Adumbration

I have made several posts concerning various perspectives on the current economic crisis, and thought it would be useful to consolidate those item into a single piece, so here goes.  Many of these introduce particular episodes of Russ Roberts' interview podcast - econtalk, a program I have found to be very educational and informative of details of diverse perspectives on economics, through a long form interview format.

A number of posts looked at the state of the crisis and our understanding of the details at different points in time;  here is one from February 2009; this post introduces the perspective from May 2010.   The moral hazard aspects of the recent bailouts, coming as they did after decades of prior cases where other large banks were saved from the consequences of their risk taking, is a persuasive model for ow we got in this mess, and how the prospects for future such messes seem more than likely.   The bailouts were not just practically counterproductive, leading as they do to more bailouts in the future, but they are fundamentally unfair inasmuch as the taxpayers end up footing the bill for the risks that went bad, while the people in charge of those banks maybe lose part of their large fortunes - privatizing the gains and socializing the losses.

The whole bailout situation continues to strike me as wholly unnecessary; I first wrote about it here; this post makes a point about the growth of economic and political power, and this post introduces discussion of the stimulus spending that was supposed to make things all better, while this post takes in the perspective of one of the people responsible for trying to make the bailout system even minimally accountable to the general public.  Matt Taibbi over at Rolling Stone authored a critique of what Bear Stearns was doing all that time (among other things); I found a couple points at issue with Mr. Taibbi's analysis of the situation.

The events leading up to the crisis were in some circles described as completely unprecedented and unpredictable - I don't believe that, nor do I think it amounts to an excuse for the policy decisions made in the aftermath; this post introduces a discussion with Nassim Taleb concerning is book - Black Swan - and the phenomena of low probability events.   For some explanation of techincal details of the crisis, this post introduces what is mean by a "credit default swap", a financial derivative that features prominently in the onset.  For more of the theoretical underpinnings, this post calls attention to the two rap videos that pit Hayek and Keynes, who are used in the video to represent two explanatory models for the crisis.

I introduce a discussion of gold as money in this post.  Gold has a long history as the monetary unit of people around the world, across all sort of cultures, for thousands of years.  Gold is important vis a vis the crisis, in as much as we can lay the causes at the feet of the Fed, for pursuing policies of cheap credit and monetary expansion.  Ron Paul, as part of his recent US Presidential campaign, has proposed competing currencies, an approach which could allow for Gold, or Silver, or even Copper or Platinum as eventually taking the dominant place in substitute of the Federal Reserve Note; the call for sound money has been picked up by Gary Johnson, 2012 Libertarian candidate for US President and former two-term Governor of New Mexico. 

At one point in this period I came upon the description of Modern Monetary Theory as explanation and prescription for the crisis; I promised myself to delve into some of the details, which led to a series of posts starting here.