How to be a Happy Economist

A mathematician, an accountant and an economist apply for the same job.
The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."
Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."
Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you want it to equal?"

Economists are thought of as people who bring bad news and that their theories do not represent reality- then why do they have so much power?? The reality is that decisions and future decisions involve choice and every choice involves something that has been forgone. (this is known as opportunity cost in economics) Often this choice involves a political decision and a particular group or region will lose or gain which means that as the politicians have to make a difficult decision - economics is often the reason or the stated reason.

Look at the picture and work out how this relates to Economics (try opportunity cost and choice)

So how do you be a happy economist- well by realising that humans are irrational and accepting that despite all the ideas and forecasting that economists are never totally correct.

1.5% inflation = interest rate rise??

The latest RBA meeting on the 6th of October has signalled the end of what Glenn Stevens has called a 'mild downturn'. After holding interest rates at 3% for 12 months the cash rate has now started heading up (though only slightly ) after the RBA decided to put them at 3.25% on Tuesday.
After Lehman Bros in the U.S filed for bankruptcy in Sept 2008 the RBA cut the cash rate by 4.25% over a 6 month period in a bid to prevent major credit and AD issues in Australia.
Thus the signal that Australia's downturn is possibly over has been given by the RBA. If you want to read why G.Stevens believes Australia avoided the major problems experienced in the G7 in particular then read this concise summary.
The question remains- Is Australia out of the recession? and why is the cash rate rising when inflation is still below the 2-3% target range?
Wll the answer is a pre emptive strike, a move to curb excess borrowing at a low rate of interest and to send the market a signal.
Of note is that unemployment has fallen very slightly from 5.8% to 5.7% which is a further indication of a return to expansionary conditions. What will be interesting is that Glenn Stevens also said "a degree of policy discipline will be needed". This means that he expects fiscal policy will also slow down its expansionary phase and that spending will decrease- however will this happen in light of the fact that the next Budget leads up to the next election?
It will be interesting to see what the ALP does??