian-economic (inflationary
policy to keep commodities constant) explanation are overly simple. In
reality, economies are chaotic systems that were likely affected by elements
of all three narratives (perhaps the least so with the first, most prevalent
narrative).

The same thing is happening with the "Great Recession," and what is about to
be "The Greater Recession 2." There are a significant number of people, like
Bernie Sanders, who believe all the banks acted in concert and became 'more
greedy' than usual somehow, giving out cheap loans for speculative profit. In
reality, there were two primary factors that created the boom and bust: Fannie
Mae's loan buyback program and low Federal reserve interest rates. Great
write-up here:
[https://admin.fee.org/files/doclib/houseunclesambuiltbooklet...](https://admin.fee.org/files/doclib/houseunclesambuiltbooklet.pdf)

We don't have the loan buyback program anymore, but we've had unprecedentedly
low interest rates for the last eight years, so I'm not optimistic about this
next crash. Definition of "kicking the can down the road" economic policy.

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huac
The really good stuff starts at page 42, though it absolutely amuses me to see
Robert Shiller write about internet memes (in a lit review, but still).

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trendia
Robert Shiller (who authored this review) has an excellent Coursera course
called "Financial Markets" [0]. It gives a broad overview of many important
facets of the economy.

[0] [https://www.coursera.org/learn/financial-
markets](https://www.coursera.org/learn/financial-markets)

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stygiansonic
If you liked this, check out Shiller's book _Irrational Exuberance_. Released
near the peak of the dot-com bubble, it covers a lot of related subjects.

