By Doug Gentry, on March 2nd, 2011
The acclaimed radio/TV series, This American Life, aired a piece titled, “The Invention of Money”, in early 2011. There are two excellent stories – or “Acts” as TAL’s Ira Glass calls them – one on how a group of economists restored the public’s faith in the Brazilian currency, and another on how the Federal Reserve creates money. The piece starts with a story about aboriginal cultures using large, hard to move stones as money. I heartily recommend listening to this piece. You can find it here. The whole piece is just under an hour.
From the web site:
Prologue.
Ira Glass speaks with several members of the Planet Money team, who all found themselves—in the course of their reporting—independently asking the same stoner-ish question: What is money? Ira and Planet Money producer Jacob Goldstein discuss a pre-industrial society on the island of Yap that used giant stones as currency.
Act One. The Lie That Saved Brazil.
A trip to a country where the fiction that is money completely fell apart. And in this same country, through a truly incredible piece of policy making, the government tricked a 150,000,000 people into believing their money had value again. Chana Joffe-Walt reports. (16 minutes)
Act Two. Weekend At Bernanke’s.
Though the name of the Federal Reserve includes the word “federal,” it’s not actually part of the government. It’s an independent institution tasked with something very simple, but very huge: Creating money out of thin air. And during this last financial crisis, the leaders of the Fed did things that they would never have considered doing in the past. Alex Blumberg and David Kestenbaum report on what the Fed usually does, and how, since 2008, it’s taken a trip to what amounts to Fed Crazytown. (26 minutes)
By Eldon Mast, on April 13th, 2010
Last year’s stimulus package included a program for states and municipalities entitled “Build America Bonds.”
The U.S. Treasury announced that so far it is on target to save those local governments $12.3 billion in borrowing costs with federally subsidized taxable bonds already sold during the first year of the program.
Since the stimulus passed last April, the Treasury has helped state and local governments sell $90 billion of these bonds to assist their jurisdictions with new liquidity to fund their local projects.
While most government agencies traditionally issue tax-exempt bonds, the Build America Bonds are taxable bonds with a 35 percent federal subsidy on interest costs. This means that a jurisdiction ultimately pays much less in interest to provide the same capital improvements or service upgrades to their constituents.
Denver Water which was one of the first agencies to take advantage of the program in order to effect need upgrades to the Denver water system. Chips Barry, manager of Denver Water stated that they were “pleased to be able to sell bonds at a very reasonable rate in the current market environment. For ratepayers, this means we are able to keep costs as low as possible while providing us the funding to improve our system.”
California issued seven of the top 10 bond deals according to analysis of Treasury Department data. The state also issued roughly one-quarter of the $90 billion worth of bonds since last April. Most of the bonds issued by the sunshine state are now in the midst of funding transportation and educational improvements.
“People originally said it would eliminate the issuance of municipal bonds,” says John Cummings, who is head of muni-bond investments at money-management firm PIMCO. “Instead they have stabilized the market and helped to create jobs.“
By Eldon Mast, on April 7th, 2010
Employers added 162,000 jobs in March. It was the biggest monthly gain in three years and continues a string of accelerated job growth that began last spring.
The latest report, which marks the third month since November in which payrolls registered a net increase, further punctuates that the labor market is pulling out of the deep downward spiral it was in early 2009.
We’ve continued to highlight the chart below in the later months of 2009. It details the abrupt turn in jobs trending since the government’s stimulus package last April. What is most apparent is that should the positive trend continue, this recovery will have netted over 4M jobs by the end of 2010.
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By Eldon Mast, on January 6th, 2010
China’s manufacturing sector has likely grown to the fastest pace in more than five years, a December survey of purchasing managers reported early Monday.
The HSBC Holdings Plc and Markit Economics purchase manager’s index rose to a seasonally adjusted 56.1 from 55.7 in November. It was the highest reading for the index since April 2004.
The report sees China’s growth accelerating to 9.4% this year from an estimated 8.5% in 2009 as the Chinese government continues its stimulus and other world economies recover from the 2008 financial credit crisis.
Lu Ting of the Bank of America-Merrill Lynch in Hong Kong said, “China’s strong recovery momentum will boost manufacturers’ confidence and improved earnings will help them to increase investment and output.”
Chinese manufacturing firms’ profits rose 7.8 percent in the first 11 months of last year to a record $379 billion.
Like the US Federal Reserve, China officials have pledged a policy that will not make the mistake of ending stimulus policies too soon — a stance that continues to contribute to the record growth acceleration.
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