Digital Wilderness

My fellow economics geeks out there might enjoy this – EconStories.tv brings us Fear the Boom and Bust.

In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there’s a “boom and bust” cycle in modern economies and good reason to fear it.

We’ve been going back and forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No… it’s the animal spirits

[Keynes Sings:]

John Maynard Keynes, wrote the book on modern macro
The man you need when the economy’s off track, [whoa]
Depression, recession now your question’s in session
Have a seat and I’ll school you in one simple lesson

BOOM, 1929 the big crash
We didn’t bounce back—economy’s in the trash
Persistent unemployment, the result of sticky wages
Waiting for recovery? Seriously? That’s outrageous!

I had a real plan any fool can understand
The advice, real simple—boost aggregate demand!
C, I, G, all together gets to Y
Make sure the total’s growing, watch the economy fly

We’ve been going back and forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No… it’s the animal spirits

You see it’s all about spending, hear the register cha-ching
Circular flow, the dough is everything
So if that flow is getting low, doesn’t matter the reason
We need more government spending, now it’s stimulus season

So forget about saving, get it straight out of your head
Like I said, in the long run—we’re all dead
Savings is destruction, that’s the paradox of thrift
Don’t keep money in your pocket, or that growth will never lift…

because…

Business is driven by the animal spirits
The bull and the bear, and there’s reason to fear its
Effects on capital investment, income and growth
That’s why the state should fill the gap with stimulus both…

The monetary and the fiscal, they’re equally correct
Public works, digging ditches, war has the same effect
Even a broken window helps the glass man have some wealth
The multiplier driving higher the economy’s health

And if the Central Bank’s interest rate policy tanks
A liquidity trap, that new money’s stuck in the banks!
Deficits could be the cure, you been looking for
Let the spending soar, now that you know the score

My General Theory’s made quite an impression
[a revolution] I transformed the econ profession
You know me, modesty, still I’m taking a bow
Say it loud, say it proud, we’re all Keynesians now

We’ve been goin’ back n forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Keynes] I made my case, Freddie H
Listen up , Can you hear it?

Hayek sings:

I’ll begin in broad strokes, just like my friend Keynes
His theory conceals the mechanics of change,
That simple equation, too much aggregation
Ignores human action and motivation

And yet it continues as a justification
For bailouts and payoffs by pols with machinations
You provide them with cover to sell us a free lunch
Then all that we’re left with is debt, and a bunch

If you’re living high on that cheap credit hog
Don’t look for cure from the hair of the dog
Real savings come first if you want to invest
The market coordinates time with interest

Your focus on spending is pushing on thread
In the long run, my friend, it’s your theory that’s dead
So sorry there, buddy, if that sounds like invective
Prepared to get schooled in my Austrian perspective

We’ve been going back and forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No… it’s the animal spirits

The place you should study isn’t the bust
It’s the boom that should make you feel leery, that’s the thrust
Of my theory, the capital structure is key.
Malinvestments wreck the economy

The boom gets started with an expansion of credit
The Fed sets rates low, are you starting to get it?
That new money is confused for real loanable funds
But it’s just inflation that’s driving the ones

Who invest in new projects like housing construction
The boom plants the seeds for its future destruction
The savings aren’t real, consumption’s up too
And the grasping for resources reveals there’s too few

So the boom turns to bust as the interest rates rise
With the costs of production, price signals were lies
The boom was a binge that’s a matter of fact
Now its devalued capital that makes up the slack.

Whether it’s the late twenties or two thousand and five
Booming bad investments, seems like they’d thrive
You must save to invest, don’t use the printing press
Or a bust will surely follow, an economy depressed

Your so-called “stimulus” will make things even worse
It’s just more of the same, more incentives perversed
And that credit crunch ain’t a liquidity trap
Just a broke banking system, I’m done, that’s a wrap.

We’ve been goin’ back n forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No it’s the animal spirits

[NOTE: This is a re-post of an entry that was originally posted on 19Nov2008.]

News Flash! HOT Off the Presses! Christmas is on December 25th this year!!!

It took some time, coming very late in the year, but the governments of the world finally reached a compromise on when Christmas will be celebrated in 2008 2009 – and it’s December 25th! That’s just over a month away! Too late to save, so break out those credit cards, run up the balance and load up on gifts!

All kidding aside, will you go (further) into debt because of Christmas this year? AllFinancialMatters reports via Consumer Reports that 12 Million American’s Are STILL Paying Off Last Year’s Christmas!

Believe it or not, Christmas IS the same time every year, so why are people caught off guard by it? Why aren’t people saving for it? Putting aside as little as $1 a day THROUGHOUT the year in anticipation of the holiday will reduce the lingering stress that often results from what should be a joyous time of year. Spend the holiday enjoying time with family and friends rather than being bitter and resentful because now there are bills that have to be paid because gifts had to be bought.

It’s not too late! Prepare a budget and get ready for the holiday. Put the plastic away (or better yet, perform a plasectomy) and live within your means. Tell your money where to go rather than it telling you where to go. Skip a few lattes. Eat in rather than eat out. Look for deals online. Put a personal touch on your gifts by making them.

And when out shopping for others, how about skipping the purchase of that movie, CD, etc. for yourself?

Trying to keep my blogging momentum going… Today’s post is all about randomness.

There’s a fun and travel-intensive weekend ahead of me! Friday, Kristy and I are heading up to Indianapolis for my yearly fix of DCI. This year I’m going all out. Rather than heading to a local show, we’re going to the DCI World Championship semifinals! Let’s go Phantom Regiment! (Unfortunately, after winning it all last year, they find themselvs in 9th place at the end of the “regular season” this year… )

Saturday we’ll be heading to Western KY to spend some time with my family. Every year around this time, before school starts, my father’s side of the family converges on my grandparents’ farm, south of Henderson, KY. This year I’ll be bringing a special guest. Kristy will get to meet the entire paternal side of the family…all at once. She graciously accepted the invitation and seems to be up for the challenge of meeting everyone! Yep, she’s a keeper

There are rumors of a Quantum Leap Revival. Yes! That would totally make my day! Quantum Leap is one of my all time favorite shows.

I’ll follow that with an interesting report on a study that concluded Opposite financial habits attract.

Eli Finkel: We found that when looking at spending patterns, spendthrifts and tightwads tend to pair up.

Tess Vigeland : And though singles say they would rather marry someone with spending habits like their own, they often don’t. Finkel says it has a lot to do with trying to address the pain we each experience. Tightwads actually don’t like spending too little money and spenders don’t really like spending too much.

Finkel: On those rare cases where we have a trait about ourselves that we dislike, those might be the cases where we would seek somebody who’s the opposite of us. So, if I’m somebody who spends a great deal of money and experiences some pain about it, I’ll dislike it enough in myself that I may well seek the opposite in a partner.

Vigeland: Of course, if you disagree on finances, the research also shows you may experience “diminished marital well-being.”

The actual study can be found here: Fatal (Fiscal) Attraction: Spendthrifts and Tightwads in Marriage

Considering that the number one cause of problems in marriage is money, and 50% of marriages end in divorce, I’m not sure if this is a good thing…

Here’s an interesting website to which I wanted to bring attention: givinganon.org.
In a nutshell, the site let’s you give anonymously to others.

Giving Anonymously is a non-profit organization facilitating generosity between people. We are a volunteer organization; each of us donates our time without pay to keep Giving Anonymously running.

We began with a few goals in mind: We wanted to relationally connect people through giving, to make it fun, and in the process protect relationships from feelings of obligation. Giving to others in need can be full of mixed motivations and our hope is to facilitate Pure giving.

Anyone who enjoys putting cash under a friends door or in their mailbox will often times not know if their friend actually got the gift and they cannot hear what it meant to them. So, we came up with an idea to have a messaging line where recipients could call after receiving their gift. When a recipient doesn’t know who gave the gift to them they are even more free to express their gratitude and we capture this through voice files that we email to the donor.

And the last bit of randomness for today – I completely missed my 1 year anniversary at Medpace! I started July 28th, 2008 and the past year has been a good journey. I’m not doing much of what I was originally hired to do, having instead stepped into a more specialized role with a different system. I’m thankful for this opportunity and appreciate the challenge of establishing new processes and reworking old processes to streamline the flow of getting the system up and running. The company itself is great. They definitely have employee morale in mind by providing word day activities such as cornhole and pop-a-shot tournaments, ice cream socials and lunches, as well as outside work events such as the Christmas party, paintball, golf outings and more.
It has been a welcome change from my previous employers!

Did you miss Town Hall For Hope or maybe want to see it again? It’s now available to watch online for free via vimeo.com:

Dave Ramsey – Town Hall for Hope 2009 from Central FPU on Vimeo.

Via LifeHacker.com: TrueCar Shows You What Cars are Really Selling For

Any car shopper will tell you it’s nearly impossible to get a bead on fair prices from lip service alone. TrueCar aggregates sales data for a clear picture of what cars are really selling for.

If you’d like to get a feel for whether or not you’re getting a good deal on a car you’ve been looking at, TrueCar has the dirt. TrueCar collects and analyzes data from 25% of the automotive sales in the US—a sizable portion, and more than enough to paint an accurate picture.

You plug in your ZIP code and search for the make and model you’re thinking about purchasing. TrueCar returns information about the car, including dealer cost, factory invoice, average price paid in your area, and the sticker price. Based on those numbers and archival sales, the site charts out a bell curve, showing you where the sweet spot for wheeling and dealing is.

TrueCar also provides sales history for the previous six months which is handy to check and see if the sale price is falling. TrueCar is a free service. If you know of another service for checking the sales price of cars, share it in the comment belows.

This week’s Finance Friday comes via CBS News:
How Supermarkets Lure You To Buy More

“Nothing happens by accident in a supermarket. Everything is designed to sell.”

And that, says Consumer Reports retail expert Tod Marks, is the key thing to keep in mind as you go up and down the aisles of your local store. Knowing how to shop is vital.

Supermarkets “are in the real estate business,” Marks pointed out to Early Show consumer correspondent Susan Koeppen Monday in the first of her three-part series, “Supermarket Secrets.”

Supermarkets, she explained, “are set up very carefully, with the hope that you will spend lots of money, maybe even more than you planned to.”

Read the article for tips on saving money when you shop at the supermarket.

Via Tony Morgan: 14 Ways to Spend Less so You Can Do More.

1. Avoid eating out. It costs us anywhere from $25 (Chik-Fil-A) to $50 (Applebee’s) to feed our family when we eat out. When we eat dinner at home, it’s only about $6 per meal for our family of 6.
2. Buy used cars. We haven’t had a car payment for seven years, but I’ve never owned a new car either. We’ve committed to having no debt with the exception of our home.
3. Pay off credit cards every month. Avoid interest expenses at all costs. That means planning ahead for emergencies and saying “no” to the stuff we really don’t need.
4. Eliminate the telephone landline. This probably saves us about $400 per year now. We just use our mobile phones at home. We also shop around to save money on cell phone plans, insurance, utilities, etc.
5. Refinance your house. If you’re planning on staying in your home for a year or more, now’s a great time to either lower your monthly payment or reduce the term of your mortgage. Either way, you’re paying less money on interest. That’s the goal.
6. Use Vanguard for investments. Start with money market accounts then graduate to stocks and bonds. Saving money can become fun especially when you use a company like Vanguard that helps you save more of your money by keeping investment costs low.
7. Shop at T.J. Maxx. You can get name-brand clothes at a fraction of the cost. One of our favorite dates now is hunting through the racks at T.J. Maxx looking for bargains on clothing.
8. Use the library. Books, music and movies are essentially free. Ask for Killing Cockroaches. If they don’t have it, they can get it through the interlibrary loan program.
9. Vacation off season. We shop VRBO.com for a condo that ends up being cheaper than a hotel room right on the beach. The same condo costs four times more during the peak season.
10. Share date nights. Watch your friends’ kids one week and then let them watch your kids the next week. That means you have free babysitting twice a month.
11. Carpool and share rides. We save gas and on vehicle wear and tear (and time) by sharing rides with neighbors and friends. With four kids going in four different directions, that adds up.
12. Use sale ads and shop with a list. Our family of 6 spends less than $500 per month on combined groceries, paper products and health and beauty needs. (And with a face like mine, H&BA’s are essential.)
13. Be responsible. Avoid late fees in every area, drive the speed limit and don’t buy double of something because you forgot you had it.
14. Don’t own a pet. Even the fish that won’t die is costing us money we could spend on something else. Your kids don’t need a dog to learn responsibility. That’s a lie.

Town Hall For Hope with Dave Ramsey.

Connect with families across the nation for a truly radical message: HOPE.

Tired of hearing the fear, doom and gloom that’s filling the airwaves? Join Dave Ramsey for a nationwide town hall meeting and discover what’s happening with the economy, how we got here, and where we’re going. Plus, Dave will answer your questions live throughout the event!

Join us for this free event April 23 at 8:00 p.m. EDT in one of the thousands of venues across the country as we stand together to reignite the fire of hope!

A little fuzzy on the fall of the housing market and how it’s affected the economy and led to the so-called credit crunch?

Crisisofcredit.com has a nice visual explanation that details the domino effect that has led us to where we are today, as well as terms such as leverage, CDO, etc.

The Crisis of Credit Visualized – Part 1

The Crisis of Credit Visualized – Part 2

News Flash! HOT Off the Presses! Christmas is on December 25th this year!!!

It took some time, coming very late in the year, but the governments of the world finally reached a compromise on when Christmas will be celebrated in 2008 – and it’s December 25th! That’s just over a month away! Too late to save, so break out those credit cards, run up the balance and load up on gifts!

All kidding aside, will you go (further) into debt because of Christmas this year? AllFinancialMatters reports via Consumer Reports that 12 Million American’s Are STILL Paying Off Last Year’s Christmas!

Believe it or not, Christmas IS the same time every year, so why are people caught off guard by it? Why aren’t people saving for it? Putting aside as little as $1 a day THROUGHOUT the year in anticipation of the holiday will reduce the lingering stress that often results from what should be a joyous time of year. Spend the holiday enjoying time with family and friends rather than being bitter and resentful because now there are bills that have to be paid because gifts had to be bought.

It’s not too late! Prepare a budget and get ready for the holiday. Put the plastic away (or better yet, perform a plasectomy) and live within your means. Tell your money where to go rather than it telling you where to go. Skip a few lattes. Eat in rather than eat out. Look for deals online. Put a personal touch on your gifts by making them.

And when out shopping for others, how about skipping the purchase of that movie, CD, etc. for yourself?