Danny Swanson

I am in the process of writing a paper on the current economy and how we got there for my macroeconomics class and I found this article quite interesting. The big important part to the article is the date that it was written. This was written in February of 2007 almost a year and half before anyone knew we were in some sort of recession. I thought this was an important line….

“just as in the 1920’s the equity bubble was not created by wages keeping pace with productivity (the healthy formula for growth) but by the expansion of personal debt. Also, one could buy stocks without the money to purchase them, just as one can buy a $600,000 or $700,000 house today with zero-down and no monthly payment on the principle for years to come.”

The similarities are remarkable between the current recession and the Great Depression. It just seems that the great depression involved overinflated stocks while this current recession involved overinflated housing prices. A good long read that is worth it because it shows how powerful economics can be in understanding the future of the economy. I was truly amazed on the shear accuracy of everything written when it was written ahead of any remote sense that a recession was coming.

I thought this fit perfectly into what I have previously talked about. The state of California is planning to raise tuition by 32% over this winter. Then in the summer they are planning to raise tuition by another 32%. The rule of 72 (meaning when you raise something by 72%, the original amount will have doubled) shows that in just over a year, California will have nearly doubled their tuition.

………..They should do what Virginia has been doing. Increase tuition by 5-10% every year. No one gets too upset and they’ll be no protest. Then slowly over 7-10 years you will have doubled tuition……….I am glad California actually protests for education. Virginia on the other hand seems to welcome tuition increases.Virginia has a very interesting belief system in the Government where if you use it you should pay for it. The idea of “public” doesn’t really exist here.

Again I go back to my proposition of Tuition should be free for those who work hard and succeed. It has so many positive benefits in the long run. If politicians just looked into that they could see it but they continue to fix short run problems with more money. I’ll take you back to FDR’s economic bill of rights “The right to a good education.”

Education is not a privilege, it is a right and should be affordable for everyone. Reward good students don’t punish them for wanting to make a better life for themselves.

For my economics class I have been looking at monetary and fiscal policies for this current recession and stumbled across this editorial. I really wish we went to a direct job creation plan like back in FDR’s time. It seems very necessary to improve our deteriorating infrastructure, build new forms of energy plants, and lay down the tracks for high speed rail. The costs of these are small percentages of the billions given to companies