Understanding Ponzi Schemes
Posted on December 20, 2008 - Filed Under Markets | Leave a Comment
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 buy a US stamp for [...]
Read More..>>Understanding Fed Open Market Operations
Posted on December 17, 2008 - Filed Under Central Banks | Leave a Comment
The primary monetary policy tool of the Federal Reserve is the Federal Funds rate (see here for a description of the package of tools the Fed can use). This article briefly describes the nature of monetary policy, the idea of targetting a rate and how the Fed actually conducts open market operations (for a fairly [...]
Read More..>>Is the US in Recession in 2008? YES
Posted on December 1, 2008 - Filed Under Economy | Leave a Comment
[Updated as of November 26 data; on December 1, 2008, the NBER announced that in December 2007 a recession started. I will no longer update this article with but I will write more about the recession here.]
Many market analysts (e.g., Warren Buffett, Martin Feldstein and Alan Greenspan), have argued that the U.S. economy [...]