h1

Econ 101 Teaching

November 3, 2010

I’m not an economic prophet, but everyone is saying the same thing: Later today, the Federal Reserve is going to buy up Treasury Bonds. “Big Deal” the guy on the couch watching basketball says. “Let them buy all they want” says the teen texting her friend on the other end of the couch. Just in case you don’t remember Economics classes in college, or were smart enough to stay away from them, here is the big deal in four easy points.

1. The Treasury Bonds are what the Government issues to pay their debt. People buy them up, so the government owes them money. They are pretty good investments…safe at least.

2. The Federal Reserve prints money. Our money – American money.

3. When the Federal Reserve buys Treasury Bonds, they are buying up debt, with money they are printing.

4. Other countries see this and conclude “America is buying its own debt with money it is printing. Let’s invest somewhere else”.

Scary huh?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: