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New York Federal Reserve President William Dudley Teaches About Inflation Using the iPad … And Makes People Angry

March 11, 2011 By Leave a Comment
ipad-inflation-thumbnail

There was a firestorm of controvery this morning following remarks by New York Federal Reserve Chairman William Dudley. In an attempt to explain how the Federal Reserve calculates inflation, the Fed President commented to a group of working class people that you can't just look at the price of food - the price of everything has to be factored in to understand what is happening to the purchasing power of the dollar.  His comments: "Today you can buy an iPad 2 that costs the same as an iPad 1 … [Read more...]

Filed Under: Economics Tagged With: , ,

The Money Illusion – Why Thinking About Things In Nominal Currency Can Destroy Your Net Worth

December 23, 2010 By
German Mark Inflation

In 1928, Irving Fisher published The Money Illusion (seriously, buy it - it's only $7.95), which discussed the human fallacy of thinking about things in the nominal currency of your home country instead of in terms of purchasing power.  The concept phrase "money illusion" was coined by legendary investor and economist John Maynard Keynes. The easiest way to think about the money illusion is a phrase Warren Buffett has proclaimed: It isn't how many dollars you have, but how many … [Read more...]

Filed Under: Economics, Stock Market Tagged With: , ,

How We Used Shares of Coca-Cola to Teach My Youngest Sister About Investing (and Why the Cycle of Consumption and Financial Stress Starts as a Teenager for Most Americans)

September 7, 2010 By 2 Comments
Coca-Cola Direct Stock Purchase Plan and Coca-Cola Dividend Reinvestment Plan or Coke DRIP Literature

When I was a senior in high school, I bought my youngest sister, who was first grader at the time, a single share of Coca-Cola common stock for her 6th birthday.  I had it framed with an engraving of the first part of Deuteronomy 8:18 placed under it, "You shall remember the Lord your God, for it is he who gives you power to get wealth". I registered the ownership as a uniform gift to minors, naming our father as the trustee.  He and my mom decided to have $50 each month taken out of their … [Read more...]

Filed Under: Dividends, Dollar Cost Averaging, Featured, Saving Money Tagged With: , , , , , , , , , , , , , , , , ,

American Manufacturing Profits Are the Same After Inflation As In 1960

September 3, 2010 By Leave a Comment
Profit by Industry in the United States of America

The manufacturing sector in the United States generates the same inflation-adjusted profits it did in 1960.  Surprised?  Consider this: In 1960, the United States manufacturing sector generated total profits of $23.8 billion. In 2008, the United States manufacturing sector generated total profits of $175.5 billion. If we adjust for inflation, 2008 profits from manufacturing should have been $171.17 billion, so we are actually ahead of the game a bit.  The problem is, at the same … [Read more...]

Filed Under: Case Studies & Profiles, Economics Tagged With: , , , , , , ,

How to Solve the Trade Deficit – Part III

August 31, 2010 By Leave a Comment
Knowledge Worker

This is Part III of my special on How to Solve the Trade Deficit.  If you missed the earlier parts, you can read Part I or Part II first. How to Solve the Trade Deficit - Knowledge Workers vs. Manual Workers In many ways, your question about the trade deficit has very little to do with global trade policies and everything to do with the rise of the "knowledge worker" class that Peter Drucker predicted in 1959. Drucker, the management guru who is to executives what Warren Buffett is to … [Read more...]

Filed Under: Economics Tagged With: , , , , , , , , , , , , , , , , ,

Professor Richard Wolff Says Capitalism Is To Blame … for Everything

August 21, 2010 By 1 Comment
Richard Wolff on Capitalism

Amherst professor Richard Wolff, is arguing that capitalism is a failure because events like the housing crisis keep occurring with some regularity.  Evil banks are "forcing debt" on more Americans who are downing under their bills.  He proposes that we should create low cost "community owned" housing for everyone. Yes, Richard, because American Express and Discover showed up at your house, put a gun to your head and made you pick up a pen, place the tip of the pen on the cardholder … [Read more...]

Filed Under: Economics Tagged With: , , , , , , , , ,

How to Marry a Millionaire – An Economic Update on the 1953 Film

August 15, 2010 By Leave a Comment
How to Marry a Millionaire

In 1953, a great movie starring Lauren Bacall, Bette Grable and Marilyn Monroe was released called How to Marry a Millionaire.  I got curious as to how much money it would take to equal the same net worth today so I did an inflation adjustment because I wanted to know how big their motivation was in the film. Turns out, someone who had $1 million in 1953 would have roughly $8 million today. That kind of asset base should generate cash dividends or interest of $34,000 per month without … [Read more...]

Filed Under: Economics, Movies Tagged With: , , , , , , , , , , , , , , , , ,

Super Tycoons Facebook Update: From $100 Million to $14 Billion

August 5, 2010 By Leave a Comment
Super Tycoons on Facebook Update

On May 9th, I gave an update on the Super Tycoons game I've been playing every day on Facebook in which you have to build an empire and compete against other players. I've even convinced my grandma to start playing it as a steel tycoon. When I wrote about the game back in May, my in-game businesses generated $11 million per day and my game net worth stood at below $100 million.  As of a few seconds ago, I've gotten my in-game profits to just under $500 million per day and my game net worth … [Read more...]

Filed Under: Video Games Tagged With: , , , , , , ,

Ruby Is Now a Steel Baroness on the Tycoons Facebook Game

July 16, 2010 By Leave a Comment
Super Tycoons Facebook Game

My grandma Ruby is finally on Facebook.  As a result, we got her playing the Tycoons game that I have been obsessed with for the past few months (as evidenced by the total blog posts I've written about it).  Since my last update, I've increased my net worth in the game from almost nothing when I started two months ago to roughly $6 billion today. With the commodity price inflation that has happened, we got Ruby setup and she started with a few hundred thousand dollars, like all players.  … [Read more...]

Filed Under: My Life Tagged With: , ,

The House of Creed Is the Perfect Family Business

July 7, 2010 By Leave a Comment
Creed Fragrance Counter at Harrods Department Store

This is cross-posted from the Investing for Beginners site at About.com, a division of The New York Times.  I wanted to point it out to the readers here and tell you to head over there and check it out because I had been writing so much about Creed perfume, cologne, and fragrance products the past few days and the Creed business itself.  Many of you read my About site anyway, but I just wanted to make sure you didn't miss it. For the past few days, I've been adding to my collection of … [Read more...]

Filed Under: Case Studies & Profiles, Fragrances & Perfumes Tagged With: , , , , , , , , ,
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