I don’t have a Ph.D., so perhaps that is why I occasionally suffer from ‘money delusion.’ But if other average Joes would be shocked by expensive fertilizer, as I recently was, some economic theories are on shaky ground. “Money illusion”…
Category: Other
Only time will tell if commodities riding a bubble
Overbought commodity futures markets may be the next source of excitement for investors and economists. They also may make conditions even more problematic for households. The problem is that no one, even the most experienced and insightful commodity analysts, really…
Equity spending couldn’t last forever
If something can’t go on forever, it won’t. That is the first law of practical economics. It may be hard to predict exactly how an unsustainable trend will end, however. And as the retail sector is finding out right now,…
Default swaps carry uncertain risks
It is dangerous when anyone plunges into business deals they don’t fully understand. Over the past 25 years, the securities industry has developed myriad new financial instruments intended to better manage risk. But it’s becoming clear that not everyone dealing…
Loan supply won’t create demand
You can lead a horse to water but you can’t make it drink. Keep that in mind when reading how much the Fed has driven down interest rates. In finance, you can increase the amount of money available for lending,…
Politicians see letters from economists as junk mail
The collective wisdom of economists is valuable. With it and $3.75 you can buy a gallon of unleaded gas nearly anywhere. Yes, that is a sour-grapes reaction to John McCain and Hilary Clinton’s scorn for a warning from economists that…
Rate cuts help borrowers, hurt savers
Lower interest rates are a double-edged sword that hurts some even as it helps others, and there is no getting around that. An interest rate is a price, little different than the price for onions, gasoline or freelance newspaper columns…
Investor distaste for prepaid mortgages led to crisis
Our economy is reeling because many borrowers are failing to make their mortgage payments. This undercuts the value of mortgage-backed securities, which, in turn, threatens the solvency of large financial institutions. The irony is that the mortgage-related securities at the…
Surging food, fuel prices could inflation picture
Even economists experience sticker shock. I just bought one gallon of skim milk and one of 2 percent at the corner store. I do this regularly, but $9.14 for two gallons of milk still seems like a lot. I’m not…
Those who fail to read fine print shouldn’t cry foul
I’m not sure what happened to the legendary “prudent man,” but if he isn’t dead he must be lying in a coma somewhere. At least that would seem to be the case, from all the losers pointing their fingers at…