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Finance #1: Intro, Real vs. Financial Assets

The productive power of an economy is determined by the real assets of an economy such as its land, buildings, machines, and the knowledge that can be used to produce goods and services. Real assets are what bring true value to an economy whereas financial assets, such as stocks and bonds.

Financial assets essentially determine the allocation of wealth and are claims to the income generated by the real assets mentioned earlier. Investors place their wealth into various securities provided by companies. This money, in turn, is then used to pay for real assets such as plant equipment, technology, and/or inventory.

In this series, I will be focusing primarily on financial assets, financial markets, and the investment process in general. My intentions are to discuss bonds and debt securities, equity such as common stock, and derivative securities as well as other concepts, investment tactics, and formulas to help you (the investor) make your decisions. I’ll also try to keep my posts shorter than my ones of the past while making them more informative and applicable to each of you. Thanks for reading!

 
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Posted by on June 14, 2011 in Finance/Investment 101

 

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6 Minute Management Course

Provided by Adi Gulati

6 Minute Management Course
Lesson 1:
A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings.
The wife quickly wraps herself in a towel and runs downstairs.
When she opens the door, there stands Bob, the next-door neighbor.
Before she says a word, Bob says, ‘I’ll give you $800 to drop that towel.’
After thinking for a moment, the woman drops her towel and stands naked in front of Bob, after a few seconds, Bob hands her $800 and leaves. 
The woman wraps back up in the towel and goes back upstairs.
When she gets to the bathroom, her husband asks, ‘Who was that?’
‘It was Bob the next door neighbor,’ she replies.
‘Great,’ the husband says, ‘did he say anything about the $800 he owes me?’
Moral of the story:
If you share critical information pertaining to credit and risk with your shareholders in time, you may be in a position to prevent avoidable exposure.
 
Lesson 2:
A priest offered a Nun a lift.
She got in and crossed her legs, forcing her gown to reveal a leg.
The priest nearly had an accident. After controlling the car, he stealthily slid his hand up her leg.
 
The nun said, ‘Father, remember Psalm 129?’
The priest removed his hand but, changing gears, he let his hand slide up her leg again.
 
The nun once again said, ‘Father, remember Psalm 129?’
The priest apologized ‘Sorry sister but the flesh is weak.’
Arriving at the convent, the nun sighed heavily and went on her way.
On his arrival at the church, the priest rushed to look up Psalm 129.
 
It said, ‘Go forth and seek, further up, you will find glory.’
Moral of the story:
If you are not well informed in your job, you might miss a great opportunity.
 
Lesson 3:
A sales rep, an administration clerk, and the manager are walking to lunch when they find an antique oil lamp.
They rub it and a Genie comes out. The Genie says, ‘I’ll give each of you just one wish.’
‘Me first! Me first!’ says the admin clerk. ‘I want to be in the Bahamas, driving a speedboat, without a care in the world.’
 
Puff! She’s gone.
‘Me next! Me next!’ says the sales rep. ‘I want to be in Hawaii, relaxing on the beach with my personal masseuse, an endless supply of Pina Coladas and the love of my life.’
Puff! He’s gone.
‘OK, you’re up,’ the Genie says to the manager. The manager says, ‘I want those two back in the office after lunch.’
Moral of the story:
Always let your boss have the first say.
 
Lesson 4
An eagle was sitting on a tree resting, doing nothing.
A small rabbit saw the eagle and asked him, ‘Can I also sit like you and do nothing?’
 
The eagle answered: ‘Sure, why not.’
So, the rabbit sat on the ground below the eagle and rested. All of a sudden, a fox appeared, jumped on the rabbit and ate it.
Moral of the story:
To be sitting and doing nothing, you must be sitting very, very high up.
 
Lesson 5
A turkey was chatting with a bull.
‘I would love to be able to get to the top of that tree’ sighed the turkey, ‘but I haven’t got the energy.’
 
‘Well, why don’t you nibble on some of my droppings?’ replied the bull. ‘They’re packed with nutrients.’
The turkey pecked at a lump of dung, and found it actually gave him enough strength to reach the lowest branch of the tree.
The next day, after eating some more dung, he reached the second branch.
Finally after a fourth night, the turkey was proudly perched at the top of the tree.
He was promptly spotted by a farmer, who shot him out of the tree.
Moral of the story:
Bull S__t might get you to the top, but it won’t keep you there.
 
Lesson 6
A little bird was flying south for the winter. It was so cold the bird froze and fell to the ground into a large field.
While he was lying there, a cow came by and dropped some dung on him.
As the frozen bird lay there in the pile of cow dung, he began to realize how warm he was. The dung was actually thawing him out!
He lay there all warm and happy, and soon began to sing for joy.
 
A passing cat heard the bird singing and came to investigate.
 
Following the sound, the cat discovered the bird under the pile of cow dung, and promptly dug him out and ate him.
Morals of the story:
(1) Not everyone who sh*ts on you is your enemy.
(2) Not everyone who gets you out of sh*t is your
friend.
(3) And when you’re in deep sh*t, it’s best to keep your mouth shut!
THUS ENDS THE six MINUTE MANAGEMENT COURSE

 
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Posted by on June 1, 2011 in Uncategorized

 

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Political Science for Dummies

My aunt forwarded this to me some time ago and it was so funny, I thought I’d share it with all of you🙂


Political Science for Dummies

DEMOCRAT


You have two cows.
Your neighbor has none.
You feel guilty for being successful. 
You push for higher taxes so the government can provide cows for everyone. 
 

REPUBLICAN


You have two cows.
Your neighbor has none.
So? 
 

SOCIALIST


You have two cows.
The government takes one and gives it to your neighbor.
You form a cooperative to tell him how to manage his cow. 
 

COMMUNIST


You have two cows.
The government seizes both and provides you with milk.
You wait in line for hours to get it.
It is expensive and sour. 
 

CAPITALISM, AMERICAN STYLE


You have two cows.
You sell one, buy a bull, and build a herd of cows. 
 

BUREAUCRACY, AMERICAN STYLE


You have two cows.
Under the new farm program, the government pays you to shoot one, milk the other, and then pour the milk down the drain. 
 

AMERICAN CORPORATION


You have two cows.
You sell one, lease it back to yourself and do an IPO on the 2nd one.
You force the two cows to produce the milk of four cows.
You are surprised when one cow drops dead.
You spin an announcement to the analysts stating you have downsized and are reducing expenses.
Your stock goes up. 
 

FRENCH CORPORATION


You have two cows.
You go on strike because you want three cows.
You go to lunch and drink wine.
Life is good. 
 

JAPANESE CORPORATION


You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
They learn to travel on unbelievably crowded trains.
Most are at the top of their class at cow school. 
 

GERMAN CORPORATION


You have two cows.
You engineer them so they are all blond, drink lots of beer, give excellent quality milk, and run a hundred miles an hour.
Unfortunately, they also demand 13 weeks of vacation per year. 
 

ITALIAN CORPORATION


You have two cows but you don’t know where they are.
You break for lunch.
Life is good. 
 

RUSSIAN CORPORATION


You have two cows.
You drink some vodka.
You count them and learn you have five cows.
You drink some more vodka.
You count them again and learn you have 42 cows.
The Mafia shows up and takes over however many cows you really have. 
 

TALIBAN CORPORATION


You have all the cows in  Afghanistan , which are two.
You don’t milk them because you cannot touch any creature’private parts.
You get a $40 million grant from the  US  government to find alternatives to milk production but use the money to buy weapons. 
 

IRAQI CORPORATION


You have two cows.
They go into hiding.
They send radio tapes of their mooing. 
 


POLISH CORPORATION


You have two bulls.
Employees are regularly maimed and killed attempting to milk them. 
 

BELGIAN CORPORATION


You have one cow.
The cow is schizophrenic.
Sometimes the cow thinks he’s French, other times he’s Flemish.
The Flemish cow won’t share with the French cow.
The French cow wants control of the Flemish cow’s milk.
The cow asks permission to be cut in half.
The cow dies happy. 
 

FLORIDA CORPORATION


You have a black cow and a brown cow.
Everyone votes for the best looking one.
Some of the people who actually like the brown one best accidentally vote for the black one.
Some people vote for both.
Some people vote for neither.
Some people can’t figure out how to vote at all.
Finally, a bunch of guys from out-of-state tell you which one you think is the best looking cow. 
 

CALIFORNIA CORPORATION


You have millions of cows.
They make real   California  cheese.
Only five speak English.
Most are illegal.
Arnold  likes the ones with the big udders.


 
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Posted by on May 31, 2011 in Recreational

 

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Economic History, Part VII: A Lesson in Inflation and Monetary Policy



The above chart tracks the United States’ inflation rate since January of 2000 through February of 2011 taking monthly averages. The deflation experienced between 2009 and January of 2010 is believed by many to be explained by the Phillips Curve, which “represents the relationship between the rate of inflation and the unemployment rate” (Source A).

But what exactly is inflation?

According to Investopedia, inflation is the rate at which general level of prices for goods and services is rising and purchasing power is falling. Central banks attempt to stop severe inflation as well as severe deflation in an attempt to keep the excessive growth of prices to a minimum (Source B).

So, as you can tell by the chart, it looks like the inflation rate is relatively low with respect to 2006-2008 levels. With rising prices and an increasing need for consumers to cut back at home or search for substitutes, many are clamoring for lower prices. There are several different economic policies a government can enact to reduce inflation:

  1. Monetary Policy – Increase interest rates.
    1. Raises the costs of borrowing which leads to reduced spending.
    2. Increased interest rates makes saving a more appealing prospect.
  2. Supply Side Policies – Privatization and deregulation.
    1. Make firms more competitive and more productive to keep costs low.
    2. Works in the long run and won’t necessarily bring prices down today.
  3. Fiscal Policy – Tax policies.
    1. Increasing taxes and reducing government spending will reduce aggregate demand.

Naturally, there are many other policy options to be considered as everything seems almost inextricably linked in economics, but these will do for our purposes.

But what if the U.S. government decided to simply reduce the value of our money by 20% overnight? To put this in perspective, imagine that your $1 bills were now worth 80¢, your $5s worth $4, your $20s a mere $16 and so on and so forth. Well, this is essentially what happened in 18th century France.

Granted, the monetary regime in place at the time is not the same as ours today. In 1726 France, when these events took place, the government was using a variety of gold and silver coins which didn’t indicate a specific value, like our alternate fiat money. The intent behind the French government’s actions was to lower general price levels, which they thought were too high.

What the government didn’t anticipate, however, were the adverse effects it would have due to expectations. Once the value of their specie dropped, the people lost faith in the coins and held their wares as collateral against the expectation of further diminution. Goods were worth more than the money if there were further decreases in the value of the coins. Business owners had stocked up their inventory based off of yesterday’s prices, so selling them without increasing prices would, in fact, be counterproductive and harmful to their own well-beings.

A local official in Marseille described the situation from a more personal perspective, “the diminution has suspended all business and increased the prices of foodstuffs and merchandise. We never doubted that the first diminution would have this effect…all sensible people are convinced that the third diminution will begin to have some effect and progressively things will return into balance with specie, as long as all are convinced of the King’s firm and serious intention not to increase after the diminutions, It is up to the Court to see how it can persuade foreigners and the King’s subjects that this intent is serious, firm, and unwavering.”

This graph essentially describes what took place in France. First, the government reduced the value of the money. Output and commerce suffered significant setbacks and the aggregate demand curve shifted to the left to reach point B for a significantly longer period of time than was expected by the government. This was due to a combination of expectations that the value of the money was going to continue to fall and because of the contracts which hadn’t yet been renegotiated.

To support his proposition that a law be passed reducing all leases passed since January 1720, the mayor of Nantes said, “In vain would one ask merchants to cut the prices of their wares by a third if one does not reduce by a third the leases on their shops.”

Only after the government finally came out and set an official price did France undergo market clearing and the economy reach point C on the long run aggregate supply curve, as indicated by the arrows.

So inflation, it turns out, has a great deal to do with expectations. Business owners might, for example, anticipate that transportation costs are going to increase due to rising oil prices and bring up their prices. Before you know it, all costs and prices might go on the rise, all due to expectations. Something to be careful of, however, is that history shows that prices are much easier to increase than they are to bring down.

Sources:

Source A: http://www.econlib.org/library/Enc/PhillipsCurve.html

Source B: http://www.investopedia.com/terms/i/inflation.asp

Source C: http://www.econtalk.org/archives/2009/02/meltzer_on_infl.html (podcast)

Source D: Chart Source http://www.tradingeconomics.com/economics/inflation-cpi.aspx?Symbol=USD

Source E: http://www.frbsf.org/publications/economics/letter/2009/el2009-12.html – philips curve

Source F: Policy http://www.economicshelp.org/blog/inflation/economic-policies-to-reduce-inflation/

 
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Posted by on April 12, 2011 in Economic History

 

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Economic History Part VI: Oil Prices and the Economy, OPEC and Stagflation

Source A

There’s no denying that gas prices are on the rise and many are attributing it to the unrest in the Middle East and North Africa in countries such as Libya and Iran. These high prices are certainly disconcerting for most all as 90% of Americans say they usually drive to get to their destinations (Source B).

But are there broader implications for this phenomenon? What effect do oil prices and supply have on the U.S. economy?

In the early 1970s, OPEC—the Organization of Petroleum Exporting Countries—coordinated to reduce the supply of oil which effectively doubled the world price. The subsequent increase in oil prices caused stagflation in most industrial countries, including the United States (Source D).

OPEC Member Countries

Source C

Here are the effects of the change in oil prices on the inflation and unemployment rates in the United States:

Source D

The trends are readily apparent upon a scan of the above data. The 68% increase in oil prices in 1974 resulted in significantly higher inflation and unemployment. After these initial supply shocks, after the economy had stabilized itself, 1979-1981 saw further spikes in the price of oil which again led to double-digit inflation and unemployment.

It was thanks only to the weakening state of OPEC, due to political turmoil among the member countries, that oil supplies were freed up and stagflation was reversed (Source D). Oil prices dropped by 44.5% in 1986 and the United States experienced one of its lowest inflation rates ever as well as a decreased unemployment rate.

Nowadays, however, OPEC itself has less of an effect on economic fluctuations within the United States due to how we’ve shifted to a more service-based economy over the manufacturing basis of our past. This means that we’re going to have to experience greater increases in oil prices for there to be macroeconomic repercussions, but it definitely does seem as if we’re heading in that direction.

Click here for a purely monetary explanation of the stagflation of the 1970s (it’s a link to a NBER-hoted PDF file).

Sources

  1. Source A: http://gasbuddy.com/gb_retail_price_chart.aspx
  2. Source B: http://abcnews.go.com/Technology/Traffic/story?id=485098&page=1
  3. Source C: http://www.opec.org/opec_web/en/data_graphs/40.htm
  4. Source D: Mankiw, Gregory. Macroeconomics.
 
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Posted by on April 8, 2011 in Economic History

 

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Economic History Part V: Factors of Production, The Black Death

Gross Domestic Product, or GDP, is one of the most reliable—or at least most popular—measures for how well an economy is doing. GDP is the total market value of all final goods and services provided in a country in a given year, equal to total consumer, investment, government spending, and net exports (Source A).

Y = C + I + G + NX

But what determines the total production of goods and services? To answer this question, we turn to the factors of production and the subsequent production function. Factors of production are the inputs used to produce goods and services, the most important of which are capital and labor (Source B). This is not a very difficult concept to grasp, as capital is the set of tools that workers use—trucks, drills, buildings, etc.—and labor is quite simply the time people spend working. Capital is denoted by K and labor is denoted by L.

The relationship between the two inputs is expressed through the production function, which states how output is a function of labor and capital:

Y = F(K,L)

Another critical piece of knowledge for anyone interested in GDP is that the total output of an economy is equivalent to its total income, both of which are essentially considered the same thing by economists. And since the factors of production and the production function together determine the total output of goods and services, they also essentially determine national income (Source B).

The distribution of national income is determined by factor prices, which are the amounts paid to the factors of production which, for our purposes, are capital and labor. To put it in perspective, we are talking about the wages that laborers earn and the rent which owners of capital collect.

So what is the relationship between factor prices and factor quantities?

Well I would argue that the best way to find out is through real-life examples. Let’s take a look at 14th century Europe, or more specifically, the 1348 outbreak of the bubonic plague. “The Black Death visited unprecedented mortality rates on Europe, realigning relative values of factors of production, and in consequence the costs and benefits of defining and enforcing property rights…overall one-quarter to one-third of the continent’s population perished in half a decade, although in extreme instances some locales were utterly depopulated…” (Source C).

Due to the massive depopulation taking place in these countries at this time, the marginal product of labor, or MPL, rose significantly. Marginal product of labor is the extra amount of output gained from one extra unit of labor, holding the amount of capital fixed. The economy became unbalanced as feudal society adapted very poorly to the rapid changes taking place; many medieval institutions were destroyed (Source C).

The Black Death left most land and physical capital unscathed, and the effects on the animal population were not so significant, but the human casualties, again, were astounding. Naturally, this led to an increase in the marginal product of labor because the amount of labor fell—the sharp increase in real wages support this fact (Source C). The reduction in the labor force resulted, in fact, in the doubling of real wages (Source B).

The severe drop in the labor force reduced the marginal product of capital as well. As fewer people were available to farm the land, adding more land and other physical capital would not necessarily have increased their output, so land rents fell (Source C).

Essentially, the production function measures technology and not economic behavior. Click here if you’d like an alternate explanation with a practice problem!

  1. Source A: http://www.investorwords.com/2153/GDP.html
  2. Source B: Macroeconomics, by Gregory Mankiw.
  3. Source C: http://www.jstor.org/stable/10.1086/345566?&Search=yes&searchText=death&searchText=black&list=hide&searchUri=%2Faction%2FdoAdvancedSearch%3Fq0%3Dthe%2Bblack%2Bdeath%26f0%3Dall%26c1%3DAND%26q1%3D%26f1%3Dall%26acc%3Don%26wc%3Don%26Search%3DSearch%26sd%3D%26ed%3D%26la%3D%26jo%3D%26dc.Economics%3DEconomics%26dc.Finance%3DFinance%26dc.PoliticalScience%3DPolitical%2BScience%26dc.PublicPolicy%2526amp%253BAdministration%3DPublic%2BPolicy%2B%2526amp%253B%2BAdministration&prevSearch=&item=12&ttl=17407&returnArticleService=showFullText
 
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Posted by on April 7, 2011 in Economic History

 

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Economic History IV: Alexander Hamilton, Path Dependency, and the Financial Crisis

 

Today, public opinion concerning the state of the American economy is unstable at best. There are many indicators which would seem to agree with such a conclusion, the foremost being the growing figure displayed by the National Debt Clock in Manhattan, New York City which has surpassed $14 trillion. In order to put this massive number in perspective for us, those responsible for maintaining the clock have divided the $14 trillion plus dollars equally between all U.S. citizens to determine the debt per citizen, which is currently in excess of $45,000.

There are, however, many variables that go into these calculations—to which the public is generally oblivious—variables such as federal tax revenue, federal spending, and money creation to name a few. With the next round of presidential elections in sight and the recent power exchange in the House of Representatives this last November of 2010, we are coming to find that we are a country divided on the question of how to approach the handling of our economy and personal finances from both macro and microeconomic perspectives.  But this is a bipartisan issue, and the best thing that we could do as a nation is become better informed on the groundwork upon which our economy is based.

Path dependence is the idea that one decision in history can impact, and even determine, the future in a very big way. Several examples of path dependent outcomes are the destruction of the steam locomotive industry, the triumphs of Bill Gates over IBM, and more recently, the adoption of DVDs as a medium over their VHS alternative. Path dependence works in the same way even in the more general case of the U.S. economy and the country’s governmental policies. We can trace contemporary issues back to actions of the past to gain a firmer understanding of what the root causes of said issues are, and what the next best step is in addressing them.

“History repeats itself because no one was listening the first time.” – Anonymous

“Those who cannot learn from history are doomed to repeat it.” – George Santayana

As part of the K-12 curriculum in the United States, students learn that the Founding Fathers of the country were the men who signed the Declaration of Independence, took part in the Revolutionary War, and established the U.S. Constitution. Among these men are George Washington, Benjamin Franklin, Thomas Jefferson, and Alexander Hamilton, though the list goes on and on. It is truly a shame that little emphasis is placed on recognizing the individual contributions to the country made by at least the most prominent of men within this group, as there is much value to acquiring such knowledge.

Oftentimes in our education, we focus on the Who, What, When, and Where. We fail, however, to ask ourselves the most vital question: Why? For instance, why does the concept of debt even exist? Why would foreign countries, foreign citizens, and U.S. citizens loan money to the federal government? Why do we even have a central government to which we pay taxes? The greatest and most detrimental mistake we can make is to accept our surroundings as the norm when we really should be questioning the status quo and arriving to creative solutions to circumvent outstanding problems or even simply to improve our current situations. We can link the current financial crisis back to the very establishment of our country.

Few people are privy to the entirety of Alexander Hamilton’s contributions to the country. Not many know, for example, that he and George Washington first became acquainted after Hamilton impressed the rebel generals in the Revolutionary Way with the professionalism of his New York artillery company over several key battles. After accepting the position of aide-de-camp with the rank of Lieutenant Colonel, Hamilton became Washington’s key confidante. Even as he took on increasing amounts of responsibility in his service with the commander-in-chief of the Continental Army, Hamilton began exploring solutions for policy and administration, casting a critical eye on the Second Continental Congress and their limitations as a governing body.

Hamilton’s Federalist groundings came to be during this time. He believed that congress was overly preoccupied with the various state interests to function effectively. His next step of action was to contact Governor George Clinton of New York to express his views on how there was a great need for a strong central government, particularly if the nation hoped to ever become an international power. The contacts which he had established during his time as Washington’s aide-de-camp came to use as he called for changes to the current government.

The financial plan he outlined back in the 18th century—before he even truly held public office—sounds almost eerily familiar. To secure revenue, he recommended securing foreign loans, taxing businesses and farmers. He advocated an economy based on fiat money and creating a national bank which would act in a manner akin to competitive businesses and even explored ways of turning the national debt into an advantage.

After turning down two nominations for positions within the state assembly, Hamilton returned to the public eye after he wrote the charter for, and became a founding member of, the Bank of New York in 1784. Almost two years after signing the constitution, Hamilton was named the nation’s first Secretary of the Treasury. He became, in essence, responsible for steering the country from a crippling debt to a sustainable power capable of funding professional armies, encouraging growth, and achieving purchasing power. Hamilton followed through with several of the ideas which were mentioned before and exacted a tax on imports, or tariffs, as a means of accumulating some wealth and protecting domestic business interests.

Although all of his policymaking during his time as Secretary of State has impacted us today in one way or the other, the credit system he put into play is perhaps the most relevant to our current crisis. Interestingly enough, it was this facet of his fiscal reform package which helped the country become the international superpower it is today. Thanks to Hamilton’s support of a fluid paper currency, as opposed to landed wealth, investors began filling the treasury’s coffers. His vision of private wealth going towards beneficial public uses was being realized. Hamilton remained true to his Federalist ideals as his policies continued to encourage international trade and domestic industrialization, using the British as a model for success.

Most are familiar with the term bonds, but just to cover all of our bases, bonds are “A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used…to finance a variety of projects and activities” (Investopedia). In 1790, Hamilton submitted a report in support of public credit to Congress in which he stated that the country’s debt would be converted into interest bearing bonds which, after a predetermined amount of time, would mature, luring investors. Clearly, it was vital that the interests of the public creditors were aligned with those of the central government if Hamilton’s system was to work.

Eleven months later, Hamilton submitted a second report to Congress concerning established credit, though this time the central focus was the bank he had proposed. He had pushed for private ownership to prevent the corruption which was prevalent in the Bank of England. The purposes of such a bank, for example, included—but were not limited to—maintaining a uniform currency, lending money and investing in industry and private businesses, loaning money to the government, and acting as a safe store for the nation’s money.

Just when it seemed as if Hamilton had accounted for everything as he forced his agenda through Congress and President Washington, the young nation experienced a crash in 1792. Groups of speculators, with money loaned to them by banks, began to play the market. Their risky, and sometimes foolish and extravagant, practices finally caught up to them when the market crashed, bankrupting the speculators. As the securities began to lose value, Hamilton created the Sinking Fund Commission, which was responsible for purchasing government stocks.

Does this sound familiar? Well it should, because in 2008, Congress authorized the Treasury Department to spend $700 billion through the Emergency Economic Stabilization Act in an attempt to reverse the declining state of the U.S. economy at the time; this number has since been reduced to $475 billion (Bailout ProPublica). And in 2010, the Federal Open Market Committee of the central bank declared that it would buy $600 billion in mortgage-backed securities in an attempt to reverse the declining state of the U.S. economy at the time (MarketWatch).

 
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Posted by on April 5, 2011 in Economic History

 

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