Economics from a people first point-of-view

Last time we heard financial reporters say what QE2 is supposed to do. Truly these writers looked like “the blind men trying to describe an elephant.” Economists, on the other hand, are easily to be able to see the whole picture. Economists are nearly unanimous is feeling that this round of quantitative easing will accomplish next to nothing

Why is that? To see, let’s put together the pieces of QE that make up a whole elephant. Then let’s see why our elephant might not get us to here we want to go.

Why the Fed chose QE2 to rescue our elephant

Continue reading →

Are you confused about what QE 2 is supposed to accomplish? If so, please don’t blame yourself. According to our economy’s ‘doctors,’ QE2 is supposed to cure everything from asthma to zebra-itis!

Not since “friendly fire” has there been a euphemism shrouded in obfuscation like “quantitative easing”! Here, straight from the London Financial Times and the Wall Street Journal are ten completely conflicting explanations of what QE2 might  – or might not –  do.
Continue reading →

Previously in Brucenomics I’ve written about Robert Kiyosaki’s book series Rich Dad Poor Dad. In it, Robert distinguishes between “assets” (things that bring money into your pocket) and “liabilities” (things that take money out of your pocket.)

Fittingly enough, in the early part of this century when he began his series, Kiyosaki used houses as an example. Is Your House an Asset? Here’s what he said. A house you buy for yourself is a liability. A house you buy to rent to others at a profit is an asset.

It’s the same thing–a house. It’s the way a thing is used is that creates different outcomes for its owner. And as it turned out, houses as liabilities set off the financial crisis for their owners, then for the owners of mortgage-backed securities (MBSs), then for investors in collateralized debt obligations (CDO) derivatives based on those MBSs, and then for all the rest of us.

All too often when times get tough, the first impulse is to hang onto your money (or for many people their credit cards) and not spend. Robert Kiyosaki’s message is basically that this is not the right thing to do. What you need to do is look at what assets you possess (including that house or credit card) and see how they can bring money into your pocket. Continue reading →