How the Economy Works

Macroeconomics deals with unemployment, inflation, and interest rates: how they are connected and how they are influenced by government monetary and fiscal policy. How
the Economy Works provides a verbal account of macroeconomics aimed at the general reader. I explain the difference between two main approaches, classical and Keynesian, and I show how they have influenced the policy debate that developed in the wake of the world financial crisis that began in the fall of 2007, with the fall of Northern Rock in the UK, and that exploded into a worldwide catastrophe, with the failure of Lehman Brothers in the United States in the fall of 2008.

But that is not all. This book provides much more than an explanation of existing ideas. It introduces and explains some brand-new ideas that go beyond classical and Keynesian economics. I provide a fresh approach to the prevention of future financial crises and I offer practical policy solutions based on a coherent scientific foundation. The technical and
mathematical details are explained elsewhere.

This book is for you, the general reader, who wants to make sense of it all.