Common ¢ent$: A Citizen’s Survival Guide – 2nd Edition

CCGuide Kindle Cover

Editorial Summary and Table of Contents included below (click on cover to buy the epub version at Amazon).

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Revisions to Version 2.1

Aside from the usual correction of typos, cleaning up language, and some new anecdotes, the main revision (making this 2.0 rather than 1.1) is to the sections on monetary policy under a fiat currency regime. The previous analysis adopted the traditional framework of a convertible currency, such as the dollar backed by gold. This type of currency regime no longer exists because we live in a world of floating, government-fiat currencies. This means that the government, operating through the agencies of the Federal Reserve Bank and the U.S. Treasury, is able to issue new currency at will, without having to tax, borrow, or commandeer gold from the citizenry. What this does is relax the debt constraints that apply to a fixed currency regime. So, neither the debt ceiling nor the absolute levels of national debt or the deficit really constrain monetary and fiscal policy. Of course, this means that the burden of the national debt is borne by the entire economy and is reflected in the exchange value of the dollar. The is still a kind of a tax on people who own dollar assets, or most Americans (as well as foreign holders of U.S. debt), it is just not a direct tax that requires payment on April 15, but a tax that can slowly erode the value of dollar assets. The key statistic that indicates the degree of worry is the debt as a percentage of GDP, which measures the ability of the economy to service this debt without serious negative consequences.

For a more thorough, and somewhat complex, investigation of the fiat currency framework, I would advise reading up on Modern Monetary Theory, or MMT. A brief explanation is offered in the Glossary with a link to Wikipedia.

Version 2.1 also adds an Executive Summary.

Editorial Summary

Our world is changing. Revolutions in information, communication, economic liberalization, and political integration are bombarding us at a dizzying pace. Individually and collectively, we try to manage this change, seeking to adapt and thrive. One way we organize our collective action is through the exercise of public policy, but the landscape keeps changing and the old maps and blueprints seem inadequate to the task.

If our leadership elites understand how to manage these changes, it is not apparent from the results. Regrettably, our traditional media sources seem unable or unwilling to help by providing straight answers untainted by ideology and political partisanship. The stock market jumps higher one day, and crashes the next, but what exactly has changed between yesterday and today? Or tomorrow? Meanwhile, Main Street enterprises and average families struggle to survive, much less thrive. In a self-governing democracy, how do we navigate this growing chaos? How do we return to a world we recognize?

To start, we need to establish some touchstones to anchor our rational perceptions. Today, these touchstones must come from our own understanding. We need a basic intellectual foundation to guide our collective decisions because managing democracy is no longer the exclusive domain of the expert.

Common Cent$: A Citizen’s Survival Guide seeks to fill that need. The guide is a basic primer that focuses on economics for non-economists and policymakers. Its author holds advanced degrees in economics, finance, and political science and has taught these disciplines at the university level. He has also worked in an investment management and consulting capacity. In contrast to conventional approaches, this guide offers a new way of understanding our society that departs from the economy as a mechanical system or programmable machine amenable to simple policy directives. Rather, the adopted metaphor is organic, holistic, and integrative. Our analysis focuses on resource inputs and outputs in a natural cycle over time. Rational, interactive human behavior becomes a key driver of this economic-financial-political ecosystem.

In developing this approach, we can then tackle the nuts and bolts of the conventional policy world encompassing Federal Reserve monetary policy, the banking system, government fiscal policy, tax policy, public finance and social insurance entitlements. With a clearer perception as to how these various policies shape our world, we can gain a greater understanding of the ways we have been affected personally through the gyrations of the financial, housing, and labor markets. In this respect, we may discover that intuition is more powerful than technical expertise.

This guide is not a compendium of solutions, but a framework for analysis so that we may design solutions together. Our financial and economic predicaments are not accidents of circumstance; we are not victims of fate. Our problems are of our own design due to misguided policies and faulty intellectual models of our world. The road back to sanity starts with small steps.

Table of Contents

Author’s Note

Revisions to Version 2.1

Executive Summary


Chapter One – A Simple Model

1. Let’s Eat! Now or Later?*

2. I Like What You Have – Let’s Trade*

3. I Need Some $Money$**

4. Debt and Credit**

5. Capital versus Labor: Friends or Foes?**

6. Risk, Return and Uncertainty**

Chapter Two – The Macroeconomy

Market Failures**

The Mystique of Money***

Financial Alchemy***

Capital and Financial Markets***

Labor and the Problem of Unemployment**

Competing Macroeconomic Theories**

Distributional Failures*

Globalization: National vs. International Economy**

Risk, Uncertainty, and Insurance**

Chapter Three – The Politics of Policy

Democracy and the Two-Party System*


Politics and Policy*

The Media*

Red vs. Blue?*

Elites, Oligarchies, and Plutocracies*

Chapter Four – Applying the Model to Policy

The Great Moderation, The Credit Bubble and Financial Crises**

A House is Not Just a Home?*

The Policy Agenda

Private and Social Insurance**

Distributional Issues**

Capitalism For All**

Chapter Five – The Main Policy Challenges

Federal Reserve Policy***

Fiscal Reform**

Tax Reform**

Risk, Insurance, and Entitlements**

The Principal-Agent Problem**


The Curse of the Market**

Appendix A: A Gross Over-Simplification of Economics***

Appendix B: What’s Wrong with Economics?***

Appendix C: The Credit-Debt Machine***

Appendix D: Casino Capitalism and Crapshoot Politics Blog 

About the Author


Reading List



Difficulty Factor: * = easy; ** = moderate; *** = challenging.

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