As an odd point of clarification that has almost nothing at all to do with this post; when I took economics classes in college we never really discussed political views regarding economics. Things like "The Chicago School" of economic thought and free market versus socialism were really just never discussed. I suppose we did talk a bit about government intervention. Mostly we figured out how changing one variable in any given situation would trigger a change in other variables. On tests we would be expected to know how to "create an economic story" and show the changes graphically. Most of it was just studying the history of economics which is really like... the last 100-150 years. I'm sure economists will be better prepared for future crisis's in the next 100 or 200 years when they have better data. Then again by that time I'm sure computers smarter than our (current) selves will be running the show (another subject I know).
Here's a typical page of my notes... don't worry, they're confusing to me (now) too. These 3 charts, that are really one, has to do with floating currency.
This is interesting just because I consider myself to be somewhat "informed" in terms of economics and what not yet was unaware at just how much the various indexes have lost in value. Aside: look at the REIT's (real estate investment trusts) in pink!
This is interesting on several levels. The red line in the center gives the inflation adjusted cost of buying a home. Thus, if you purchased real estate in 1979 it's worth about the same as what it's worth today plus inflation... think 3% a year. This of course isn't the case if you bought in a "hot" area where prices increased dramatically. There are positives (tax deductible interest payments, you get to live there, one of the few investments that's protected from inflation) and negatives (upkeep, generally poor appreciation, highly illiquid, and high transaction costs if you sell) to owning a home, but it is worth mentioning that it isn't a crazy idea to rent and invest the excess money you would have been paying on a mortgage. Then again, in a country with a (previously) negative savings rate, who has the will power to do such a thing?