Bill Cutshall’s Weblog

May 5, 2009

Happy Birthday Karl Marx

May 5th, 1818, saw the birth of Karl Heinrich Marx, a revolutionary thinker (literally).  Marx was a philosopher, political economist, historian, political theorist, sociologist, humanist and revolutionary and is credited as the founder of communism.  In his 1875 Critique of the Gotha Program he states that once society reaches its Communistic ideal, it can proudly hang a banner proclaiming “From each according to their ability, to each according to their need.”  Happy Birthday you brilliant crazy dead Communist. (more…)


February 20, 2009

More of the Same

Should I be worried that our nation’s calls for change are being answered with more of what got us into this mess coupled with depression-era economic strategies?  Should it concern me that FDR’s failed policies are being touted as the roadmap for how we are going to turn our economy around?  Should the fact that the most liberal-voting member of Congress has become our President and is taking 50 billion dollars from people that *can* pay their mortgages and is giving it to people that can’t cause me concern that we are becoming a socialist nation? (more…)

February 17, 2009

Evil Geniuses or Incompetent Idiots

Right now I am trying to figure out whether the current Financiapocalypse is a result of Democratic subterfuge, Republican conniving, or just plain old-fashioned incompetence.  Sliced any way the situation still looks bad. (more…)

December 23, 2008

What Comes After Zero?

Filed under: Economics — billcutshall @ 5:33 am
Tags: , , , ,

With the Federal Reserve’s interest rate near zero some may wonder what tools are still available to bolster our economy and return it to health.  For those interested in monetary policy (and that’s a pretty small percentage of the population even in these times) Robert E. Lucas Jr. has written one of the best quick summaries of what is happening to our economy, what is being done to change it, and why it should work that I have read lately.

My poor summary of the explanation is that people are currently uncertain, risk averse, and looking for high-quality investments as stable as cash.  The Fed’s response is to buy up high-risk investments with cash thereby reducing the quantity of out-of-favor risky instruments and increasing the availability of in-demand stable government-backed instruments like cash and T-Bills.  The theory is basic economics, really.  When something is in demand (safety is in demand) increase the supply.  When demand for a good falls (risk is out of fashion) reduce the supply.  By swapping quality securities (cash and T-Bills) for questionable securities (CMOs and other popular modern villains) the Fed will keep the money market moving and prices stable.

My explanation is a poor substitute for the actual article though.  Read Robert E. Lucas Jr.’s article in The Wall Street Journal for a much more complete understanding.

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