Neil Irwintells Dave Davies about why the euro has exacerbated the current financial depressions in Europe:

Normally what would happen when a country like Greece finds itself unable to pay its debts, is it would experience a run on its currency, and the value of its currency would plummet, and it would default on its debts, and that would be very difficult and very wrenching and not much fun for anybody. But it would also sow the seeds of the next expansion. So if you’re Greece, suddenly your currency would depreciate by 50 percent, and that would make you much more competitive as a tourist destination, your exports would be more competitive, and so you would actually have the seeds of the future growth sown by that depreciation. …

But instead, what we’ve had is an economic collapse in Greece — while they’re still using the euro — so there’s been no depreciation, so they’re having to try and do that depreciation by having internal deflation. They’re trying to have wages fall rather than it just happens automatically because the currency collapses. So what you have is a combination of a very difficult economic situation in Greece and some of the other European countries without the obvious path forward to get out of it and return to growth.

Image by Ramberg Media Images

Neil Irwin tells Dave Davies about how the regulation of banks has changed over time:

Paper money had its start this time 350 years ago. What’s remarkable is that we’ve learned a lot since then. There’s a lot that we’ve learned about how you can control the banking system, how you can regulate banks, how you can — if you are a central banker — turn the dial of money supply. …The idea that this is a dial over which people have control and governments have control is something that has only really developed in the last hundred years, as we’ve moved beyond the Gold Standard and toward this world of fiat money, where one thing you learn the more monetary history you study, is [that] money is an idea, it’s not a physical object; it’s an idea of, ‘What is this value? What is the store value? What is money worth?’ Why does money have value? Because people will take it as compensation for other things.

“Paris 6” from the “Money Art” series by Annie Weinmayr

planetmoney:

Get-Well Cards For The Economy

After years of slow, slow recovery, the U.S. economy could use a get-well-soon card to buck up its (animal) spirits.

Dave Dickerson, a former Hallmark writer and video blogger at Greeting Card Emergency, was kind enough to write up a sample, which we fancied up to look like the cards at the drugstore on the corner.

But this is just a start. What we’re really hoping is that we’ll be buried in clever reader ideas for more greeting cards. Submit your ideas in the comments, on Facebook, or on Twitter (#economygetwell). We’ll post our favorites on the blog.

Hopefully, this won’t become a section in the greeting card aisle of the store…

theweekmagazine:

Americans are woefully unprepared for retirement… 

The retirement squeeze

Yikes… Check out our 2008 interview with economist Teresa Ghilarducci for some advice.

(via theatlantic)

Paul Ryan said the people are not better off. And Joe Biden said America is better off. I actually think you can make a really good argument that they’re both right. And here’s what that argument would look like. The country itself is better off. Four years ago, September 2008, we were just about to enter a horrific downturn. The collapse of Lehman Brothers set off the worst of it. If you look at something like world trade, stock prices, industrial production world-wide – an economist named Barry Eichengreen with colleagues have done some of this work – it is remarkable how similar 2008 looks like 1929 in terms of the speed of the declines, in almost any global economic indicator of import that you look at. In most of the ways, 2008 was a little bit worse than 1929. And yet, of course, we don’t have anything that looks like the Great Depression. As bad as the economy is, we don’t have unemployment at 20 percent. When you look at those measures, what you see is in 2009, the economy really stabilized. It’s remarkable to look at those lines continue to fall back in 20s and 30s, and sort of flatten out in 2008 and 2009. The Obama administration can claim a lot of credit for that. They broke the back of this, along with the [Federal] Reserve, and by the way, with an assist from the outgoing Bush administration, which was quite aggressive in its final months. And so is the country better off today or when it is was in the very early stages of this really frightening crisis? I don’t think there’s any question that we’re better off today as a country than we were then. …

“But, there is also a very serious argument that a typical American household is worse off than it was four years ago and that’s because financial crises don’t do all their damage at once. They do it over many months and then there are long, slow disappointing, painful recoveries. And I think one of the fairest indictments of the Obama administration is that it has consistently underestimated the severity of this crisis. It didn’t in 2009, but since then it has. It thought the recovery would be better than it really was. And the same goes for the Federal Reserve. And so most of the reason why we’re not better off is just that’s the way financial crises work. But some portion of it is that the policy makers, The Fed and Obama administration looked on the bright side a little bit too often. And didn’t take every step they could have taken. And so when you look at something like household income, when you look at median wealth, when you look at the percentage of the population that’s working – on all of those measures we are lower than we were four years ago. And so I think it’s fair to say the typical American household isn’t better off, but the country is.

— New York Times Washington bureau chief David Leonhardt on the question: “Are you better off now than you were four years ago?”

People come from Wall Street and go into government and then leave government and go back into Wall Street. When you have this kind of revolving door, it’s not just that their interests are not well-aligned with the public; it’s that their mindset is captured by the industry from which they come. They see their interest — the interest of Wall Street — as if it were in the public interest.

— Nobel Prize-winning economist Joseph Stiglitz on lobbying. [full interview here]

The nature of our growth today is markedly different than in the decades after World War II. There we had shared prosperity. More recently, what we’ve had is exactly the opposite. … Right now, most Americans are worse off than they were 15 years ago. There has not been shared prosperity.

— Nobel Prize-winning economist Joseph Stiglitz argues that widely unequal societies don’t function effectively or have stable economies and that even the rich will pay a steep price if economic inequalities continue to worsen.

Tomorrow: A conversation with Nobel Prize winning economist Joseph Stiglitz, author of The Price of Inequality, in which he argues that widely unequal societies don’t function effectively, their economies aren’t stable or sustainable and that even the rich will pay a steep price if economic inequality continues to worsen.

50 Years of Government Spending, in 1 Graph

(via 50 Years of Government Spending, In 1 Graph : Planet Money : NPR)

For those of us who never think twice about having enough food, it’s hard to imagine what a daily struggle it is for some needy families.

— New York Times reporter Jason DeParle has covered America’s poorest for over 20 years.

Throughout the past four years, we keep hearing about the impact of this economy on the middle class, which of course, is important, but it’s having a great impact on these people, too. They can resort to strategies that make them seem unsympathetic. That’s what’s been missing from this debate. This recession aftermath has been so framed in terms of an impact on the middle class that the poor have largely been pushed out of the spotlight … and they’re really in political oblivion right now.

— On today’s Fresh Air, how the recession has impacted America’s poorest women.

We might think heated debates about the national debt are a relatively new phenomenon, but in fact, they stretch back all the way to the earliest days of the Republic, says economist Simon Johnson.

10,885,892,840,514.66

— The National Debt Held By The Public as of 4/3/12 (via Treasury Dept.) On today’s Fresh Air, we’re talking to economist Simon Johnson about the history of the national debt, which dates back the earliest days of the Republic.

Planet Money’s Minimalist Economic Posters

(via Minimalist Econ Posters : Planet Money : NPR)

The Fed is constantly worrying about investor sentiment. But the danger there is that you get caught up in that and you do things for PR reasons rather than sound financial reasons because you think that confidence will take over — and then it becomes something that you’ve done for appearances rather than solid financial reasons.

— Since the financial crisis of 2008, the Federal Reserve has shrugged off warnings and let the largest U.S. financial firms pay tens of billions of dollars in dividends to shareholders, instead of putting aside money as capital in case a new financial crisis hits. On today’s Fresh Air, investigative reporter Jesse Eisinger explains how the Fed made a critical oversight in the wake of the financial crisis — despite objections from the Federal Deposit Insurance Corp. His report was published jointly by ProPublica and The Atlantic online.