As a guest on NHPR’s The Exchange, Dartmouth’s Charles Wheelan ’88 explains the economic principals and concepts common in the news, including the budget deficit, health care economics, the stock market, and government bailouts.
Regarding the current state of the stock market, Wheelan says, “Stocks are a leading indicator. So people bid up the price of shares when they think companies are going to be profitable in the future. … The positive narrative here is that it reflects the fact that the market believes that the economy is going to turn around.”
Wheelan adds that “the more pessimistic narrative would be interest rates are so low that if you bought bonds, which is arguably a safer in the short run alternative and certainly more predictable, you can only get 2 percent, and why would you do that when equities seem to be doing so well? So it could well be that low interest rates have just caused a lot of people to channel their cash into stocks. Those stocks aren’t more valuable, they just have more money chasing them.”
Wheelan addresses similar topics in his newly revised and updated book, Naked Economics: Undressing the Dismal Science, notes NHPR. Wheelan is a senior lecturer and policy fellow at the Nelson A. Rockefeller Center for Public Policy and the Social Sciences and a senior lecturer in the Department of Economics.
Listen to the full story, broadcast 9/24/13 on NHPR.