Increasing my Financial Literacy

I’ve been meaning to do this for a while, to take some notes on terms used in discussions about the economy and finance in order to understand better what’s going on. I’ve always been a bit turned off by the economy and finance because it feels like a bit of a rigged game at times. But regardless of that, in order to understand the direction the world is headed, I think it best to understand the language that the people who move it speak and the tools that they use.

There are certainly untruths and opinions, even dogma spread in the study of economics so I will take everything with a grain of salt. At the very least, this will help me understand the world better and at best it can help make me freaking rich and perhaps even help others do the same.

I’m using the YouTube series “crash course economics” because it seems to resume the kind of economics you might study at university in America and most of what I’ve learned about economics has come from more alternative sources, bitcoiners and rather skeptics libertarians. Whether or not they actually believe in it, I want to understand the education that bankers and regular investors get in school 😆

Feel free to comment and let me know if I got something wrong or if there is some important context I’m leaving out.

These are just some terms that I’m trying to remember:

Demand push inflation -too much money chasing too few goods

Cost push inflation - inflation due to supply shock

Supply shock- decrease in availability of an important resource

Ninja loan - (no income, job or asset)

Contractionary fiscal policy - when the govt tries to lower the money supply to lower inflation

Keynesian policy - said government spending can make up for a lack of consumer spending

Crowding out - (stimulus) when govt borrows money, increasing interest rates… Keynes said it can help get people back to work and spending again when economy is below capacity

Austerity - when govt raises taxes and lowers expenses

Multiplier of 1.75 - when govt spends $1 that passes hands a total of $1.75 (welfare has higher multiplier than tax cuts

(is “the left” in America Keynesian?)

Note: according to the video more money goes to the elderly than both defense AND “government handouts” wow, so the left and right have a common enemy: old people?

Principal - the original amount lended before interest

Reserve requirement - in fractional reserve banking, the % of deposits the bank is required to keep (they loan/invest the rest). Decreasing this will increase the money supply (lol 0% requirement!?!? Any wonder the economy is a mess?)

Open market operations - the fed buys or sells short term government bonds. Banks hold bonds because “more secure”. More bonds = less liquidity. How many bonds decided by federal open market committee

Quantitative easing - central banks buy up longer term assets from banks

it’s amazing just how much I learned from following bitcoin since 2017. (“Money serves as 1 a unit of account 2 a medium of exchange 3 a store of value” couldn’t miss that in the cryptosphere if you pay attention to fundamentals). But studying more “traditional finance” even just casually like this, makes it easier for me to understand what CEOs and financial analysts and big investors are talking about. I heard the word yield curve yesterday and couldn’t understand the definition I found. I also find it hard to explain how money is created even though I have done enough research to have a rough idea. The goal is to get my knowledge to a level where I don’t have lots of words I don’t understand and I can explain these concepts simply

—- Recent vlog: How to do anything - I learned a language in 6 months about how I learn any skill, how I’m learning about finance effectively right now and how I learned Japanese and Mandarin.