Saw David Graeber, author of Debt: The First 5,000 Years, on Up with Chris Hayes. He had an interesting perspective on debt. Within the current financial crisis, we tend to think this is something unique, that having such a high debt to Gross Domestic Product (GDP) ratio never happened before. But it has...
So these are the trade-offs...
I found this series of videos from a lecture by Albert Bartlett to be quite enlightening.
Jon Stewart's solution to economic crisis - While interviewing Lawrence Lindsey, author of What the President Should Know, Jon Stewart's shares his solution for the economic crisis: Instead of paying bail out money to banks, pay the money to consumers, who will pay it to the banks to help reduce the consumers' loan debt. That way everyone (except for taxpayers) wins: the banks get the money AND consumers gets debt relief.
Lindsey, a finance savvy guy, sort of agrees, but argues that paying the consumers rewards consumers for bad behavior ("Oh, I can get a loan and get money from the Government to pay it off"). As Stewart quickly pointed out, same can be said for the banks.
Bad Faith Economics - by Paul Krugman - Nobel Prize Laureate for Economics Paul Krugman rebutts conservative Republican arguments against President Obama's economic stimulus plan. In his New York Times editorial, Krugman's declares that Republicans are arguing in "bad faith." Below is a summary with some added commentary...
Ways to Hedge against Falling U.S. Dollar - If all your money and investments are in U.S. dollars, the falling value of the U.S. dollar is a huge concern. After record stock market and real estate market declines, the next big theft of your money will be devaluing of the U.S. dollar--in simpler terms, inflation. Your dollar simply won't buy as much as it did before if the value of the U.S dollar continues to fall. Some consider this the most insidious of taxes.
So you need insurance, currency insurance. You need some way to hedge against the falling U.S. dollar. Below are some options suggested in Several ways to hedge against falling dollar by Kathleen Pender.
Dilbert on the economic crisis - Brilliant! But I think the economic crisis is more like having a few sick cows along with some healthy cows, then grinding up all the cows into a big pile of hamburger and distributing the hamburger all over the world.
How do you know if the hamburger you received does not contain any of the sick cows?
You don't. Which is the problem with making hamburger this way (which we do, BTW), and with the "securitizing" of home mortgages.
Arithmetic, Population, and Energy - by Albert A. Bartlett - Fascinating yet simple illustration of why continued growth (of the population, of oil consumption, etc.) cannot go on forever. Intuitively, that much is obvious. Not so obvious is how near impossible it is for us (as a society) to recognize when we've gone too far, when our resources have been consumed to the point that it's too late to do anything about it.
The reason it's hard to recognize that point has everything to do with the simple yet profound implications of how compounding growth rates behave. Compounding growth rates are our friend when receiving interest. Compounding growth rates are our enemy when it comes to consumption and population growth.
This third video of the series carries a devastating message. The core problem of our unsustainable economy is the rate of population growth and the rate of resource consumption. When we think about China and India and their impact on global consumption in the coming years, it's essential to remember that what brought us to this point was U.S. consumption.
Permit me to issue and control the money of the nation, and I care not who makes the laws.
~ Mayer Anselm Rothschild, Banker
I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Where does money come from? - As best I can tell, money is literally created from debt. So when a bank is established, it makes a deposit into a Federal reserve bank. The amount they deposit determines how much money the bank can (initially) loan. So if a bank puts $10,000 into the Federal reserve, they can loan something like 10 times that, or $100,000. In other words, the act of depositing into Federal reserve gives them the right to loan $100,000. Where does the extra $90,000 come from?
That's the sleight of hand that no one talks about.
Why understanding economics is hard: This is a wonderful, thought-provoking article that has implications for all relationships, economic and otherwise.
Link is dead, so read cached copy below.