Little Island Economics — Full Book Capability Entry
Trigger and Do Not Trigger
Applies to: Inquiries and tasks related to the capability domain of this book (see Intent column in the routing table below).
Does not apply to:
- Real-world investment, credit, tax, legal, or medical advice
- Distillation of other books or cross-book knowledge merging
- Treating political evaluations of characters in the book as independently verified facts
Core Principles (Always available; answer overview questions with just this section)
- Real output, savings, and return on capital are the foundation for judging growth; nominal spending does not equal capacity increase.
- Loans must be classified by purpose, source of funds, future output, and potential loss, not just willingness to borrow.
- Currency and prices must be layered; separate the author's definition of inflation, real-world statistics, and facts pending verification.
- Trade and external savings must track goods flows, capital flows, and future repayment relationships simultaneously.
- Aid, exit, and restructuring after a crisis each have costs; beneficiaries and loss bearers must be identified.
- This book is an analogical argument and cannot replace modern statistics, institutional analysis, or professional advice.
Capability Routing (Read this table first; load exactly 1 capability card per intent)
| User Intent | Primary Read | Supplementary / Notes |
|---|---|---|
| Explain sources of economic growth; assess savings, capital, and productivity; judge whether an investment expands output | references/capabilities/productive-capital-growth.md | references/capabilities/loan-purpose-triage.md, references/capabilities/investment-cost-benefit.md, references/capabilities/money-price-diagnosis.md |
| Determine whether a loan should be borrowed or lent; compare business, consumer, and emergency loans; review repayment sources and collateral | references/capabilities/loan-purpose-triage.md | references/capabilities/productive-capital-growth.md, references/capabilities/savings-interest-investment.md, references/capabilities/credit-bubble-mechanism.md |
| Explain low or high interest rates; determine if a rate cut stimulates investment; identify interest rate distortions | references/capabilities/savings-interest-investment.md | references/capabilities/loan-purpose-triage.md, references/capabilities/credit-bubble-mechanism.md, references/capabilities/money-price-diagnosis.md |
| Determine if a claim is inflation; explain price drops or purchasing power changes; differentiate CPI and money supply | references/capabilities/money-price-diagnosis.md | references/capabilities/savings-interest-investment.md, references/capabilities/trade-external-balance.md, references/capabilities/credit-bubble-mechanism.md |
| Analyze trade deficits or surpluses; explain specialization and comparative advantage; track foreign savings and reserve currencies | references/capabilities/trade-external-balance.md | references/capabilities/money-price-diagnosis.md, references/capabilities/credit-bubble-mechanism.md, references/capabilities/crisis-reallocation.md |
| Analyze housing or asset price increases; assess risks of government-guaranteed loans; sort out refinancing and leverage | references/capabilities/credit-bubble-mechanism.md | references/capabilities/loan-purpose-triage.md, references/capabilities/savings-interest-investment.md, references/capabilities/crisis-reallocation.md |
| Compare aid, stimulus, and exit; analyze post-crisis unemployment and asset prices; determine how to handle debt | references/capabilities/crisis-reallocation.md | references/capabilities/credit-bubble-mechanism.md, references/capabilities/trade-external-balance.md, references/capabilities/money-price-diagnosis.md |
| Evaluate infrastructure or equipment projects; compare investment plans; determine if job creation justifies a project | references/capabilities/investment-cost-benefit.md | references/capabilities/productive-capital-growth.md, references/capabilities/loan-purpose-triage.md, references/capabilities/crisis-reallocation.md |
| Analyze wages and skill value; choose between apprenticeship, borrowing for equipment, or working; design income improvement experiments | references/capabilities/labor-value-wage.md | references/capabilities/loan-purpose-triage.md, references/capabilities/productive-capital-growth.md, references/capabilities/investment-cost-benefit.md |
Non-Capability Queries:
- Book name/author/chapter/full overview → references/overview.md
- Term explanations → references/glossary.md
- Quick reference for decision rules (when original text is not needed) → references/cheatsheet.md
- Full intent and keyword index (check here first for intents not covered in this table) → references/capability-index.md
Loading Rules
- For each task, first read this file, then load 1 capability card according to the routing table; load at most 2 cards when the task clearly spans domains.
- For overview/book name questions, do not load any capability card; answer with the 'Core Principles' section and overview.md.
- If an intent cannot be matched by this routing table or the capability-index.md, clearly state that it falls outside the scope of this book and do not force an adaptation.
Boundaries and Stop Conditions
- When key inputs such as output, cost, cash flow, or time are missing, and a meaningful judgment cannot be made, first list the gaps without guessing values.
- When the user requests real-world statistics or multi-country macroeconomic conclusions and the current materials do not provide verifiable data, indicate that updated information is needed and stop extrapolating.
- When the user requests specific buy/sell decisions, loan approvals, or policy implementation decisions, only provide the analytical framework from the book and hand off to the appropriate qualified professional.