What's up?! Well, you know what? I don't care! If I cared, I'd be reading your blog right now, which I'm not. You're reading mine. Which hasn't been updated since forever. So I'm going to write stuff that comes to mind... Namely, I'm going to write about what prompted me to post to begin with!

Grades! Not my grades, really, but other folks' grades. You see, in my Macroeconomics class (which I will discuss later), I was there early one day and around me were a bunch of other folks who also happened to be there early and were actually awake enough to talk! They talked about the only thing we had in common: That class. What I heard was disturbing... They all thought it was boring. Woah, hold on. What did they think the class was about? You see, it's in the social science division here at the University (or the Uni, as my European friends abbreviate these places). A degree requires 2 of these classes, and economics is only one of many of these in that division. You could have picked something else! Something else, dare I say, more on your level of thinking? (In other words: You could have picked a class that didn't require thinking! They're there!)

So these people were all whining about how none of it made sense and how they couldn't understand any of it (even though Professor stops multiple times to see if there are any questions, and constantly repeats key points) and one of them even said that their roommate had already been through Macroeconomics and would filch the answers from them. One of the others would keep falling asleep. On the front row. (If I was a Professor, I would concoct an ingenious method of totally embarrasing anyone who fell asleep in class. I think the Professors here are far too lenient on students, but that's another story for another day.) I was there thinking, "Wow. I can tell you guys don't pay much attention... Slurping your expensive Student Center coffees and idly doodling on your notepads. I sure would love to see your grades when this is over."

Well, I sort of got my wish today. We had our second exam for the class on Monday, and we just got our results back. I had gotten a B on my first exam because I saved the essay questions for last and ran out of time and got hit for not explaining everything properly. I think he knew I knew what I was talking about, but he kept writing "explain" in the margins. I was displeased. (Technically, I got an A on the multiple choice portion and a C in the essay portion, which got me a B. The C was scary and ticked me off.) So I endeavored to study my tail off on the weekend leading up to the second exam and did half the essay questions first, then half the multiple choices, then the last half of essays, then the last half of questions. This got me an A! Woohoo! I am now happy.

So we were given our scantron sheets to look at and see what we got wrong, and then Professor went around to all the front row students (of which I am always a part of) to collect everyone's sheets. Everyone behind us would collect the sheets and pass them up to us. It was in this way that I managed to inadvertantly see the grades of some key students. The person beside me had the sheet from the fellow who wasn't paying attention because they (I am masking their gender, even though it makes the sentences look odd) could use their roommates notes from last semester? I had never seen that letter before... I knew of their existence, but I'd never seen one in their natural habitat: An F. Apparently, using someone else's notes hadn't quite worked out. The scantron sheets all need to be lined up, so I thought I would make sure they're sorted before I handed them back. I thought I put mine on top, but it wasn't, and I was staring at a brilliant green D+ from the person directly behind me.

Clearly their attitude toward the class is hurting their grades... It's not like they couldn't have switched, either. I mean, the only reason you would absolutely HAVE to take it would be if you were an Economics or Business major or something like that. If the class is required, they should think about switching to a major that might suit them better... If you're just filling a social sciences requirement, might I suggest something less mathematical and something more abstract? Like Psychology, perhaps?

Seriously, though, it made me mad because Macroeconomics is such a neat class. I am kidding you not when I say that after this class is finished, I will know more about why the economy is in its current state than Congress or the Federal Reserve itself does. We've discussed economic schools of thought (Congress is currently pursuing Keynesian principles right now, by the way) and why some of them (namely those Keynesian principles) are absolutely laughable when you're presented with the evidence. Keynesian economics is like Darwinian evolution. It only works if you ignore everything that doesn't fit inside the model. They don't look at the state of an economy and ask "what works and how can we explain this", they look at the economy and say "we have a problem that isn't being solved, so let's just do more of the same because clearly our ideas are right, but we're just not doing enough of it to make a difference." (Hello, multiple, increasingly large stimulus packages!)

It's amazing... Taking an economics course should be mandatory for politicians before they handle money. What Congress and the Federal Reserve is doing right now is a textbook definition of something that has NEVER worked and there is data to prove it. What caused the housing market to expand? Low interest rates (which led to bad mortgages). How do you keep interest rates low? You may not know this, but interest rates change by two things:

1. The amount of money deposited in savings accounts in banks. Think about it. What's the single most important function of a free market economy? Supply and demand. How do you measure supply and demand? You look at the prices! If something is hard to make, the price goes up. If people don't buy something, the price has to come down to a point where they will. The same applies to money for loans. If there isn't a whole lot of money "in stock" in the banks to supply to borrowers, the interest rate goes up. What does that do? It gives an incentive for people to loan money! What happens then? The interest rates go down, which gives an incentive for people to start borrowing the money! Interest rates are supposed to be an indication of what money is available for borrowing.
2. The money supply as a whole can artificially affect interest rates, which is what the Federal Reserve is supposed to "monitor." Interest rates go too high, which signifies a shortage of loanable money, right? This encourages people to save more, right? Well, the Federal Reserve sees these high interest rates and decides to "correct the problem" by increasing the amount of circulating money, which will also reduce interest rates. This, however, creates inflation, as we all know. So, to combat inflation, the Federal Reserve cuts back on the supply of money, which drives up interest rates. The hilarious thing is that they can never seem to find the perfect equilibrium between interest rates that are "just right" and inflation that is "just right", and we always have an overdose of one or the other. (I say they should just stop trying to meddle, but, again, that's another story for another day.)

The housing market expanded rapidly due to the artificially low interest rates given off by the high amount of money that Federal Reserve had been pumping out in response to September 11, 2001 and the recession we experienced after that. It takes a while for inflation to catch up and make prices go up, but it finally hit us. You may remember oil prices going insane? Food prices? Literally everything? You can thank our good friends at the Federal Reserve for that. That was a first hand experience at inflation. So what did the Federal Reserve do? Well, we all know inflation is bad, and inflation is too much money circulating, so the Federal Reserve cut back on the money they were printing...

Guess what happens when you cut back on money? The interest rates start going up to reflect the true amount of money in savings accounts. Uh oh. People were depending on those low interest rates to buy their houses. Okay, well, do big deal. People will just start selling the houses they can't afford to keep, right? Well, what happens when there's a bunch of stuff on the market that people don't want? The prices go down. There was a surplus of houses that people were selling and the prices started going down across the board. People who had taken out mortgages on their houses after assuming that prices would keep going up suddenly found themselves owing more than their house was worth and, as we know, things went out of control from there.

So what is the Federal Reserve doing as a response to this? They're printing money! What does printing money do? It lowers interest rates. The target rate that started this train wreck was 1%, which was the lowest rate in the history of our economy. They pushed the rate up to 6%, which popped the housing bubble, and now they're printing money for a target rate of 0.25%. That's not a joke. My Professor said it several times over the course of the week. To fix the financial crisis, which was started because of artificially low interest rates that caused people to borrow amounts of money that wasn't actually there, the Federal Reserve is printing money so there can be an even lower interest rate.

Now do you know what I mean when I say I can safely assume that I know more about the economy right now than Congress and the Federal Reserve itself? At least when it comes to what caused this particular recession. It's a textbook definition cause, and to fix it, they're using... The textbook definition cause. Thank you, Congressional Majority! Thank you, Federal Reserve! Thank you, Federal Government, for appointing people to run our entire economy that have absolutely no idea how it works.

So that's what's been going on in my life. I'm not saying I'm better than they are, but I'm wondering what they're thinking if this is in an introductory economics course. I mean, seriously. These guys are supposed to be professionals? It makes me want to actually major in Economics... But I don't know what kind of jobs would open for someone with just Economics. Maybe Business or Accounting AND Economics. Not just plain Economics. And I need to get a job... So I'm sticking with Computer Science. Bah.