I'm a mathematician (by education) and software developer (by career), not an economist, but like many others I've been taking a very active interest in economics since 2008. I now feel as though I understand economics and banking reasonably well. The reason I'm setting out on writing a blog is that, with my new-found knowledge, I have started to realise that far too many economic arguments on news and current affairs programmes are of dubious logic or even blatantly untrue, despite in some cases having a ring of plausibility. I would like to counter this by helping others to gain the same understanding that I have acquired, which now allows me to see through the dubious reasoning which is common (though not pervasive), even in places such as BBC Radio 4 and Bloomberg. Having recently gone through the learning process myself, I hope that I can make the process easier for people who wish to understand economics better without having to try to figure it all out for themselves from a variety of good and bad sources.
In the years leading up to 2008, I had a growing sense that something seemed terribly wrong: I had been saying for years (based on intuition) that house prices had to drop because average house prices were so much higher than 3 times average combined incomes, and yet they continued to increase with no end in sight. I began to ask myself whether my simplistic understanding was wrong; perhaps the increased desire for housing, cited so often as the reason that house prices would continue to rise so quickly for many years, meant that this really could continue.
Then in summer 2007, there was talk of the investment bank Bear Stearns being in trouble over sub-prime mortgages, and there being a "credit crunch" in which banks weren't lending. It was apparently just happening in the USA at that point, but still somewhat ominous. In October 2007, I saw an opinion piece in the Financial Times arguing that it wasn't just an American problem - the author gave examples of four acquaintances of his in the UK who had taken out mortgages which they were unlikely to be able to pay, in one case having £1,000,000 of negative equity from buying several apartments. At 07:00 on one day in December 2007, the Today programme on Radio 4 reported on an IMF study predicting an imminent "perfect storm". (I was barely awake for the 07:00 news, and the story mysteriously wasn't mentioned later on in the programme - I had to check the IMF web site to convince myself that I hadn't dreamt it).
In February 2008, a work colleague told me that the Federal Reserve in the USA was unconstitutional, and that fractional reserve banking was a multi-generational scam to keep people in perpetual debt slavery. He said I should watch an animated film on Google Video called "Money as Debt", and read "The Creature from Jekyll Island" by G. Edward Griffin about the creation of the Federal Reserve. It seemed convincing - if money is created in exchange for debt, but the debt increases (due to interest) while the amount of money doesn't, it seems that borrowers as a whole can never repay their debts.
A little later in 2008, I came across Karl Denninger's Market Ticker blog. He's been blogging since 2007 about what he says is rampant fraud in the finance industry in the USA. He's also someone who defends fractional reserve lending, which gave me a great opportunity to compare the two sides.
Since then, I've been spending a lot of time reading about finance and economics, doing thought experiments, and generally trying to understand the subject better. I must have put in more effort than I did into my bachelors degree, and I believe I now have a good feel for macroeconomics, and that I can judge for myself - based on my own understanding - the truth or falsity of economic arguments made or reported in the media.
What I want to do with this blog is to help to create an environment in which people like myself - intelligent but with no formal background in economics - can sort out the wheat from the chaff of economic reporting and opinion. I'll be presenting some (hopefully uncontroversial but often ignored) starting points and using them to see what we can understand about the economy as a whole.
I also want to get feedback so that I can continue to learn. I've already had to change my opinions as I've learned more, and I'm quite happy to do it again as long as it increases my understanding.
Welcome to my blog.