"Pilate saith unto him, What is truth? And when he had said this, he went out again..."

Location: Tampa, FL, United States

Wednesday, February 11, 2009

The Cost of Money and Other Economic Perils

I remember my father taking me to a bank in 1977 to obtain a loan to attend the University of Florida (presently owned by Tim Tebow). I remember scratching me head when the loan officer gushed over how cheap the money was that I was borrowing. (If I had to guess I would say the interest rate was 7%, but I could be wrong). At the time I believed a dollar was a dollar was a dollar. What did she mean by "cheap money." I didn't understand where she was coming from at the time--that she was mentally processing the amount of interest I would be responsible for over the life of the loan.

Thanks to the public school system being run by the feds high schoolers then (and probably now) can make it through the system with nary a teaching on compounded interest, simple interest, amortization schedules, central banking, fractional reserve banking, derivatives, Austrian economics, Keynesian economics, velocity of money, CPI, CPI-U, GDP, M1, M2, M3, hyperinflation, inflation, short selling, treasury bills, hedge funds, deficit spending, gold standard, fiat currency, and the list goes on. I suppose if 11th and 12th graders were brought up to speed on even half of these topics they would become both disallusioned and infuriated with their political "leaders." American monetary policy over the past 90 years has yielded a shrinking percentage of Americans accruing and maintaining private property. While plenty of Americans have amassed large sums of Federal Reserve Notes the purchasing power of such has fallen dramatically sense the establishment of the Federal Reserve Board in 1913. To see how the value of 2009 dollars have fallen check out this handy calculator.

The movers and shakers in the education business (see: Association, National Education) aren't stupid. Cursory lessons in economics will never be a part of junior high school or high school curriculum. That would leave too little time to cover more essential topics such as global warming and multiculturalism.

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