Yes, the United States declared independence from Great Britain on July 4, 1776 and won the American Revolutionary War. But still, we were not truly independent. George Washington’s Secretary of the Treasury Alexander Hamilton knew that true independence required a vibrant economy. He had…
Financial Markets
The Income Inequality That Doesn't Bother Us
When people talk about the top 1%, they are probably not thinking about NY Yankees shortstop Derek Jeter or Seattle’s MLS forward, Clint Dempsey. For 2014, Jeter signed a $12 million contract and Dempsey makes close to $5 million. However, they all take us to income inequality. Using…
Your “ROI” From Braces
Dear Alexa, At work, I have become ashamed of my less-than-perfect smile since I am surrounded by colleagues who had the luxury of wearing braces in their youth. Should I get braces to perfect my smile, even though I am…
When Did We Get “Tough Love” From the Federal Reserve?
Demonstrating Russia’s current plight, this graph so perfectly illustrates stagflation: When GDP sinks and inflation increases, the stagflation that results is tough to cure. If monetary authorities target inflation with tight monetary policy, then interest rates go up and further…
Should Detroit Sell Its Art?
During 2009, a still life painted by Henri Matisse was sold at a Christie’s auction for $46 million. The Detroit Institute of Arts owns Poppies, also a Matisse oil on canvas but a bit larger. A municipal bankruptcy like Detroit’s creates…
Venezuela Has Cheap Gas But No Cars
At the official exchange rate, Venezuelans pay 5 cents a gallon for premium gasoline while the real price is closer to one half penny a gallon. The dark purple country at the northern tip of South America (below), Venezuela has the…
What Can We Learn From Downton Abbey Economics?
Downton Abbey can tell us a lot about the British economy…but not everything. We know the aristocracy is struggling. Many of the 700 families who had controlled 80% of all acreage during the 1870s faced financial collapse 50 years later.…
Problems With Grade Deflation
The number of hours we study is down and our grades are up. Between 1961 and 2003, full time college students diminished their study time from 40 to 27 hours a week. And yet, they have been getting higher grades.…
One Reason That $1.1 Trillion is Not So Much
The Congress just agreed on $1.1 trillion in federal spending. But let’s look a bit more closely… Each year, I give my class a federal budget graph and ask them to identify the relative size of 17 main spending categories.…
Happy Birthday to a Great Father (of our economy)
When you sing happy birthday to Alexander Hamilton today, please just think of this upward sloping (logarithmic) economic growth line: Today, 257–or maybe 259–years ago (no one is positive) on the Caribbean island of Nevis, Alexander Hamilton was born. Only…