“Economy of Debt: Learning Micro- Economics in the Big Easy” by Robert D. Kaplan is an excellent introductory text for those wanting to become more aware of the workings of the economy and how monetary policy influences it. The primary focus of the text is the story of economics as a science, with a particular emphasis on how economics affects the decisions individuals make in their own lives. The book begins with an introduction to the economics field, followed by a detailed discussion of how the decisions we make in economics affect both our short-term and long-term financial situation. The next three chapters cover the concepts of microeconomics, macroeconomics, and the methods used in economics.
I enjoyed reading this book from beginning to end. The author starts off with an explanation of how the economics field differs from other sciences because it studies the way people make choices in a small space. A successful microeconomist, according to Kaplan, “responds to incentives and knows where to find them, knows when to buy and when to sell, knows how to think.” However, the author also points out that even the most highly intelligent among us sometimes cannot seem to make the right choice, or at the right time, which is why the overall performance of the economy is so mixed. The author rightly emphasizes the importance of understanding both microeconomics and macroeconomics while conducting a thorough analysis of modern day economics.
The second chapter focuses on a very interesting case study, which the author refers to as “the story of George Soros and the economics of dummies.” George Soros is one of the most successful private investors in the world today, a billionaire who invests in many different areas of business and investments, including computer science, currencies, alternative energy, and financial markets. The story begins with the tale of a middle class man who has a difficult time making his monthly mortgage payments. After applying several different programs to help alleviate his financial stress, George Soros was able to successfully avoid foreclosures and personal bankruptcy, thus leaving behind a legacy of one of the most important economic concepts of our time: individual freedom.
Examining the concept of individual freedom, the author rightfully points out, “Inflation will always be with us, so we must learn to rely less on credit and more on our own abilities to produce.” This is indeed a wise policy to adopt for the protection of one's financial wealth. Of course, the real value of money is in its ability to create wealth, which the market can provide. Therefore, the reader should also understand that this book is not just about applying monetary stimulus to the economy but also about applying free enterprise principles to the way we make decisions in our personal lives, which will hopefully prove to be the key to a happy and prosperous life.
The final chapter of The Economics For Dummies addresses a specific problem that plagues too many Americans today: debt. Specifically, George Soros explains that it is “inevitable” for the average American to fall into excessive debt given the current state of the economy. While many of us were misled by false information during the 2008 election and some have taken extreme . . . . . . measures to “buy into the system,” as described in the book, there is no reason to fall victim to fraudulent information any longer. The final chapter of this highly useful guide, “The Economics For Dummies,” provides detailed tips on how consumers can protect their credit and become smarter consumers while spending less.
Overall, The Economics For Dummies is an extremely helpful guide for anyone who wants to become more educated about the economic concepts upon which their personal financial well-being is based. However, like any good book, there are a few nuggets of truth that don't entirely fit with the general message George Soros wishes to relay. However, anyone interested in learning about sound economics will find this text to be helpful. No economic concept is beyond understanding, and this text offers just that in a very clear and concise manner. Furthermore, anyone interested in economics as a whole will certainly find this text to be a valuable asset. Whether you are planning to enter the world of economics as an undergrad or as a graduate student, this is one book that you will want to read.