What is really happening in the economy?

With all the headlines about the fiscal cliff and quantitative easing there is a danger that too many people will think economics is just about money.,

When my economics professors stood in front of the black board they often drew an X-shaped graph.  One side of the x represented the real or physical side of the economy and the other represented the financial.

This is an important distinction to make especially as we generally use monetary terms to measure the physical side.

The financial side of the economy has lots of potential to wreck our lives and has done so, but if we really want to know what is happening we need to look at the physical side of things.  We should not assume there is an unlimited supply of energy and mineral resources and that economic growth can continue forever.

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.


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