Pragmatic Capitalism

Practical Views on Money, Finance & Life

Why Do We Study Macro Finance and Econ?

The study of macro is about big things.  Really big things.  I can only speak from personal experience, but I don’t spend most of my time thinking about money, investing and economics (for fear of death by boredom, I hope you are the same).  I spend most of my time thinking about really big things.  Why are we here?  What is our purpose?  What is the meaning of this existence?  These are big questions which require big answers.  And in order to find these answers we have to learn to think systematically as if we are piecing together the world’s most complex puzzle.

You might have noticed over the years that I have a tendency to think a bit like an engineer.  I build simple models of how systems work and try to come to the simplest conclusions.  I view the economy much like one might view the construction of a car.  If we can look at the available parts, put them together and understand how they interact then we can come to pretty good estimates about how that system might operate in the future.

Macro is about putting all of these smaller puzzle parts together to formulate an understanding of something bigger.  It is inherently about something bigger than ourselves.  Finance and economics just so happens to be a very important part of the bigger puzzle here.  In fact, we could go so far as to say that the monetary system is the system that dominates most aspects of modern human life.  And we study this system because we want to know how it operates and why it might result in outcomes that could harm or hurt us.

Macro thinkers, are, by definition, big thinkers.  Those of us who study and try to learn about the macro finance and econ worlds should not be interested merely in money and its accumulation.  After all, that misses the point that macro finance and economics is actually rather micro in the grand scheme of things.   But this is why we study it.  Piece by piece the puzzle comes together and we come to a better (though always incomplete) understanding of what might lie ahead.

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