Understanding The Financial Crisis--For Kids and Grownups

A massive jump in interest rates is needed to:
1- discourage reckless speculation
(Cheap money causes producers/consumers to behave recklessly - think housing bubble)
2- encourage people to save money
(someone has to 'save' money before someone else can 'borrow' it -think credit cruch)
3- stop consumers from buying things they can't afford (like houses, cars)
3- avoid the massive money printing the fed is undertaking which is destroying the dollar and may ultimately lead to hyperinflation

no time for all dat is what I say. I want my cash money, my chrome rims, and my pimp hand layed low. got that n-do sweating back ride ski lo, so I aint feelin all dat noise. tru. U just god served

Pretty good.

in my oppinion one of the best (easy to follow) explanations

Now, for the video itself..

The problem is not really the house bubble.. its the tons of derivative that investment banker got on those, leveraged dozen of times, when the house market collapsed, the effect was compounded many times..

and add the con artist that pushed loan to unsolvable people, then turn around and resell those to investor as 'AAA' rating...and taking insurance knowing they would default !

Again leverage work up ..but also work down, make a fortune, or loose your shirt..

Fixing this problem requires abolishing the 'Federal Reserve'. If the price of credit was set by supply and demand, the business cycle would not even exist. It's because the Government doesn't interfere in the demand and supply of say, pens, or clothes, which is why you never hear of crisis in these products. Government Price-Fixing and 'social policies' always lead to surpluses and shortages and only a when the 'free-market' is allowed to function can we avoid these violent economic swings.

Sigh, two thing..

1- if you abolish the fed (instead of better regulation) you would cause a massive jump in interest rate (less money, price of money going up, got it ?)

2- supply and demand work nice for commodities like pen and cloth...

but badly for obligation..

ex: You can afford a house a, 5..10 years from now, you have to renegotiate a morgage.. you're screwed and the bank know it, so they don't have to appeal to you, you HAVE to get a morgage (or sell the house)..

economy 201

Same thing for healthcare, you get sick, you HAVE to get treatment or you die, at any price, HMO ect can jack up the price, since you don't have a choice, buy at our price or die!..

or monopolies etc ..

that why I said economy 201

think further than basic 101

God, the Bush administration was a bunch of idiots. Why would they think that was a good idea?!

It's actually quite confeusing.