One problem I have with economics books is that they tend to end with either “and therefore, government spending is bad” or “and therefore, government spending is good”.
What I’m really after are non-ideological macroeconomics books that will help a layperson have a better sense of where the economy is headed so I can invest better, not books that would help me make better decisions if I were running a country, which I’m not.
I think investing and economics isn't that well correlated. You need some idea of monetary and fiscal policy but as you say economics tends to get political quick.
Agreed avoid his crypto stuff. I'm just trying to think of a popular person to talk about markets and economy that isn't a bedroom expert like most of them.
Most of them are boring or technical or not that good. I love Hugh Hendry but he's repeating himself all the time now. If you have someone you like I'm interested.
> One problem I have with economics books is that they tend to end with either “and therefore, government spending is bad” or “and therefore, government spending is good”.
Which economics book ends that way? I'm genuinely curious.
Even finance experts like Matt Levine use index funds. Unless you are mega rich and have connections, you almost certainly have no advantage against the many people who work 100 hours a week trying (and often failing) to beat the market.
This. Imagine the arrogance necessary to believe that you can understand economics, finance, geopolitics, and the vast arrays of industries and competing companies well enough by studying as a hobby in your spare time to get better returns than professional investors who literally spend their entire careers trying to beat the market, and fail on average.
You're correct but I'd like to point at that professional investors don't understand all of that either. They spend their careers focused on little niches in which they can find an advantage. So it's less, what are the mysteries of the economic universe, and more, why does the West Texas Intermediate futures curve differ from the Brent curve and how can I profit from the spread?
That and the goal of many (most?) professional investors is not to beat the market. For some they just need to have higher returns than cost of funding and anything positive is accretive. Others sell fund investors on things like low market correlation. Or others have more specific goals like hedging future fuel prices for an airline.
Point being, individual investors have completely different goals from most professional investors and as you point out, "VTSAX and chill" is the way.
For many professional investors (and certainly for a large class of asset management firms), the big incentive is to accumulate more AUM. Returns can be a strong marketing tool to do that, but they're not the only one.
People do beat the market, but the thing is if you can beat the market then you don't need to accept public money - you become a private trading firm and trade with your own money and keep all the profits.
That's the issue: successful firms which beat the market don't keep doing it on behalf of other people for very long.
> Economics is about explaining things after the fact, and incapable of prediction.
I would expand on this a bit.
The problem with economics is that it's the study of a type 2 chaotic system, where predictions about the system themselves feedback into the system and change the outcome. Contrasted with a type 1 chaotic system, like weather, where predictions are extremely difficult but can be made without affecting the outcome. Economics is chaotic because conscious actors are extremely unpredictable and change their behavior based on new information.
This is something you have to bear in mind whenever you hear an economist or government official make a prediction. The very act of making the prediction public often becomes a self defeating prophecy, because masses of people and money make changes to their future behavior based on the prediction. Also called the Prophet's Dilemma, https://en.wikipedia.org/wiki/Self-defeating_prophecy. A close relative of the Preparedness Paradox, https://en.wikipedia.org/wiki/Preparedness_paradox
This is why some of the best predictions are never made public. The best traders don't sell you their strategy. Because as soon as their prediction mechanism becomes too public, it gets absorbed into the system and arbitraged away to worthlessness. That's also why you always must take what government officials say with a grain of salt. They're often not telling you what they really think is going to happen. They're telling you what they think is going to motivate the population to behave in the most productive way given the current environment.
Making economic predictions is a grand game of "I know that you know that I know that you know". It's a game of mass manipulation rather than a technical pursuit of simple measurement.
It has aspects of weather like behavior. Plus climate behavior in that chaotic systems can jump from one semistable pattern to another. And then point events.
A virus jumps from bats to humans. Some dictator decides for his own internal reasons to start a war. The pace of technology isn't predictable or even possible to predict.
Referring to something above. Economics would be a lot better if it focused on historical happenings and stopped trying to pretend it's a hard science like physics.
unlike physics, and somewhat unlike chemistry, there is no direct causal relationship, instead it is systems of systems with new, unpredictable events entering into most of the them constantly. The time window for a prediction is also crucial, because the same set of decisions and rules in one era have different results in another era. Economists preside over this cacophony with a lot of measurements and news items. Occasionally something really worthy comes out, but the daily arguing and posturing is quite a turkey show, IMHO. Thomas Piketty got a prize recently.
> give us an example of a macro or microeconomic model that is incapable of prediction and it's (therefore?) all ideology?
Generally, the more a theory talks about how the past actually happened the more it's ideology than falsifiable science.
Take Marxism. It's largely a history of class struggles. There are testable bits, e.g. the labor theory of value (which is wrong). But most of it is unfalsifiable. Similar to the barter-then-money origin of money story, which offers zero predictive value while also being archaeologically unsupported.
Theories of value are untestable, since value isn't price. The LTV can only really be argued to be wrong on philosophical and theoretical grounds, not on empirical grounds. This is because market prices are not necessarily the same as values. There are however plenty of arguments outside the empirical realm against it.
If you want a testable theory from Marxism there really only are two - the aggregate rate of profit to capital will go down in the very long term, there will be endogenous economic crises due to lack of demand/too much supply in aggregate. The rest are unfalsifiable as far as I'm aware. The issue is that both of these predictions seem to be correct so far - P/E ratios are going up and we have now had plenty more evidence that crises due to mismatch between demand and supply are inherent to capitalism.
However, it's still not a great tool at actually predicting the world, because the vast majority of predictions are unfalsifiable. But I agree with you that most of economics is moreso ideology.
What I’m really after are non-ideological macroeconomics books that will help a layperson have a better sense of where the economy is headed so I can invest better, not books that would help me make better decisions if I were running a country, which I’m not.