I
have been thinking of starting a blog for a few years now. Why? Certainly not
for fame or fortune (like that is going to happen) but for my kids. I have now
taught undergraduate finance and economics for 24 years and have volumes of
lecture notes, mini-lectures for online classes, plus a few articles I have
written. But unless my kids are also my students, colleagues, or members of the
community who happen to catch me in an occasional TV or radio interview, the
knowledge I have gained over the years will be, to a large extent, lost on
them. MY VERY OWN KIDS! And this is
important stuff to know. Understanding basic concepts of economics and finance
can make an enormous difference in the quality of our lives. It can create
opportunities that otherwise would not have been available. It can also keep us
from doing some really dumb things; things that can take years to overcome.
Research
by The National Endowment for Financial Education concludes “that a large
percentage of people of all ages, incomes and education levels lack the basic
financial knowledge and skill to ensure long-term stability for themselves and
their families.” The study goes on to say that “inappropriate financial
decisions can have long-term negative effects and national consequences will
result from a continued lack of financial literacy.”
National
consequences? Was that prophetic or what!!! We are still bearing the burden of
the mortgage meltdown. It began with people buying houses that they could not
afford (which amazingly was encouraged and enabled by government policy) and
when mortgage defaults placed those homes back on the market, prices began to
fall. This kicked into gear a decline in economic activity that eventually
resulted in the worst recession since the 1930s and the highest unemployment
since 1982!
Financial
illiteracy truly is one of this nation's most pressing problems. Individuals,
families, and government all spend more than they bring in. People live in
houses and drive cars they cannot pay for. Too many get into credit card debt
and are never able to dig themselves out. Those who are able to dig themselves
out are often not able to save enough for retirement. Others lose their
retirement savings in investments they do not understand, having taken risks
they didn't know existed. Financial illiteracy takes an enormous toll!
Yes,
my kids have heard me talk about this over and over again, but I want them to
have a written reference (with the hope that being online might make it hip
enough to actually read). So, here it is. This blog is dedicated to the
financial literacy of my children, David, Sarita, and Daniel.
Everyone is Welcome
While
my kids are my primary motivation here, if others happen to stumble in that is okay
too. Welcome aboard! It is a pleasure to have you with us. This blog will
include random "deep" thoughts and musings about a wide range of
financial and economic issues. The more the merrier.
Why Mad Max?
It’s
a nick name given to me by Paul Solman, the business and economics
correspondent for The PBS News Hour. I worked with Paul on some videos a few
years back (distributed with McGraw-Hill/Irwin economics textbooks and also
available at Amazon.com). He was amused by my email address, maxutils (which is short for
maximize utility, a reminder that this is everybody’s objective function. Yes,
a rather staid inside joke among economists, ha ha). Anyway, Paul started
calling me Max and later Mad Max. I always kind of liked it and it seemed to
fit (even though I don't think I am actually mad -- at least not yet)
Why 1776?
First
and foremost it was the year of the Declaration of Independence here in the
United States, and if there is anything I want to be associated with personal
finance, it is INDEPENDENCE! But 1776 is also known for something else very
significant, something that took place across the Atlantic in Scotland and
would also have an enormous impact on the world. It was the year that Adam
Smith gave birth to modern economics with the publishing of his revolutionary
book: An Inquiry into the Nature and Causes of the Wealth of Nations.
About Mad Max
I
am but a meek and lowly professor of economics. Over the years, I have taught
courses in corporate finance, international finance, investment management,
personal finance, financial markets and institutions, microeconomics,
macroeconomics, and modern economic issues at colleges and universities along
the east coast from Florida to New York. In addition to maximizing my utility,
my objective function is to just try to do more good than harm and stay out of
trouble. Not an easy proposition in my experience :)
MM
