Big Picture Economics How to Navigate the New Global Economy

JOEL L. NAROFF is a nationally recognized expert and recipient of the Lawrence Klein Award for Blue Chip forecasting excellence and the National Association of Business Economists Outlook Award. Named the Bloomberg Business News 2008 top economic forecaster, Naroff was also named top economic forecaster by MSNBC in 2006. Data compiled by Bloomberg shows Naroff as the top forecaster of the U.S. economy during a period that included the start of the global credit crisis.

RON SCHERER is a veteran journalist who has worked for UPI, U.S. News & World Report, and for The Christian Science Monitor, a prize-winning publication. In his 37 years at the Monitor, he covered Wall Street, economic policy during the Reagan administration, and many of the important news and economic events of the day.

Preface ix

Acknowledgments xiii

Chapter 1: Introduction to the Economics of Context 1

Chapter 2: The Federal Reserve, Congress, and the Use of Context in Economic Policy 15

Chapter 3: We are All Economists and Don’t Know It 35

Chapter 4: How a Perfect World Would Work 57

Chapter 5: Shopper Nation: Why We Buy or Don’t Buy 79

Chapter 6: How is a Can of Tuna Like a Smartphone? Yes, Context! 101

Chapter 7: When to Spend, When to Cut, and When to Scratch Your Head Over the Federal Budget 123

Chapter 8: Tax Policy: Does Cutting Taxes Cure All Ills? 149

Chapter 9: Monetary Policy: Money, or Maybe the Federal Reserve, Makes the World Go ’Round 169

Chapter 10: The Panama Canal Widens and the Middle Class Grows in China—How Does That Affect Indiana? 187

Chapter 11: What Do We Do Now? 207

About the Authors 227

Index 229

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