http://understandingthemarket.com US Economy. Housing Crisis, Inflation and occasional current events Fri, 08 Jan 2010 15:01:51 +0000 http://backend.userland.com/rss092 en In an earlier essay I tried to explain President Obama's notion of saving or creating jobs.  The stimulus plan bill was passed by both houses of Congress last night and the final plan was a bit smaller than the earlier version, so the President now asserts that the plan will ... http://understandingthemarket.com/?p=63 The unemployment rate typically continues to rise for a few months after recessions end, but in recent years the timing seems to have changed.  After the end of recessions from 1948 until the 1980s, rapid economic growth followed quickly with a sharp improvement in unemployment.  But after the last two ... http://understandingthemarket.com/?p=70 On December 1, 2008, the NBER announced that a recession in the US started in December 2007 (for more about how the NBER came to this conclusion, see here; for the NBER announcement, see here). [Note that after this article was initially posted, the data have been updated and the ... http://understandingthemarket.com/?p=56 To combat the economic slowdown and credit crisis of 2007-2009, the Fed took actions that were beyond anything attempted in the last 50 years; interest rates were cut to virtually zero and the Fed massively expanded its balance sheet by purchasing (in addition to the usual Treasury Bills) Treasury Bonds ... http://understandingthemarket.com/?p=65 Discount rates are a way to compare the value of cash today with cash in the future [there are a number of other discount rates, including the rate that banks pay the Federal Reserve to borrow money; see here for more on the Federal Reserve discount rate].  The key insight ... http://understandingthemarket.com/?p=68 The start and end of recessions are determined by the NBER, a "private, nonprofit, nonpartisan research organization" (see here for more).  While there has been much debate about why this group has the power to determine the dating of recessions, their proclamations are generally accepted by most economists. The NBER determines ... http://understandingthemarket.com/?p=66 Fed Chairman Ben Bernanke is a student of the Great Depression; many commentators  (notably Milton Friedman and Anna Schwartz in A Monetary History of the United States, 1867-1960) believe that the Depression was longer than it would have been had the Fed adopted a more aggressive policy.  As the real ... http://understandingthemarket.com/?p=64 The Federal Reserve System is a complex organization, comprised of twelve regional Feds and a Federal Reserve Board in Washington, DC.  In this article I describe the terms of the Board of Governors, the group that sets Fed policy (I have written elsewhere on the structure of the Fed). The current ... http://understandingthemarket.com/?p=57 President-elect Obama's economic team says that he was developing a plan that "would save or create nearly four million jobs".  Four million jobs is a large number; this essay will try to explain how large. (Note: earlier, Obama said his plan would "save or create at least two and a ... http://understandingthemarket.com/?p=60 Charles Ponzi (actually Carlo Ponzi, from Lugo, Italy, in the province of Ravenna) was living in Boston in 1918 and looking for a way to make money.  Then he discovered an apparent arbitrage possibility.  He could buy an international postal reply coupon (an IRC) in Italy that allowed him to ... http://understandingthemarket.com/?p=58