Could something like the Great Depression happen again? During that unpleasant episode, the stock market dropped by 90%, unemployment rose to 25%, and gross domestic product fell by 30%. In making a financial plan, is this a scenario that’s worth worrying about? While no one can predict the [...]
Understanding Inflation, and Guarding Against It
Among the topics that receive attention in the world of personal finance, inflation was for many years near the bottom of the list. Between 2010 and 2019, inflation was so low, averaging just 1.8% per year, that the Federal Reserve was actually struggling to lift it. Throughout 2019, the Fed lowered [...]
The Taylor rule
If you’ve tried to buy a car or a home recently—or have even just been to the grocery store—I’m sure you’re aware how much prices have jumped over the past year. John Taylor certainly has an opinion on the topic. Taylor is a professor at Stanford University. While not a household name, he’s a [...]
Why interest rates matter
In the world of personal finance, a frustrating reality is that uncertainty is always a factor. But it’s not the only factor. Certain things are somewhat more predictable. Among them is the connection between interest rates and virtually every other aspect of the economy. Below is a look at some of [...]
Edward Lorenz
In 1972, an MIT professor named Edward Lorenz published a paper titled Predictability: Does the Flap of a Butterfly’s Wings in Brazil Set off a Tornado in Texas? It was a catchy title. Though Lorenz didn’t mean it literally, the basic idea was that events in the physical world are highly [...]
