Last week was very disappointing for me. I wrote a blog about a non-macro topic and it got more hits in one week than any of the 300 pieces I have written in the last five years. You would think I would be happy about that – but it tells me two things. First, nobody likes macro. Second, despite my hard work over five years many of you admitted to me that most of what I write you don’t understand at all. So you are outed – you don’t like macro and you think I stink at macro.
As my mother would say, Larry, eat your peas. She would also say make lemonade out of lemons. So I made some lemonade and that didn’t seem to help at all. Then I decided I would write a blog focusing only on things I know little or nothing about. That gives me a lot of leeway. But then I couldn’t think of anything to write about. Then I decided I would write a blog only on LGBTQ topics. But I wrote everything I know about that last time. Finally I decided to sip a little JD and then I hit upon a great idea. I will continue to write about macro topics and I will try to make them understandable to anyone over the age of six having a non-negative heartbeat.
I did that once. When Jason was a toddler in red sweatpants I wrote a series of lectures on macroeconomics for him. He went on to a degree in economics in college and excels at disagreeing with almost everything I write in this space. So that proves that I am capable of writing great things if only I try. It also shows that if I write about Ashley in one blog I have to say something about Jason in the next one.
As a child and then as an adult I always loved Kraft Macaroni and Cheese. ChiliMac is pretty awesome too. My favorite song was Mac the Knife. So it was only natural that I would want to study mac-roeconomics. I was dismayed when I found out that macroeconomics was not food study and that it involved math, graphs, and something called variables. But I persevered. It took three universities and four degrees to figure out supply and demand. With that knowledge safely tucked under my beard Indiana University decided that hiring me was cheap and easy and letting me loose on students might not destroy more than a hundred years of academic tradition.
With all the above filler as an introduction I now turn to my true love, nude beer making. No, just kidding. I now turn to macroeconomics. Since many of you never completed a macroeconomics course and since most of you have forgotten whatever you might have learned in that course, I am now going to make things so crystal clear to you that when you read future blogs you will understand them perfectly and you will be able to explain those blogs to your friends and pets.
The place to start for you rookies is with anatomy vavava voom. Suppose you are going down the street and your friend says – Hi, how are you? You say, fine. That explains macroeconomics. In macroeconomics your friend is Canada and you are the USA. Macroeconomics is all about the economic health of a country. Your friend then says – you don’t look so fine. You look like crap. Your GDP is sagging, your unemployment rate is flabby, and your inflation is barely beating.
You go to your doctor to get another opinion. He takes your blood pressure, temperature, and asks you to turn your head and cough. He looks at a bunch of indicators and uses them to explain why you look like crap. You feel better knowing that there are a bunch of things wrong with you. He then makes some outrageous guesses about what is causing your indicators to be so negative and gives you a prescription for drugs including Viagra. Or he might suggest that you go to a specialist. He then charges you enough money to pay for his next vacation on Jeju Island. Yes, she will fly first class.
Hopefully you are still awake and are getting the point. You look like crap. No just kidding. You look just like your Mother. Kidding again. The point is that macro is about the health of a country. Macroeconomists make huge sums of money despite taking the summers off by making up indicators that measure the macroeconomic health of places like the USA, Greece, and Oz. And like everything else on this planet we sort of know what is going on but we have lots of disagreements. What does it mean when your doctor says you are healthy? What does it mean to be healthy? There could be lots of opinions here. So we have a lot of indicators that must be evaluated.
The same is true of macro. There is no one single thing that determines the economic health of a country. So we mostly agree to analyze a bunch of economic indicators. One that gets a lot of attention is GDP or Gross Domestic Product. In class I usually refer to GDP as stuff we produce where stuff is a highly technical term meaning all that crap that passes for a good or a service. Then there is the unemployment rate which hardly needs explanation despite the fact that the US Department of Labor publishes a million different versions of it. The list of macroeconomic indicators grows from there including such spicy items as inflation, interest rates, exchange rates, earnings, debt, the length of Donald Trump’s hair, and more.
Okay – so for you literature and philosophy majors I will stop there. This is our introduction to macro. Macro is all about the health of a country’s economy. It includes numerous indicators when taken together can help you decide just how healthy the economy is. The implicit assumption is that once you make this judgment, you then try to decide WHY the economy is not at its peak health and then figure out WHAT we can do to improve it. That cause and effect approach will be covered more completely in lessons 2-768. Or you could just go backing to listening to your favorite Jimi Hendrix song, Purple Macro. Okay admit it – Macro is very easy and cool.