Podcast: Where Did All The Money Go?

Rescue me Mr. President. Bail out your tax payers from usary and excessive fees. Give us relief from Fed. taxes for one year. We can pay down our mortgages and prevent foreclosure. We can pay down and debt and give the banks some comfort in knowing that their bad debts are being taken cares of. We can pay down our medical bills, the number one reason your citizens declair bankrupsy. You can rescue us by demanding that credit card companies reduce their rates and giving us a chance to regain our good credit rating. Mr. Bush you seem worried about our 401Ks and IRAs so why don't you suspended our Fed. taxes for one year so we can add more to those funds and boost the capital of those companies holding the funds. Rescue US Mr. Bush and we will rescue the economy.

Sent by Marie | 6:41 PM | 9-25-2008

In the 9/25/08 Podcast Adam Davidson reiterated the same fearful message I hear supporters of the Economic Bailout saying. They are saying that if we don't inject lots of cash into the financial markets that the economy could grind to a halt, seize up, and average joes like me wouldn't be able to buy cars, homes, or even get a pay check. I don't buy this notion. Even if things did seize up there still would be an economy, it might be more of a barter econmoy, I might lose my job and be forced to grow a garden and keep chickens, but you can bet $700 billion I'd plant a little extra and keep a few extra chickens and bring them into the city. My point is only that this is not the end of the world. The credit/debt economy as we know it might be going the way of the dinosaur, but this is not the end of the world for us amazingly adaptable and resilient (think cockroach) humans.
My hope is that this will require a resurgence of the local community and the value we put on what we can produce locally.

Sent by Andrew | 7:11 PM | 9-25-2008

I believe we are going to get passed this situation but I am wondering what will be the impact of this going forward. Is it fair to say that the dollar will become weaker? We are going to have to borrow these $700 billion, right? And our debt is already huge. So I think the dollar will be weaker which will force the price of oil to go up (in dollars) thus making energy even more expensive for us. In addition to this, is it fair to say that international investors are fairly disappointed with us? Why would they continue to invest in our markets? Is this crisis going to undermine our ability to lure money from overseas into our markets? When comparing markets overseas, how do we fare? Are we still attractive?

Sent by Ian | 8:35 PM | 9-25-2008

Adam, what you said is a little misleading. There is not less money in the world, there is less equity.

This is the problem. People do not understand that equity, the difference between what I paid for my house 5 years ago and what a bank says it is now worth, is what is at the bottom of the reverse pyramid Laura mentioned. Equity is never a solid dollar amount because once you convert equity to dollars (by selling my house at a profit) the equity disappears and the true value of the home is now what the new owner just paid for it.

It would be a huge service to your listeners and help explain why were in this mess. It all boils down to this: equity means nothing until you sell.

Sent by Damon B | 8:59 PM | 9-25-2008

I have been following this 700-billion-bailout coverages all over the net. The more I hear about the folks in Washington pushing to close the deal, the more I feel really sad for us Americans. This is a shame, because of pure greeds from corporate America. The private companies have incredible leverages with tax savings already. Now they (the bankers) want the folks who work hard to support their families to bail them out while they are still driving luxury cars and living in luxury homes. Look at those people who are paid at minimal wages and be taxed and now asked to bail out the rich! Is that fair? This sounds like those scenes you see or read in "Les Miserables." Indeed, the American people now are the "miserables."

Sent by Alex | 1:13 AM | 9-26-2008

Thanks for your great commentaries.They are so timely.
You say that money has been destroyed or has disappeared in the financial crises.
I'm a believer that the rate of inflation has a positive correlation with the rate of increase in the money supply. So we're seeing significant increases in inflation and how does that corrolate with destruction of money you speak about on your recent show.

Sent by Nick | 2:25 AM | 9-26-2008

I just heard David Kestenbaum's report on Morning Edition. I am worried about researcher bias from Ben Bernanke. He sees the world through the eyes of his equations. I don't know the equations but visually see relationships that relate to physical principals. Put Ben's equations out there and see what the discussion brings. Maybe someone will reduce it to a principal as clean as E=MC squared, and change the world of economics as we know it. I see Ben's plan this way. The economy is one of those exercise balls that he wants to add a 700 billion dollar coating on the inside so as it deflates slowly and we don't break an arm. The leak is already there and we need to change our exercise routine so we stay strong until we find a new ball. That is over simplified but I want to know the plan for the next year not just next week.

Sent by ray | 7:32 AM | 9-26-2008

Adam, you mentioned 2 possible alternative solutions: uncapping MM investments to create 'uncapped Roth IRA - like instruments and having the government by home in foreclosure and rent them to the inhabitants -- can you expand on these 2 possible solutions?

Sent by David | 8:50 AM | 9-26-2008

As I child, I remember a photograph in my history book of FDR and the wealthy of his day around a table, maybe the same White House table as the one in the blog, at the time of the Depression. The caption read something like FDR forces business leaders to help out with financial crisis. In your blog photograph, I see lawmakers trying to bail out absent financial leaders, with public money. Accountability will come when those at the table, are those that will assume the cost. Spending others money is much easier. Your podcast clearly points out we can ask more of those that have created the mess. They should be at the table taking the responsibility and saying what they will do to make their companies financially sound again.

Sent by Sherrard | 3:06 PM | 9-26-2008