Category: Money

It’s a general guideline that people who do not follow the market obsessively should invest in index funds. Compare to mutual funds, they are lower cost, and over time tend to perform about as well, particularly when costs are taken into account. Compared to investing in individual stocks, they are much lower risk, because they…

One of the ways that pure capitalism fails is an inability to price limited resources. There is a real sense in which oil, a limited resource, is almost certainly worth more today than people are paying for it. It seems likely that people in the future will be aghast at the way we are wasting…

The long-term budget forecast for the U.S. federal government looks dire. This is almost entirely due to health care costs. People talk about social security going bankrupt, but that is actually easy to fix with relatively minor tweaks, such as increasing the income limit for which people pay social security taxes, and/or increasing the retirement…

In private e-mail I got a pointer to one of the real goals of the Fed’s quantitative easing, one that we’re also seeing in other countries reactions to the Fed’s plans: to weaken the dollar in order to improve the U.S. trade deficit. This is a more plausible goal than the stated ones. By making…

The Federal Reserve Bank is about to undertake another round of quantitative easing, by purchasing up to $600 billion worth of U.S. Treasury bonds. The Fed gets to make up their own money—they don’t have to get that $600 billion from anybody else—so this is a way of expanding the overall money supply. The intent…