Economy

Disclaimer: I'm not the smartest guy when it comes to the Economy. Admitedly there is a lot I don't understand. That said...

With all the doom and gloom talk over our current financial situation (bailouts, bank failures, etc...) there is a thread of conversation that I keep picking up on, and I have not heard anyone address this directly.

So this is how I'm hearing it stated...
The banks lent out lots of money via mortgages to people who could not afford them.
(lots of finger pointing as to why this happened. Some blame the people, some blame the banks... I blame the banks. If was out and out fraud on behalf of the people, then they should be prosecuted.)
So, now, the banks have loaned more money that they have. Because of that, the banks (and this is the key point) have stopped lending (even to other banks) because they don't have the cash.
This giant bailout, is to give the banks a pile of cash, so that they can again start lending.
So, here's the part that bothers me... you mean to tell me our entire economy could collapse because people would not be going into debt anymore?
I understand the importance of borrowing money in the form of a loan. people need certain items 'now' that they are willing to pay (in some cases HUGE) interest on. But there's something underlying all this economic talk that bothers me in the sense of keeping people in debt.
Is that what truly runs our economy? Is that why we're the 'richest' country in the world, because we have the most debt? Why does this seem backwards to me?
If someone can explain this to me in 'laymans' terms in a comment, I'm all ears. And thanks!

If nothing else, these bank failures and bailout talks have showed me one thing... I personally am SO FAR removed over any sort of decision making in this process, it's clear to me that class is a very important issue when it comes to this money aspect of America. I saw this recent chart, and it was another example of who could run our country. Who is more like me? (well, neither, I don't own a house, or a plane, or a bike, but I do own one car).
If we let a RICH person make the decisions, we the people will foot the bill and remain in debt. If we let an average guy (I know, Obama's got some $ too!), he (or she) might be willing to hold the corporate big wigs accountable.

where does bread come from?

Ok, today's post ties in two different topics under one word - pretty clever huh? :)
First...
I made my second loaf of bread last night! And I'm happy to report that it went much better than my first attempt. I used the recipe off the back of the packaging of my whole wheat flour that I got from "King Arthur Flour". I stuck pretty good to the recipe (except I used whole milk). Although, I do not understand why I ended up using so much more flour than the recipe called for. It called for 2.5 Cups of flour and I must of added at LEAST a whole 'nother cup of flour. After mixing all the ingredients, it was just a gooey sticky mess, but I just kept adding more flour and eventually got a decent dough. As you can see from the photo, this loaf actually expanded above my (silicon) bread pan. AND it tasted pretty good too! I think next up, I want to try more sweeter breads or breads with fruit in them (like raisins or banana).

And the second topic... Money (aka bread, dough).
Where does money come from?
Think about it for a second...
Did the image of the government Mint pop into your mind?
Guess what... you're wrong!
It's pretty complicated (I'm not sure I fully understand either), but short answer is: The Banks make money out of thin air. Don't believe me?
Watch this video online...
Money As Debt (about 47 minutes).

Tech Tags: bread dough whole+wheat king+arthur+flour money debt banking

Debt is stupid...

I'm certainly not in a position to give anyone money advice. I manage to pay my bills and over the past few years, I've been able to save more than I've ever had. BUT... one of the best decisions I've ever made was to make a concious effort to get out of credit card debt. I was driving a 13 year old pick-up truck (which I LOVED) but it was falling apart. I knew that sometime in the future I'd have to get a new vehicle. So, I made a real effort to stop buying 'toys' and really pay down my debt. In a few years, I cleared all my credit card debt, and (knock on wood) have never gone back in debt since. I've even managed to turn my little bit of savings into actually making money in interest for me. Granted, not a lot, but it's nice to get "free money"!
So, all of that just to say, I found this great post over on the Consumerist.com.
It talks about some guy who is giving a video presentation, but I just read through the "talking points". I struggle on about a weekly basis to NOT go into debt, so its nice to get a reminder like this every so often.
Check it out here...
My favorite... "According to Larry Burkett (?), we spend the first 5-7 years of our marriage trying to reach the same standard of livings as our parents, only problem being that it took them 35 years to do it."

Robin Hood

About a week ago or maybe longer, I happened to watch a reality TV show about Gene Simmons. The rock star from KISS. It was supposed to be a glimpse into his world. After watching the show I felt sick to my stomach. Gene's wife and her sister wanted to go on a shopping spree while Gene took his son to a ranch to figure out why he had lost $20,000 dollars on an investment. Ok, I know that Gene is probably worth several million dollars, and I can understand how he may have lost $20,000 in an investment gone bad. What I could not understand is the activity of his wife. She and her sister hired a guy to help them purchase clothes. Yes - you heard me. He was some sort of "fashion consultant". Well, long story short, the two women ended up making fun of the guy for his height because they had different tastes in clothing. Then when they got home, she had to tell her husband how much she spent at ONE store that he had to go back and settle the bill... $17,000!! I felt sick to my stomach. He didn't seem to mind, She felt like she had it owed to her.
I understand that people have to right to spend their money on whatever they wish. But there is something wrong in this world when a person can go out and drop $17,000 on a whim, on such things as clothes. There is a real disconnect between the people who have, and the people who don't.
What sparked this blog entry was an article I just read about putting it in perspective... The top CEO's in Canada, have earned the average workers yearly salary ($38,010) by 9:46am on Tuesday morning. (I am assuming they had Monday off and started at 9am). It's an interesting article (though it still makes me feel sick to my stomach).
I have just bought a new computer and in spite of me saving for about a year, and it's partly for my job, I still have a tinge of guilt over buying something so expensive ($1900). I guess it's all relative.