Sat May 15th, 2010 at 09:16:07 AM EST
It is not easy... it is really not easy to explain what is going on in the economic world. With so much nonsense in the radio , TV and newspapers... how do you respond? How do you explain what is going on? the card game is a brilliant idea.
Here I propose a short, simple (as simple as possible but no more than necessary) explanation that we should disseminate.
I tried the other day to write the minimum needed to explain it. So, I ask for your input. What would you need to write down to explain what is going on... in something that does not last more than a couple of pages?
I gave it a try and came up with this structure.
-A paragraph about the need to explain what is going on.
-Another paragraph about the particular situation of each country
-Another about the stupidity of the media."You are not going to get the real news there".
-Declaration that you should feel victim of a crime but you need two basic ideas about economics to feel that you have been mugged.
-A first economic paragraph explaining the fallacy of being rich if you have more money. Explaining inflation, hyperinflation, deflation explicitly. Explain short term and long term growth implicitly. Finally, explain that 5-6 % inflation is not necessarily bad. The key point is making you believe it is so.
-Second paragraph explaining aggregate demand and monetary mass. Explain the role of the banks and the credit economy explicitly. Explain implicitly, without details, the open market operations.
-Describe the nature of the financial collapse. CDO and CDS do no appear, they are the casino part of the financial world.
-Explain what a typical liberal (in the Krugman sense of liberal) response is: Nationalize banking system, separate casino from banking. Increase aggregate demand by transfering purchase power to the unemployed and middle classes, generate inflation (5-6 % in Germany, smaller in other parts of the world) by generating debt and print money , if necessary (no distinction between printing directly and monetize debt). World unbalances can be commented here but it is difficult.
-Explain in detail why inflation at 5% is awful for the casino club but good for the average company, worker in debt
-Put a list of measure to solve the deficit problem (European tax agency, Tobin tax). it should be a short list.
-Very short explanation (better links) on how the financial market forces countries to follow a low inflation path.
-Final paragraph explaining the risk of following this path.
And a final "A la mierda"
Please, is there anything important missing? Anything I should remove?
Any other structure proposed?