Life Cyclists

This book is the first in a series of discussions about the 'great minds' in the history and theory of finance. It establishes a framework upon which all the subsequent discussions rest. It investigates how people make financial decisions over time, and why those decisions change as we age and as our circumstances change. The work of the individuals featured in this book has created the basis for what we now know as 'personal finance'. These theorists answered for us the following six questions: Why do people save? How does inflation affect savings? Why do additional savings not always translate into new investment? How does a household's savings pattern change over its lifetime? Why is the national savings rate quite volatile over the business cycle? Likewise, why are individual savings also volatile? We examine these questions (and their answers) through the context of the lives of Irving Fisher, John Maynard Keynes, Franco Modigliani, and Milton Friedman, collectively termed 'The Life Cyclists'. These men were extraordinary, not because they made an unfathomable leap in understanding, but rather because they looked at something in a different way - and caused us all to forever look at the problem in this new way. That is the hallmark of a great mind.