Are You Building the Capital of Brazil?

Twenty years ago, while Germany was just starting to undertake its massive pay-off of debt interest from the First World War, Brazil also faced an overwhelming problem: 80% inflation. Chana Joffe-Walt of NPR’s Planet Money team wrote a story about how the Brazilians used a creative system of making fake money real to stabilize their currency and reduce inflation. She contextualizes the problem with a carton of eggs: if you buy them at $1 to bake your birthday cake, they’ll cost $1000 by the time your next one rolls around. Continue reading

The Golden Fleece

With all the sovereign debt crises currently rocking the global economy, including the impending default of the U.S. Government, a small but vocal minority has been gaining traction advocating the abolishment of the Federal Reserve and a return to the gold standard. This is perhaps understandable given the great uncertainty in the Dollar and the American economy, but nonsensical nonetheless.

The most important thing to know about value of gold in the monetary policy debate is that it is a rock that is found buried in the ground. Its value is determined by the dynamics of supply and demand just like any other commodity. As such, it is no more or less vulnerable to speculative asset bubbles or price manipulation in financial markets. Continue reading

Social Security Explained

Social Security was never meant to be something to be relied upon for retirement funds. Passed in 1935 as a part of Franklin Roosevelt’s New Deal program, it soon became entrenched within American politics.

The program was essentially a forced version of budgeting during the turmoil of the Great Depression. By law, the federal government required employees to give them a certain percentage of paychecks. After a while, this amount of money would accumulate into a fund that could be used by the employee. The fund was never intended to be a permanent fixation in the federal budget, but as people came to be dependent on it as a means for retirement funds, the more strained Social Security became. Continue reading

The Wisdom of Generation Y

When we think of wisdom when it comes to the economy and business most people think of company CEO’s and Board members. After all, these are the individuals who have walked the walk; they have been through the battles of business and the job market and survived. Their experiences must have given them some sort of right to be “wise”. The post – recession job market however, is very different than the one all of these people’s experiences come from. In this new unsettled economy it may actually be the younger generation of the workforce that can lend some advice, or wisdom, to the older generations. Continue reading

National Debt Part 2

In part two of the national debt topic, I want to examine what the possible leaders of the United States say they will do about the deficit. The previous blog showed just how big of a problem the national debt is and why this matters for average Americans. While both candidates say they want to reduce the deficit, which plan is more likely to really reduce the country’s yearly deficit and get the nation closer to a balanced budget? Continue reading

National Debt Part 1

Continuing a focus on election issues for this November, I wanted to take a look at another hot-button issue this election season: the national debt and deficit. Most people understand that this concept of the government holding masses amounts of debt is probably not the best thing, but few really know why and how it affects them. In the first of a two part series I will focus not only on the current situation of the debt of the United States, but also what this means to it’s citizens and future Americans. Continue reading

Bail Out Facts

As election season gets in full swing, I wanted to take some time to look at some of the financial issues that are sure to come up. We all know politics, elections, and even politicians themselves are prone to glossed over facts that make positions look better. Therefore it is important for every voter to know the facts before the election rolls around so that they can make the most educated decision possible. The decisions from the leaders of this country are important, whether you are just starting out on your credit journey or have years of experience with credit and debt. The first topic of conversation: the infamous bailout. Continue reading

Investment Banks: Why Do We Need Them?

If you asked an average American on the street to list the top five most disliked professions it would be very likely that something along the lines of “Wall Street Investment Banker” would be high on the list. Investment bankers are often perceived as lazy, unoriginal, and greedy. People think they reap huge wages and bonuses from the hard work of other individuals, corporations, and even countries. This perception has only been reinforced since the financial crisis that started in 2007. Continue reading

The Buffett Rule

The tax code of the United States is some of the most complicated legal writings in the entire world and because of this tax season is one of the most stressful times for most Americans. It has also recently become the subject of much debate as American politics begin to heat up for the 2012 election season. One issue that Democrats have thrust to the forefront of the election is how eventual Republican Presidential nominee Mitt Romney pays a lower income tax than many middle-income families. President Obama recently began focusing on a new tax rule dubbed “the Buffett rule” that aims to adjust for this disconnect that allows many millionaires to pay lower income taxes than many middle class families. Continue reading