Much to our surprise, everything turned out to be connected to everything else. The rest is history. And it’s a history that continues to play out, and will play out for years to come.

Some of you may have taken that boring, senior-level “Econ” class in high school. You may have a rudimentary understanding of economics from that or some other class or from an uncle or grandparent who got a kick out of telling you about growing up as a kid during the Great Depression. You may have learned something along the way about supply and demand. You understood the difference between macroeconomics and microeconomics. You know that a good economy means a strong GDP and low unemployment. You have an idea that when those things are going well, you’re more likely to have some spending money in your wallet and that your 401(k) and other retirement plans will grow at least a bit. You know enough to fear inflation and that someday—inevitably—there will be yet another recession, who knows when or why. But that’s about it.

Now those relatively basic economic concepts have been set upon their ear. During the Great Recession, those news flashes were about “deleveraging,” “deflation,” “credit default swaps,” “asset-backed securities,” “hedge funds,” and “globalization.” I think we’d all agree—these were alarming words to hear even as we heard them day in and day out. As the economy jerked into reverse, we had the “impossible” collapse of big names like Bear Stearns and Lehman Brothers and the near-collapse of the banking system itself, with threats of twenty-dollar bills being no longer available in your local ATM machine. We got “medicine” in the form of unprecedented federal bailouts—the so-called “TARP” bailout of $700 billion given to all those “too big to fail” lending institutions (almost all of which has been paid back, by the way). Even as the economy mends, the Federal Reserve chairman Ben Bernanke and his equivalents at the European and Japanese central banks continue to do what’s possible to stimulate their economies, although now the news is about “tapering”—that is, in plain English, reducing—these efforts. Our president and other world leaders talk about the economy constantly—good news or bad. No doubt, it’s a complex, interconnected, and fast-paced world of change.

Before the Great Recession, the powers that be at the Federal Reserve, the SEC, and elsewhere for many years seemed to have control over things—if the economy went a little cool, they could stimulate it back to life; when it ran a little hot, they could cool it. They spoke of the “Goldilocks economy”—not too hot, not too cold. The medicine worked. Everyone expected it to work. However, in the past ten years, and especially during the crisis years of the Great Recession, the patient became less responsive to the usual medicine. So what’s the good doctor to do? Increase the dosage, naturally. That meant lower interest rates and greater financial stimulus for longer periods of time. As of mid-2013, the Fed was still injecting $85 billion a month into the economy through bond purchases, keeping interest rates artificially low in an end-run effort to stimulate the economy and employment. Unfortunately, the “side effects”—the unintended consequences—could include a bond bubble or another real estate bubble, and many are worried today about catching a deadly inflationary virus as we move forward. Too, the stock market has advanced to new all-time highs anticipating the recovery, but how much of this recovery is “real” versus a response to artificial stimulus, that is, printing money? We may have solved some of the problems and dealt with some of the tough questions, but there is still a lot more to deal with.

Bottom line: It seems as if the more you know, the more you don’t know, and since this stuff messes with your future, you’d better learn what’s going on. So that’s why the second edition of 101 Things Everyone Should Know about Economics comes to the table once again at just the right time.

This book is not a crash course on economics, although some may decide to use it that way. Most definitely it isn’t a textbook. Instead, it is intended to provide a handy reference to the very real concepts and terms in use in today’s economy. It connects things you read about and hear about to things you need to know about and do. Or not do. It’s more than a study guide for your economic life. It is intended to help you understand how economic concepts affect you. It is intended to help you make sense of what is good for you and bad for you, both now and in the future. It is intended to help you ask the right questions and ultimately take the right actions.

By no means is this book, like so many other books and articles you read, designed to help you get rich or earn more money or even save money. And, very importantly, this guide is not meant to help you understand just today’s economy and its opportunities and pitfalls. This book is meant to help you be more knowledgeable, more aware, and more prepared going forward. Prepared to recognize the next crisis. Prepared to deal with it. Prepared to come out better than you did the last time. Prepared to come out better than you otherwise would have.

That preparation is important. Today’s schools turn out graduates at all levels prepared to handle a career, perhaps multiple careers. But they still don’t—much to our detriment—offer preparation for economic life. Even the “home economics” courses of the 1950s are gone; there is virtually nothing to help you live prudently or efficiently or economically, save for the vast assortment of books and magazines that tell you where to put your money this year. I believe a more basic understanding is necessary before you can trust yourself to make the right decisions. Today’s education and media leave a huge gap in that area. 101 Things Everyone Should Know about Economics, 2nd Edition is the fastest, friendliest, and most effective way to fill the gap.

THE ECONOMY IN SEVEN STEPS

Whether it’s a book or a business presentation, I believe any complex topic can be broken down into between three and seven important pieces. That principle applies to this edition, as well as the first. The first chapter acts a refresher to common economic terms and then the remaining seven discuss the 101 economic concepts. I describe the concept, fast facts, what you should know, and why you should care about it. Common sense, start to finish. Beyond the first chapter, here is how the book is laid out:

Chapter 2: Economy and Economic Cycles. A look at the economy as a whole as well as its current condition. This chapter offers a little bit of history, with special focus on the ups and downs, the booms and busts, why they happen, and how they affect you.

Chapter 3: Money, Prices, and Interest Rates. What money is, what it does, and what happens to it, including inflation, deflation, and stagflation, and the cost of money—interest rates and the dynamics around them.

Chapter 4: Banks and Central Banking. Once we understand money, it’s time to learn about banks—the different kinds of banks and how the banking system works, with special emphasis on the Federal Reserve and its relationship to the banks and the economy at large.

Chapter 5: Government and Government Programs. With the basic system outlined, who are the big government players in the economy, and what do they do? What are the most important laws and policies, why are they there, and how do they affect us?

Chapter 6: Economic Schools and Tools. From government and government policy, we take another step toward the “big picture.” What are the major schools of thought for managing or guiding the economy? How do they work? How do they explain what has happened, what should happen, or what’s going to happen with our economy?