Ten prerequisites for a better understanding of the contemporary financial crisis

  • Authors: Armin HAAS
  • Published in: 2013
  • Published on: Complexity Economics 2(1): 107-112


In this short paper, I discuss ten prerequisites for detecting and understanding financial crises in general, and the current financial and economic crisis in particular. The ten prerequisites are: i) A good understanding of double-entry accounting. ii) A basic understanding of national accounting. iii) Knowledge about how money is created. iv) A basic understanding about how financial markets work. v) A basic understanding of accounting principles. vi) A basic understanding of the rules how bank assets must be backed by equity. vii) A rough idea about the way how financial players are interconnected with each other, and with players from the non-financial economy. viii) A basic understanding of dynamic systems. ix) A basic understanding of network dynamics. x) A basic knowledge about economic history, especially about the economic crisis of the 30s. This exercise may be helpful for prioritizing what economists should focus when discussing the current crisis, and what the models they use for their inquiry should possibly include. Moreover, it may contribute to the ongoing discussion of how to reform the curriculum of economists..

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