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Understanding Economics

Understanding Economics. David Horner, Ph.D. Chief Economic Advisor | Fixed Income Academy Susan Munson, CFP Founder & CEO | Fixed Income Academy. Objectives. Provide answers to commonly asked questions to provide a basic understanding of often misunderstood economic theory. ***

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Understanding Economics

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  1. Understanding Economics David Horner, Ph.D. Chief Economic Advisor | Fixed Income Academy Susan Munson, CFP Founder & CEO | Fixed Income Academy

  2. Objectives Provide answers to commonly asked questions to provide a basic understanding of often misunderstood economic theory. *** Our goal is to provide a foundation to enhance the ability to evaluate the news and debates in political and economic circles.

  3. Goal: Minimize Spin Reasons for Spin Examples of Spin Incentives Official Effect Lack of Knowledge Ideology Financial Firms Ben Bernanke Rick Santelli Steve Forbes/Fox News/MSNBC

  4. John Maynard Keynes (1883 – 1946) • British Economist whose revolutionary ideas serve as a benchmark by which we define economic thought today. • Keynes was not a Keynesian! • Keynes was a monetarist who advocated a strong dose of fiscal policy in times of financial crisis.

  5. Zandi/Blinder Study Results • Saved 8 ½ million jobs • GDP would have been 11.5% lower • Total cost was approximately $1.6 billion. (i.e.: Much of TARP was recovered) • Note: Authors’ best guesses. The counterfactual is not observable. To view report: http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf

  6. Cause for Concern? Fed Reserve Balance Sheet It’s an Asset!! Fed Debt as % GDP

  7. Simpson/Bowles Proposals • Sizeable cuts in growth of entitlement programs • Cuts in both defense and other discretionary spending • Increase in tax revenue • Moderate tax reform that would maintain incentives • Limited increases in spending for investment would have a beneficial return Report was bipartisan and attempted to “share the pain” For Report Summary: http://tpmdc.talkingpointsmemo.com/2010/11/deficit-commission-co-chairs-simpson-and-bowles-release-eye-popping-recommendations.php

  8. Questions? Topics/Video Discussions in the Works… Tax Reform Plusses and Minuses of Consumption Tax Importance of Private/Public Partnerships Underfunded Pensions Effect of Globalization on Wages Emerging Pressure on Public Wage

  9. “Ask the Economist” Meet Ups Today at 5:15 – 5:45 PM Importance of Public/Private Partnerships Tomorrow at 7:30 – 8:00 AM Emerging Pressure on Public Wages Stop by the Fixed Income Academy Table near Registration for details. To Reach Us: www.fixedincomeacademy.com 800-243-5097

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