QE3?

Many of the problems Americans face can be dealt with by creating some inflation in our country. Most of our debt is in nominal, not real terms (something we will get into more later). We have the cost of our mortgage exceeding what we can pay (evident by the large default numbers) and we have a national debt too large (in many people's opinion at least). If we had some inflation this would "ease" these problems that households and our nation faces. So how do we get inflation? By a process called "Quantitative Easing" and for the first time it looks like we may do round three of this, thus Quantitative Easing Three (QE3). We will talk more about this later, but it steps outside the typical Federal Reserve actions.

Student Teachers

Local school districts have no money. Voters are turning down propositions for increasing spending. The unions refuse to give enough concessions. The result is squeezing wherever the districts can squeeze. Unfortunatly for those trying to become teachers things just got worst in Medford NJ (where I live). Now the student teachers may have to PAY for the right to student teach.

Global Poverty

Here is a good Op-Ed piece in the NY Times on Financial Aid. One very interesting paragraph, and a nice complement:

When I was in college, I majored in political science. But if I were going through college today, I’d major in economics. It possesses a rigor that other fields in the social sciences don’t — and often greater relevance as well. That’s why economists are shaping national debates about everything from health care to poverty, while political scientists often seem increasingly theoretical and irrelevant.

Hemp for Victory

Via ‘Marginal Revolution’ we get this link for legalizing Hemp. Plenty of interesting information, but what is perhaps the most interesting is that it was made by the US government.

(No you can not cite this as a source on your position paper)

Allocating Cuts in Education

Our government is spending more than the taxes it takes in. This has gone on for a while, and happens on all levels of government (federal, state, and local). Lately the states have done so with the help of the stimulus package a couple of years ago. It just ran out and the states have to figure out how to deal with that problem.

Step one seems to be accepting this fact and taxing more or spending less (the latter in the case of PA). Step two is who to tax or who to cut. This article seems to move from step one into step two of this process for education. In other words, how should the state properly allocate the cuts more efficiently?

Welcome Summer 2011!

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College Football Helmet Stickers

Economics is all about incentives. When a college football player does well (in many schools) they get a sticker on the helmet. This is an interesting piece on the incentives this creates for the players. Mony quote:

Now, a study published this month in the online journal PLoS ONE, has given a fresh perspective on this practice: When small rewards become visible trophies of status within a group, male players change their approach in competition, sacrificing their own best interest to serve the needs of the team.

Higher Ed the Next Bubble?

This is an interesting piece. I personally never heard of Peter Thiel, but that should not indicate that what he says is not relevant. If this is true I wonder how it would all play out. The money quote:

Instead, for Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

HT: The big lead

Correlation vs. Causation

This site offers plenty of correlation examples. Thinking about possible causations can be time consuming. (HT: Freakonomics)

Solving the Deficit

The article we went over in class. Try solving the deficit on your own and see what our Federal Government looks like. Imagine the political will it would take to do it.