Intangible investments — Nobel Prize winner Edward Prescott analyzes the current U.S. market

The Argonaut In the midst of Congress’ discussions on healthcare reform, Nobel Prize economist Edward Prescott spoke about America’s economic future at Washington State University’s Smith Center Undergraduate Education building Thursday.
“Over time, things have been getting better for the modern humans who are dominating the world, making the world a better place for our species,” Prescott said.
Prescott said economists can examine current economic constraints by reviewing past market turmoil and expansion. He said he sees a regime change reoccurring after the 2008 recession and recently in 2016.
“(Economics) is an exciting field. So much progress is being made over the last 18 years. We know much more now — well, the few of us,” Prescott said.
According to Investors’ Business Daily, the U.S. stock exchange has gradually risen since November 2016. However, Prescott said forecasting future investments can be a predicament, especially in retirement. He said baby boomers are retiring, often with a lack of savings to access, and Millennials may also suffer this fix as well.
“Our retirement is in grievous shape,” Prescott said. “My undergraduates … I make them do a present value (model) of their time endowment.”
This means that for Millennials to retire by age 67, Prescott said they have to start working at 22. He said another question is how much that person is worth, because the value might shrink over time.
Prescott said wars often cause dramatic fluctuations in the market and increase Gross Domestic Product (GDP), especially during the economic mayhem.
“Sometimes there are things like depression and there are sometimes (World War II) when we make and build a lot of guns and have 10 million people, young men, over in Europe,” Prescott said. “They weren’t making cars then — just jeeps and tanks.”
By the 1960s, a different paradigm ruled supreme — macroeconomics, Prescott said. The Great Depression proved economists knew so little about the market, and its ...


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