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Pragmatic Capitalism: What Every Investor Needs To Know About Money And Finance
Being successful in the modern world of finance requires a more in-depth understanding of our global economies on a macro level. What does a shifting demographic cycle mean? How does the explosive growth of emerging markets matter? Why does the world’s population affect my portfolio? Does the global monetary system impact my results this year? How does government intervention in markets impact my strategy? In Pragmatic Capitalism, Cullen Roche explores how our global economy works and why it is more important now than ever for investors to understand macroeconomics. Cullen Roche combines his expertise in global macro portfolio management, quantitative risk management, behavioral finance, and monetary theory to explain to readers how macroeconomics works, and provides insights and suggestions for getting the most out of their investment strategies. This book will uncover market myths and explain the rise of macroeconomics and why it impacts the readers’ portfolio construction. Pragmatic Capitalism is a must for any sophisticated investor who wants to make the most of their portfolio.
252 pages, Kindle Edition
First published July 8, 2014
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Displaying 1 - 30 of 34 reviews
November 24, 2019
The Good
This book has plenty of helpful information. Roche does well to explain what money is and how the economy works. He uses straightforward language. The examples are simple and approachable.
The Bad
My biggest criticism is that the book it is very repetitive. There are only a few ideas and they get repeated for 200 pages. I understand the need to reinforce certain ideas for readers who are new to the subject, but Roche goes beyond that.
At times, he uses the same sentence or quote multiple times within the span of a few pages. I stopped once or twice because I thought I had accidentally lost my place and reread a page from earlier in the book.
This repetition makes the book quite boring after just a few chapters. So even though the language is simple and understandable, it took me months to get through Pragmatic Capitalism.
Who Pragmatic Capitalism Is For
This book is most helpful for people who know little to nothing about how the economy works or about investing strategy. It will give you a good overview and introduce you to important financial concepts.
Who Pragmatic Capitalism Is Not For
If you're looking to improve your investing strategy, find another book. Here, I'll save you some time. There are just two big points on investing in Pragmatic Capitalism:
1. Investing is not a way to get rich quick. Putting money in the stock market won't turn you into Warren Buffet. That includes investing in IPOs and it includes investing in lucrative companies.
2. Putting your money into index funds is better in the long run (for the average person) than trying to pick individual stocks.
If you already know those two things, this book won't help you with investing.
The Only Chapters You Actually Need to Read
Even if you don't know much about the economy, reading this whole book is unnecessary. I'd say you only need to read (at most) five of the 11 chapters. One could even argue that you only need to read one of the chapters. The rest of the book can be skimmed. (I almost feel like Roche knows this is the best strategy because the content of the book is very skim-friendly. There are bolded lists, major points set in italics, isolated quotes, etc.)
- Chapter one does a good job of explaining what money is (though reading half of chapter one is probably enough).
- Chapter three nicely explains what investing is (though you could still just skim this chapter).
- Chapter four lists some common misconceptions that people have about the stock market. It will give you a good idea of the ways investing can (and cannot) help someone build wealth.
- Chapter seven, which is 50 pages, is basically a summary of the book. It may be a little heavy if you don't have any financial knowledge, but you could read only chapter seven and you'd get all the important information in this book.
- Chapter eight lists some common misconceptions that people have about the economy.
This book has plenty of helpful information. Roche does well to explain what money is and how the economy works. He uses straightforward language. The examples are simple and approachable.
The Bad
My biggest criticism is that the book it is very repetitive. There are only a few ideas and they get repeated for 200 pages. I understand the need to reinforce certain ideas for readers who are new to the subject, but Roche goes beyond that.
At times, he uses the same sentence or quote multiple times within the span of a few pages. I stopped once or twice because I thought I had accidentally lost my place and reread a page from earlier in the book.
This repetition makes the book quite boring after just a few chapters. So even though the language is simple and understandable, it took me months to get through Pragmatic Capitalism.
Who Pragmatic Capitalism Is For
This book is most helpful for people who know little to nothing about how the economy works or about investing strategy. It will give you a good overview and introduce you to important financial concepts.
Who Pragmatic Capitalism Is Not For
If you're looking to improve your investing strategy, find another book. Here, I'll save you some time. There are just two big points on investing in Pragmatic Capitalism:
1. Investing is not a way to get rich quick. Putting money in the stock market won't turn you into Warren Buffet. That includes investing in IPOs and it includes investing in lucrative companies.
2. Putting your money into index funds is better in the long run (for the average person) than trying to pick individual stocks.
If you already know those two things, this book won't help you with investing.
The Only Chapters You Actually Need to Read
Even if you don't know much about the economy, reading this whole book is unnecessary. I'd say you only need to read (at most) five of the 11 chapters. One could even argue that you only need to read one of the chapters. The rest of the book can be skimmed. (I almost feel like Roche knows this is the best strategy because the content of the book is very skim-friendly. There are bolded lists, major points set in italics, isolated quotes, etc.)
- Chapter one does a good job of explaining what money is (though reading half of chapter one is probably enough).
- Chapter three nicely explains what investing is (though you could still just skim this chapter).
- Chapter four lists some common misconceptions that people have about the stock market. It will give you a good idea of the ways investing can (and cannot) help someone build wealth.
- Chapter seven, which is 50 pages, is basically a summary of the book. It may be a little heavy if you don't have any financial knowledge, but you could read only chapter seven and you'd get all the important information in this book.
- Chapter eight lists some common misconceptions that people have about the economy.
October 20, 2014
Crossposted from The Astrosocialist.
http://astrosocialist.com/review-of-p...
Here at the Astrosocialist we generally focus on the future. But part of being able to speculate cogently about the future is having an understanding of the past and present. It is with that in mind that I picked up Pragmatic Capitalism by Cullen Roche. My Review is after the break.
Cullen Roche is a finance guy who got disillusioned with Wall Street (proof enough that he is not a greed obsessed psychopath) and retreated to San Diego to try and do right by his clients. Along the way he has gone from a mainstream understanding of economics, through a Modern Money Theory (MMT) phase, to an understanding of economics that is both original and, in my view, one that seems most borne out by the facts, Monetary Realism (MR).
An explanation of what MR is Chapter 7 of the book. Before that point Cullen discusses what money is, with an emphasis on the scale of moneyness. Money is told to be akin to a theater ticket. The ticket itself isn’t valuable, only the show is. Like wise things that have high moneyness are things that get you access to more goods. Bank deposits have high moneyness because they are easy to use for purchases. Gold on the other hand is easy to trade for cash or bank deposits but you can’t spend it in stores generally so it has a lower moneyness. (Try to take a gold nugget to a McDonald’s the poor clerk will be stupefied.)
Cullen then goes on for several chapters about finance. For me this was the most tedious and least interesting part of the book though perhaps that is because I do not yet own stock. One message stood out though about investing in yourself, things that will increase your income and skills, a college education, like the one I am pursuing, being the perfect example of that.
The book picks up again when Cullen gets into behavioral finance, the subtle irrationalities of investors and how to avoid the money losing traps borne thereof. This leads into the previously mention chapter on MR.
This chapter is really important because of Cullen’s approach. He wants to describe the system without making biasing prescriptions of how to change it, like Da Vinci did with the human body. I’m not sure that I would be to such a task but it is valuable work for understanding what the current economic system in liberal democracies looks like. It is a poor policy maker that make decisions off of a poor understanding of current operations.
There are several key lessons from this chapter:
Banks produce most money by issuing loans. In this way loans create deposits and banks control the money supply.
Sovereign autonomous currency issuers, like the US government and federal reserve together, can’t go bankrupt. The same way that any entity that can print money would be able to use that ability to pay off their credit cards.
Instead governments are inflation constrained, they can print so much money nobody will use it anymore.
The rest of the book deals with some economic myth busting (particularly dealing with the US debt and Quantitative Easing (QE)) and a summation of important points. This review will wrap up by answering a question of its own. Why would a socialist care about a book about capitalism?
I could go with the obvious answer, for the same reason Marx’s magnum opus is title On Capital. But Marx’s critique is fundamentally different from Cullen’s book. Cullen doesn’t want to tear down the system. His understanding was built for his personal edification and to earn him more money in the volatile markets that hit after the 2008 crash.
Instead we can use his understanding to fend off charges that social programs and NASA are too expensive by pointing out that can only be measured in inflation and that we currently have too little of that. While that is heartening it is equally scary that the US government has ceded the job of money making to the market that still invests in made up financial products in search for profits. Which is an excellent argument for public banks to take back that function and reduce the harm that finance can do to the people.
These are important and valuable things for Socialists, Progressives and sane policy makers to understand, which is why I think it is a must read. This is a book worth referencing again and again and will be worth keeping until the economic system fundamentally changes. In my humble opinion Cullen Roche is the Adam Smith of our time.
Cullen Roche’s blog is at pragcap.com, a link to an earlier version of chapter 7 of the book can be found on SSRN, along with his excellent papers on Hyperinflation (which is caused by a collapse in production not by excess money printing; which is an effect) and QE.
http://astrosocialist.com/review-of-p...
Here at the Astrosocialist we generally focus on the future. But part of being able to speculate cogently about the future is having an understanding of the past and present. It is with that in mind that I picked up Pragmatic Capitalism by Cullen Roche. My Review is after the break.
Cullen Roche is a finance guy who got disillusioned with Wall Street (proof enough that he is not a greed obsessed psychopath) and retreated to San Diego to try and do right by his clients. Along the way he has gone from a mainstream understanding of economics, through a Modern Money Theory (MMT) phase, to an understanding of economics that is both original and, in my view, one that seems most borne out by the facts, Monetary Realism (MR).
An explanation of what MR is Chapter 7 of the book. Before that point Cullen discusses what money is, with an emphasis on the scale of moneyness. Money is told to be akin to a theater ticket. The ticket itself isn’t valuable, only the show is. Like wise things that have high moneyness are things that get you access to more goods. Bank deposits have high moneyness because they are easy to use for purchases. Gold on the other hand is easy to trade for cash or bank deposits but you can’t spend it in stores generally so it has a lower moneyness. (Try to take a gold nugget to a McDonald’s the poor clerk will be stupefied.)
Cullen then goes on for several chapters about finance. For me this was the most tedious and least interesting part of the book though perhaps that is because I do not yet own stock. One message stood out though about investing in yourself, things that will increase your income and skills, a college education, like the one I am pursuing, being the perfect example of that.
The book picks up again when Cullen gets into behavioral finance, the subtle irrationalities of investors and how to avoid the money losing traps borne thereof. This leads into the previously mention chapter on MR.
This chapter is really important because of Cullen’s approach. He wants to describe the system without making biasing prescriptions of how to change it, like Da Vinci did with the human body. I’m not sure that I would be to such a task but it is valuable work for understanding what the current economic system in liberal democracies looks like. It is a poor policy maker that make decisions off of a poor understanding of current operations.
There are several key lessons from this chapter:
Banks produce most money by issuing loans. In this way loans create deposits and banks control the money supply.
Sovereign autonomous currency issuers, like the US government and federal reserve together, can’t go bankrupt. The same way that any entity that can print money would be able to use that ability to pay off their credit cards.
Instead governments are inflation constrained, they can print so much money nobody will use it anymore.
The rest of the book deals with some economic myth busting (particularly dealing with the US debt and Quantitative Easing (QE)) and a summation of important points. This review will wrap up by answering a question of its own. Why would a socialist care about a book about capitalism?
I could go with the obvious answer, for the same reason Marx’s magnum opus is title On Capital. But Marx’s critique is fundamentally different from Cullen’s book. Cullen doesn’t want to tear down the system. His understanding was built for his personal edification and to earn him more money in the volatile markets that hit after the 2008 crash.
Instead we can use his understanding to fend off charges that social programs and NASA are too expensive by pointing out that can only be measured in inflation and that we currently have too little of that. While that is heartening it is equally scary that the US government has ceded the job of money making to the market that still invests in made up financial products in search for profits. Which is an excellent argument for public banks to take back that function and reduce the harm that finance can do to the people.
These are important and valuable things for Socialists, Progressives and sane policy makers to understand, which is why I think it is a must read. This is a book worth referencing again and again and will be worth keeping until the economic system fundamentally changes. In my humble opinion Cullen Roche is the Adam Smith of our time.
Cullen Roche’s blog is at pragcap.com, a link to an earlier version of chapter 7 of the book can be found on SSRN, along with his excellent papers on Hyperinflation (which is caused by a collapse in production not by excess money printing; which is an effect) and QE.
May 25, 2015
this is a good book on macroeconomics. the author made a sincere point about how we should look at investing (which is merely allocations of savings).
the best investment that we'll make is on ourselves and not on stocks etc. Investments in stocks should be viewed more as an allocation of savings than as an investment. And with it, the objective changes.
there are a few things that the author mentioned that I'll be exploring
the best investment that we'll make is on ourselves and not on stocks etc. Investments in stocks should be viewed more as an allocation of savings than as an investment. And with it, the objective changes.
there are a few things that the author mentioned that I'll be exploring
May 20, 2018
the first three chapters of this book was really easy to get into with relatable examples provided. however, as i continued reading, it got increasingly repetitive which made it quite boring. the best parts were chapters 1-3 & 6 imo. chapters 9 & 10 were summaries - which would be helpful for future reference, I guess. but, seeing how long it took me to read this, I don't think I'll have the urge to pick this up again.
March 9, 2024
An overview of modern money, portfolio construction, and behavioral finance. Leagues better than the average investment book and has a huge focus on global macro rather than the whole idea of value investment or other investment fads that worked in a less globalized world. Perhaps one of the best pop-investment books available.
April 27, 2024
Full of keynesian propaganda. I almost feel like contaminated. ‘Qe does not lead to inflation, debt spiral is myth, usd is so great’ etc etc.
Gotta read some Mises and Rothbard to detox.
Gotta read some Mises and Rothbard to detox.
Read
January 9, 2025Published in 2014, author Cullen Roche’s stated purpose is to give those with a weak grasp of financial concepts improved financial literacy in order to make better choices. (Sidenote by Mr. Roche: Though Charlie Munger said that those who continue to learn have a huge advantage, knowledge alone is not sufficient for success - the key is to use that knowledge to change behavior and alter habits.)
Akin to other high-level overview books about economics and finance, this one opens with a brief lesson about what money is, namely a social construct and medium of exchange. Most of today’s money exists not as physical cash but rather as a debit / credit ledger. Mr. Roche also reminds us that money and wealth are not synonymous - the analogy he uses is how an admission ticket to the opera and the opera itself are not the same.
Mr. Roche also makes a distinction between saving and investing. Buying stocks, mutual funds, bonds, etc. is not investing but rather a form of savings - almost all such purchases are done on the secondary market, and so the companies who originally issued the securities don’t see additional money (other than the price of the security going up due to higher demand). Investing, by contrast, is spending done for future production (e.g., directly in your own business, in a rental property, etc.). The relevance of this is Mr. Roche’s suggestion to have a savings portfolio (cash, stocks, bonds, mutual funds) as well as an investment portfolio (e.g., real estate holdings, entrepreneurship, side hustles, continued job training and education, etc.), with the latter hopefully providing multiple income streams. On the subject of savings, it is imperative that we understand the dangers of inflation, which perniciously eats away at our wealth. Taxes and expenses are also important to take into account when evaluating returns. The S&P 500 has averaged an inflation adjusted return of 8%, which is 6% after taxes and expenses.
In terms of diversification, in order to protect yourself against uncertainty and tail risk (i.e., 2+ standard deviations in terms of likelihood) those without a wealth / money manager might consider something close to Harry Browne’s Permanent Portfolio, which is a mix of stocks (market expansion exposure), bonds (deflation protection), cash (recession protection), and gold / precious metals (inflation protection). If one holds too much gold, commodities, (and nowadays cryptocurrencies), such could be dangerous because their value stems from the belief that someone else will pay for them rather than productive use or growth. In other words, an asset that has no cash-flow stream but whose users view it as valuable is due to perception rather than utility.
Another observation by Mr. Roche is how the movement of the majority of financial markets today result from macroeconomic trends rather than company specific events, yet most market participants focus their approach on news about those companies. Perhaps this is why the ‘sage’ advice today is to invest in low cost index funds (called the “lazy macro approach”) over individual securities.
A couple chapters are devoted to human irrationality and our inability to appreciate risk. A very pernicious yet commonly held sentiment is that risk equals reward. The key takeaway from Daniel Kahneman’s Prospect Theory (aka Loss Aversion) is that human beings are irrational when confronted with potential for losses. Notably, Warren Buffet’s advices about being greedy when others are fearful and vice-versa is just another way of saying to profit off the emotional miscalculation of others. One way to prevent yourself from making the same mistake twice or more is to consistently ask yourself to identify the last thing you were wrong about.
Chapter 7 is the most technically dense and provides the reader with a framework of the modern monetary system, including how and why fractional reserve banking and quantitative easing (QE or what many inarticulately refer to as “money printing”) are part of said system. While it is true that inflation results from too much money chasing too few goods, some QE is arguably necessary to prevent stagnation. A healthy economy, like a healthy body, involves the continual flow of money (blood) throughout the system. Although it is also technically true that the purchasing power of the dollars has declined 95% over the past 100 years due to inflation, such has been outpaced by the surge in productivity and innovation. True wealth is having more time to consume more goods and services and do the things we want in our lives.
Finally, what was super interesting was Mr. Roche’s attempt to debunk what he considered common misconceptions and myths:
Myth: Your house is a great investment.
Roche: Since the mid 1980s, the average real return on real estate prices is about 0.74% per year, whereas stocks have been at 5.79%. View your home as two components, the house and the land on which it sits. Although the land will generally appreciate, the house is a depreciating asset. This is not to say that a house is not a bad purchase - you get to live in it and you accordingly offset what you would have paid in rent. There are also other intangible benefits to being a homeowner.
Myth: The US government’s balance sheet is like a household balance sheet and we should be gravely concerned about the national debt.
Roche: The US government’s full faith and credit and the primacy of the US Dollar keeps things less dire than what doomsayers claim. Although the US will never go bankrupt as a result of its ability to “print money” without truly devaluing its currency, this doesn’t mean that there won’t be reprisal - we may very well witness “De-Dollarization” in our lifetimes.
Myth: The Fed is a cabal controlled by the heads of greedy banks which exists to enslave us.
Roche: The Fed is basically a clearing house, whose primary purpose is to ensure that the US payments system functions properly. Although some may criticize its professed dual mandate of curbing inflation and promoting employment as overreach, we need to pick our poison. A completely free market that could result in catastrophic bank failures and economic depressions vs. nationalized banking and letting the government run the entire monetary system. The current Fed is a compromise between the two.
Myth: Hyperinflation is solely due to excessive money printing
Roche: Yes, printing too much money can cause inflation and even hyperinflation, but it is not the sole cause. A collapse in production and resulting supply chain problems, as well as the lack of monetary sovereignty play huge roles.
Finally, with respect to the book’s title, Myth: Capitalism should be allowed to remain unfettered.
Roche: By their nature, capitalists are monopolists. Allowing them to go unchecked could result in the same type of problematic leviathan as an unchecked government. The problem with well-intended attempts at regulation are blindspots, perverse incentives, and all too common unintended consequences.
Akin to other high-level overview books about economics and finance, this one opens with a brief lesson about what money is, namely a social construct and medium of exchange. Most of today’s money exists not as physical cash but rather as a debit / credit ledger. Mr. Roche also reminds us that money and wealth are not synonymous - the analogy he uses is how an admission ticket to the opera and the opera itself are not the same.
Mr. Roche also makes a distinction between saving and investing. Buying stocks, mutual funds, bonds, etc. is not investing but rather a form of savings - almost all such purchases are done on the secondary market, and so the companies who originally issued the securities don’t see additional money (other than the price of the security going up due to higher demand). Investing, by contrast, is spending done for future production (e.g., directly in your own business, in a rental property, etc.). The relevance of this is Mr. Roche’s suggestion to have a savings portfolio (cash, stocks, bonds, mutual funds) as well as an investment portfolio (e.g., real estate holdings, entrepreneurship, side hustles, continued job training and education, etc.), with the latter hopefully providing multiple income streams. On the subject of savings, it is imperative that we understand the dangers of inflation, which perniciously eats away at our wealth. Taxes and expenses are also important to take into account when evaluating returns. The S&P 500 has averaged an inflation adjusted return of 8%, which is 6% after taxes and expenses.
In terms of diversification, in order to protect yourself against uncertainty and tail risk (i.e., 2+ standard deviations in terms of likelihood) those without a wealth / money manager might consider something close to Harry Browne’s Permanent Portfolio, which is a mix of stocks (market expansion exposure), bonds (deflation protection), cash (recession protection), and gold / precious metals (inflation protection). If one holds too much gold, commodities, (and nowadays cryptocurrencies), such could be dangerous because their value stems from the belief that someone else will pay for them rather than productive use or growth. In other words, an asset that has no cash-flow stream but whose users view it as valuable is due to perception rather than utility.
Another observation by Mr. Roche is how the movement of the majority of financial markets today result from macroeconomic trends rather than company specific events, yet most market participants focus their approach on news about those companies. Perhaps this is why the ‘sage’ advice today is to invest in low cost index funds (called the “lazy macro approach”) over individual securities.
A couple chapters are devoted to human irrationality and our inability to appreciate risk. A very pernicious yet commonly held sentiment is that risk equals reward. The key takeaway from Daniel Kahneman’s Prospect Theory (aka Loss Aversion) is that human beings are irrational when confronted with potential for losses. Notably, Warren Buffet’s advices about being greedy when others are fearful and vice-versa is just another way of saying to profit off the emotional miscalculation of others. One way to prevent yourself from making the same mistake twice or more is to consistently ask yourself to identify the last thing you were wrong about.
Chapter 7 is the most technically dense and provides the reader with a framework of the modern monetary system, including how and why fractional reserve banking and quantitative easing (QE or what many inarticulately refer to as “money printing”) are part of said system. While it is true that inflation results from too much money chasing too few goods, some QE is arguably necessary to prevent stagnation. A healthy economy, like a healthy body, involves the continual flow of money (blood) throughout the system. Although it is also technically true that the purchasing power of the dollars has declined 95% over the past 100 years due to inflation, such has been outpaced by the surge in productivity and innovation. True wealth is having more time to consume more goods and services and do the things we want in our lives.
Finally, what was super interesting was Mr. Roche’s attempt to debunk what he considered common misconceptions and myths:
Myth: Your house is a great investment.
Roche: Since the mid 1980s, the average real return on real estate prices is about 0.74% per year, whereas stocks have been at 5.79%. View your home as two components, the house and the land on which it sits. Although the land will generally appreciate, the house is a depreciating asset. This is not to say that a house is not a bad purchase - you get to live in it and you accordingly offset what you would have paid in rent. There are also other intangible benefits to being a homeowner.
Myth: The US government’s balance sheet is like a household balance sheet and we should be gravely concerned about the national debt.
Roche: The US government’s full faith and credit and the primacy of the US Dollar keeps things less dire than what doomsayers claim. Although the US will never go bankrupt as a result of its ability to “print money” without truly devaluing its currency, this doesn’t mean that there won’t be reprisal - we may very well witness “De-Dollarization” in our lifetimes.
Myth: The Fed is a cabal controlled by the heads of greedy banks which exists to enslave us.
Roche: The Fed is basically a clearing house, whose primary purpose is to ensure that the US payments system functions properly. Although some may criticize its professed dual mandate of curbing inflation and promoting employment as overreach, we need to pick our poison. A completely free market that could result in catastrophic bank failures and economic depressions vs. nationalized banking and letting the government run the entire monetary system. The current Fed is a compromise between the two.
Myth: Hyperinflation is solely due to excessive money printing
Roche: Yes, printing too much money can cause inflation and even hyperinflation, but it is not the sole cause. A collapse in production and resulting supply chain problems, as well as the lack of monetary sovereignty play huge roles.
Finally, with respect to the book’s title, Myth: Capitalism should be allowed to remain unfettered.
Roche: By their nature, capitalists are monopolists. Allowing them to go unchecked could result in the same type of problematic leviathan as an unchecked government. The problem with well-intended attempts at regulation are blindspots, perverse incentives, and all too common unintended consequences.
May 27, 2019
Ce livre est une introduction et une vulgarisation de la macroéconomie à l'usage de tout investisseur (comprenez: boursicoteurs) qui voudraient rentrer dans le milieu étrange de l'économie, dont tout le monde parle sans jamais définir les mots et le fonctionnement. On y parlera de dynamique économique, de politique monétaire, et plus basiquement des mythes qui entourent le fonctionnement de l'économie actuelle.
La chose que j'ai le plus apprécié est l'immense humilité qui est dans ce livre: bien que Cullen Roche soit tout à fait rompu à cet art de l'investissement, il évite soigneusement tout ton condescendant et explique de façon épurée et détaillée de quoi il s'agit quand on parle de dette publique, d'inflation, le fonctionnement d'une monnaie et qu'il démonte des "mythes" qui font encore aujourd'hui la moitié des publications grand public. J'ai énormément appris sur ces points, et j'ai également apprécié qu'il se soit retenu de vendre une quelconque idéologie particulière, se concentrant sur la description du fonctionnement de l'économie à grande échelle.
Bref, une bonne lecture sur le sujet. Pour ma part j'ai sauté le chapitre sur le "portefeuille" et me suis concentré sur celui qui explique la macroéconomie. Je recommande.
La chose que j'ai le plus apprécié est l'immense humilité qui est dans ce livre: bien que Cullen Roche soit tout à fait rompu à cet art de l'investissement, il évite soigneusement tout ton condescendant et explique de façon épurée et détaillée de quoi il s'agit quand on parle de dette publique, d'inflation, le fonctionnement d'une monnaie et qu'il démonte des "mythes" qui font encore aujourd'hui la moitié des publications grand public. J'ai énormément appris sur ces points, et j'ai également apprécié qu'il se soit retenu de vendre une quelconque idéologie particulière, se concentrant sur la description du fonctionnement de l'économie à grande échelle.
Bref, une bonne lecture sur le sujet. Pour ma part j'ai sauté le chapitre sur le "portefeuille" et me suis concentré sur celui qui explique la macroéconomie. Je recommande.
July 16, 2022
This book felt off. Especially the part about governments increasing their money supply not causing inflation because of the fractional reserve banking system. It just feels very counter intuitive and like a complicated answer to a simple question. This creates more confusion than clarity.
Maybe I’m just too uninformed about how the macro economy works with its collective balance sheets. But I don’t get it and it feels very off. Increasing the money supply greater than the growth of the economy can only make the stuff in that economy reach new and higher equilibriums meaning higher prices. At least that’s my simplistic view of the matter.
This book feels like an elaborate answer to the question: so does printing money create inflation? And the answer is so complicated with such sophisticated language and terminology that you become too shy to keep asking the stupid questions that are so important for understanding.
Maybe I’m just too uninformed about how the macro economy works with its collective balance sheets. But I don’t get it and it feels very off. Increasing the money supply greater than the growth of the economy can only make the stuff in that economy reach new and higher equilibriums meaning higher prices. At least that’s my simplistic view of the matter.
This book feels like an elaborate answer to the question: so does printing money create inflation? And the answer is so complicated with such sophisticated language and terminology that you become too shy to keep asking the stupid questions that are so important for understanding.
June 5, 2022
I almost snoozed through the first 6 chapters and then - boom - the 7th chapter was a killer. It's one of the best (if not the best) texts on how the modern monetary system works and it dispels numerous myths about modern money and banking that can be found in university courses on economics and finance, mainstream financial media, etc. Chapter 7 is what makes this book a worthwhile read. I would probably skip the rest cause it's quite basic, unless the reader is not very acquainted with the fundamentals of investing and macroeconomics.
December 3, 2022
I'm rating three but my opinion not really true for people that it's first book in concept of economy it's a very very good book and I think before they work in forex market or any financial market it's good to them read this book because this book it's so simple for began in financial market reading and but this book don't have any more information for that people who worked in financial market for several years and because of that I suggest to these people skip this book this is not book you need to read this is for some people that knew in this field
October 18, 2022
First portion of the book talks mainly about investor psychology and is concerned with dispelling some myths and setting realistic expectations about investing. This book has a nice section on the monetary system, explaining for the layman how money is created (almost overwhelmingly by bank deposit creation / loans, NOT by central bank reserve printing), although the text is not a comprehensive overview of this topic. Book stays clear of political bias and is true to its title in being pragmatic, however, the organization of the book in sum total is not totally intuitive to me, and seems more like a loosely organized collection of the author's foundational thoughts on investing rather than a text with a specific thesis. Don't expect to be taught how to analyze a security or the macroeconomy at large. Roche emphasizes strongly the importance of macroeconomic thinking, but does not go into what specifically to think about, other than the major trend of globalization -- again, veering from the political. He leaves that up to the reader.
And personally, I find myself in strong agreement that the investment landscape is increasingly one that requires closer attention to events happening elsewhere, as the extremely financialized, globalized system in which we live leaves us more vulnerable than ever to crises abroad. I am curious, for example, how the hyperinflation in Turkey and Lebanon will affect things, as well as the balance of payments crises in Sri Lanka and elsewhere, not to mention the Russian elephant in the room and this ultimate US vs. China showdown that we seem to be building up to like some once in a century UFC event. If the system hasn't broken and we're not on the active warpath by 2030, my view becomes more optimistic. For now it's mainly a nervously-wait-and-see approach
And personally, I find myself in strong agreement that the investment landscape is increasingly one that requires closer attention to events happening elsewhere, as the extremely financialized, globalized system in which we live leaves us more vulnerable than ever to crises abroad. I am curious, for example, how the hyperinflation in Turkey and Lebanon will affect things, as well as the balance of payments crises in Sri Lanka and elsewhere, not to mention the Russian elephant in the room and this ultimate US vs. China showdown that we seem to be building up to like some once in a century UFC event. If the system hasn't broken and we're not on the active warpath by 2030, my view becomes more optimistic. For now it's mainly a nervously-wait-and-see approach
January 31, 2020
I do not know much when it comes to financial activities (such as saving, stock market, investment, etc.) but what I really like about this book is that it really simplifies a lot of these things and does its best to make as understandable as possible.
At first when I bought this book from a discount shelf I decided to give it a go without knowing what exactly is the book about (I mean it could be a financial book which it was or it could have been a political book) and I can say that I have no regrets whatsoever finishing and enjoying this book very much. I would highly recommend this book to anyone who wants to learn more about economics and finances without having to take up a class (I mean it is good to take up a class but if you cannot afford to or do not have the time, I would say that this book is a very good alternative to that).
At first when I bought this book from a discount shelf I decided to give it a go without knowing what exactly is the book about (I mean it could be a financial book which it was or it could have been a political book) and I can say that I have no regrets whatsoever finishing and enjoying this book very much. I would highly recommend this book to anyone who wants to learn more about economics and finances without having to take up a class (I mean it is good to take up a class but if you cannot afford to or do not have the time, I would say that this book is a very good alternative to that).
March 30, 2021
The nice thing about this book is that it’s extremely informational (chapter 7 and 8 are very good).
The bad thing is that the book is also in desperate need of a good editor. Some of the earlier chapters are very badly written. If it wasn’t for this sin, this book would have been a 5 stars book for me.
The bad thing is that the book is also in desperate need of a good editor. Some of the earlier chapters are very badly written. If it wasn’t for this sin, this book would have been a 5 stars book for me.
October 4, 2021
Algunos conceptos interesantes, y mucha paja. Además, se plantea como un texto introductorio pero luego da conceptos por sentados de modo que si no los conoces vas a tener dificultades en entender el resto de la información. Es el típico libro demasiado sencillo para unos conocimientos medios y un poco duro para gente con pocos conocimientos, que es su aparente público objetivo.
January 5, 2020
Content is just okay - pretty basic, nothing insightful. The writing, however, is atrocious and overwhelms any basic knowledge that might be learned from reading the book. Do yourself a favor and go read something else.
December 6, 2020
Excelente libro!
Si necesitas entender cómo en realidad funciona el sistema monetario actual, en especial la Reserva Federal, éste libro es lo que necesitas. Específicamente el capítulo 7.
Si necesitas entender cómo en realidad funciona el sistema monetario actual, en especial la Reserva Federal, éste libro es lo que necesitas. Específicamente el capítulo 7.
January 3, 2024
Excellent coverage and explanation of Modern Monetary Theory. Good overview on how one needs to be wired up to think about a Macro. The book does not give any investment ideas but gives you the ecosystem and how they interact with each other.
January 13, 2024
Macro macro macro macro. Read about a chapter a month. Appreciate the lens and it’s a good counter to someone like Morgan housel who focuses more on the “eternal financial truths”, this one is more about the shifting winds of markets and the consequences of them
January 14, 2018
Excellent. A clear explanation of the high-level structure of the US financial system. Directly addresses several persistent myths and misunderstandings.
September 3, 2020
This book explains how capitalism works. It describes macro aspects and breaks myths about the economy and money.
February 1, 2021
A bit repetitive but outlines an overview of macroeconomy and how the economic machine works in a clear way.
September 19, 2022
Interesting analysis of the monetary system
October 19, 2022
A far better use of time than any contemporary economics class
February 19, 2024
Holds up.
July 2, 2024
Good book as an overview of how the Global and American financial system works
September 25, 2014
Understand the System (reality) as it is, not as it should be or as we want it to be
This book is really three books in one:
1.- Investing basics and common behavioral biases
2.- Popular myths and misconceptions.
3.- Monetary System
For those who often read Roche's blog you will be familiar with some of the ideas and concepts on this book. And for the rest I'm positive it will give you a different and fresh perspective about several topics.
Here are some of the myths, misconceptions and other topics the book talks about:
The oversimplification of Buffett and his investment style.
Active Funds, Hedge Funds, commissions and conflict of interests.
Fundamental and Technical analysis
Passive and Active Investing
Buy and Hold
Commodities as an investment
Real Estate as an investment
Modern Portfolio Theory
The Long Term
Debt (USA case)
QEs
Hyperinflation, deflation, desinflation.
Central Banks and Private Banks
Free Market and Capitalism
IS-LM model
Investments and Savings.
As you can see there are a lot of interesting topics and all of them are well addressed and are easy to understand. The core of the book is about today's Monetary System, though.
I don't agree on some few things outlined in the book. Nonetheless it is worth reading because not only it's always healthy to read intelligent arguments that differ from our view, but also it gives us the chance to think and ask questions that otherwise we wouldn't have done. As a matter of fact the book really challenged some of my investing ideas of which I was pretty sure, like the nonlinear, nonstationary and discrete aspect of Investing for the long run.
No doubt this is a great book to read in order to make better financial decisions and to develop more informed opinions.
This book is really three books in one:
1.- Investing basics and common behavioral biases
2.- Popular myths and misconceptions.
3.- Monetary System
For those who often read Roche's blog you will be familiar with some of the ideas and concepts on this book. And for the rest I'm positive it will give you a different and fresh perspective about several topics.
Here are some of the myths, misconceptions and other topics the book talks about:
The oversimplification of Buffett and his investment style.
Active Funds, Hedge Funds, commissions and conflict of interests.
Fundamental and Technical analysis
Passive and Active Investing
Buy and Hold
Commodities as an investment
Real Estate as an investment
Modern Portfolio Theory
The Long Term
Debt (USA case)
QEs
Hyperinflation, deflation, desinflation.
Central Banks and Private Banks
Free Market and Capitalism
IS-LM model
Investments and Savings.
As you can see there are a lot of interesting topics and all of them are well addressed and are easy to understand. The core of the book is about today's Monetary System, though.
I don't agree on some few things outlined in the book. Nonetheless it is worth reading because not only it's always healthy to read intelligent arguments that differ from our view, but also it gives us the chance to think and ask questions that otherwise we wouldn't have done. As a matter of fact the book really challenged some of my investing ideas of which I was pretty sure, like the nonlinear, nonstationary and discrete aspect of Investing for the long run.
No doubt this is a great book to read in order to make better financial decisions and to develop more informed opinions.
October 27, 2015
This book is an outstanding explanation of how the monetary system and financial markets work. Should be required reading for anyone who spouts an opinion in public about the Fed or economic policy. A plethora of myths are done in with lucid facts and rationale, including those perpetuated in B-schools. If you wonder why the monetarist rationale you were given in Econ 101/201 has failed in the predicted inflation (given quantitative easing) since 2008, this book will help you understand. Cullen Roche provides an apolitical, realistic explanation of how it all works without putting any school of thought on a pedestal or subjecting any school to demonization. His effort is focused on describing how it does work rather than how it should work, or what policies should be followed. Even in briefly discussing capitalism and socialism, he sticks to the wisdom that the best solution between competing ideas usually consists of taking the best parts from each.
September 20, 2014
I wanted to read this book mainly for Cullen Roche's ideas about endogenous money and some of his advice for investors. That is what I take away from this book. People should really learn the distinction between allocating savings and investing, because I feel the confusion between the two concepts is responsible for bad lawmaking, especially in fiscal policy. The endogenous money chapter is very useful for economic-textbook writers, who should really ditch the money multiplier myth and the 'inflation is created by central banks' myth.
Minor nuisances: The book itself doesn't really have a theme, it might as well have been a collection of his blog posts. Some chapters were interesting, some a lot less. In the final chapters, Roche just chews on his ideas a bit more, they are totally obsolete.
Minor nuisances: The book itself doesn't really have a theme, it might as well have been a collection of his blog posts. Some chapters were interesting, some a lot less. In the final chapters, Roche just chews on his ideas a bit more, they are totally obsolete.
February 1, 2017
It has some good investing advice and an interesting approach to investing and saving that was useful for me. But I think this book falls short in it's goal which was explaining why macroeconomics and big picture concepts matter to the investor. He tries to tell us what he thinks is important about finance and economics but not how or why it is important. I left without a good understanding of how the concepts explained in the book will help me or are relevant. He is also very repetitive, repeating things "understanding the monetary system, macroeconomics and big picture are more important than ever" over and over again. I did learn some stuff but not what I was expecting going in.
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