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Giant Pool of Money

2008-05-12 20:58:43.396246+00 by Dan Lyke 5 comments

Well worth a listen: This American Life: The Giant Pool of Money, on how the real estate bubble happened.

[ related topics: Economics Real Estate ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2008-05-12 22:16:15.374346+00 by: Dan Lyke

Some interesting comments over at http://www.metafilter.com/71576/The-Giant-Pool-of-Mone

#Comment Re: made: 2008-05-12 23:49:49.679277+00 by: ziffle [edit history]

Ron Pauls been saying this from the tallest mountain tops - why could you not hear him then? He is calling for a return to gold backed money. They tried to sell a Ron Paul coin backed by Silver or Gold and the US government confiscated it all. Think what people would feel like once they figured out RP money would keep going up on value and US Treasury notes keep going down in value.

He calls for closing the Fed because the money is just paper, no value at all. We are 60 Trillion in debt. Wonder how they will inflate our way our of this? Will we (they) learn a lesson from this?

#Comment Re: made: 2008-05-13 02:15:57.908966+00 by: meuon

Good story. Very understandable.

#Comment Re: made: 2008-05-13 13:16:16.926633+00 by: Dan Lyke

Ziffle, I'd buy that, except that major booms and bust cycles occurred all the time on the gold standard, and some of them were pretty huge. There are reasons to adopt gold, and reasons not to, but economic stability is empirically not a good reason for a gold based currency. Sure, it prevents inflation, but it doesn't prevent recession, at all.

#Comment Re: made: 2008-05-13 13:43:34.13553+00 by: ziffle [edit history]

I suppose we need to factor in fractional reseerve banking - but for point of argument would you rather hold paper dollars or gold?

Listening to more of the tape, it seems like a childish discussion of the market - the loan people were responding to the market - are they criticizing capitalism? Many people could not get loans because of the requirement for a W2 the stated income still required supporting documents and they fixed a problem for people who made large incomes but did not have jobs - i.e. off the governments paper trail.

The real issue was that the government printed too much money from thin air because there was no requirment to back it with anything. All that money chasing the available investments, as the tape says corrrectly, caused the problem. In the end it was the government causing the boom that caused the crash, just like the depression.

All the talk about cars and stuff ignores the problem and makes the tape not really worth listening too unless you have just started the journey to understanding the problem and then omst of it is hyperble. Read "The Dollar Crisis" by Duncan for a real good grounding. We are in for more down in prices. How has the market price of your home done since you bought Dan?