CategoryEconomics

What is Money (currency)?

A good question recently came up on Quora: What is the concept of currency? How am I simply able to buy things and services with just a piece of paper? You have an item or provide a service someone else wants. They give you a token in return. You have needs for other items and services. Those providers accept your token. Each token represents historic effort. The harder it was to produce or...

Broken Bargain

American banks fail when unregulated, and they fail when improperly regulated. That is the one sentence summary of Broken Bargain by Kathleen Day, the latest book in my series trying to understand how the financial system is failing. My key learnings from his book are highly unlikely what the author intended. She’s a bit too anti-bank for my taste. We’d seem to agree on 99% of what is...

As Judged by Profits

This idea of corporations with a purpose beyond just shareholders continues to be discussed in the news. This week in The Economist published an op-ed “What Corporations are for” ($), repeating the Friedman Doctrine and dissing the 181 signers of at the Business Roundtable earlier this month. The key word in the Economist’s essay is their measure of success of American business...

$1 Trillion to $20 Trillion in 50 Years

This year I turned 50 and and with that half century milestone, I’ve been looking back quite a bit more than normal this year. Case in point, in my recent post on the $80 trillion world economy, I pointed out there that the U.S. economy is one quarter of the total, or $20 trillion. 50 years ago, back in 1969, the U.S. economy was only $1 trillion (World Bank, reported in non-inflationary...

The $80 Trillion World Economy

When the news talks about “the economy” they always talk about percentages, especially growth or recession. Meanwhile, the U.S. GDP (a flawed but popular measure) is almost $20 trillion, almost one quarter of the $80 trillion world economy. The $80 Trillion World Economy in One Chart Put the pretty picture and the giant numbers aside for a moment and take a step back. The U.S. news is...

Just Ask the Author

I’m in the middle of yet-another economics history book and came across the fact that investors in the first Bank of the United States purchased their shares for $25 in gold, then the remaining $375 in a mix of gold and other means. The book then continued on to talk about how the bank functioned. But not me. I was sitting there wondering what other currency those investors were using, as...

The end of (solely) Shareholder Value

100 years ago, in 1919, the Michigan Supreme Court made a comment in their ruling of Dodge v. Ford saying (in its common paraphrased form), “The purpose of business is to maximize shareholder value.“ In 1970, Nobel Laureate in economics Milton Friedman repeated this in an essay in the New York Times entitled “The Social Responsibility of Business is to Increase its Profits...

The Case for Socialism (or not)

With capital “S” Socialism in the political news, when The Case for Socialism appeared in the new book shelf at my local library, I thought it a good time to see if Alan Maass and Howard Zinn could help me better understand Capitalism and its flaws. Unfortunately, instead this book had me asking my wife (a professor of philosophy and teacher of logic and critical thinking) for the...

What is money? The answer changes from 1913 to 2019.

Americans today think of “money” as paper that in minted by governments, but this was not always the case. A century ago money (“notes”) still retained their ancient connection to credit. Notes were promises to be redeemed for coin or reliable securities. — America’s Bank (page 200). Today we’ve not lost this underlying concept of credit, but we instead...

America’s Bank

Back to uncovering the history of the modern economy and understanding of how money truly works (see Lords of Finance, War and Gold, Capital in the 21st Century, Debt: The First 5,000 Years, and The Wealth of Nations to get up speed) my latest read is America’s Bank: The Epic Struggle to Create the Federal Reserve. The title sounds a bit dry and the book delivers on that promise, but there...

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