What are you thankful for in finance or economics?
It’s been a few days, I’ve been listening to Adele’s new album pretty much on loop while knitting and sewing curtains. So yes, it’s that nesting time of year, where we hunker down and seriously consume creamy spiked drinks.
And by “we” I mean Americans, Canadians, Australians, and New Zealanders. Obviously we blame the hobbits on that last one.
Well, here’s a question for you nog-quaffers: what are you thankful for from finance? I’ll extend it to the economy as well if you’d like.
The reason I’m asking is that this week, the Slate Money podcast I’m on is doing a special “thanksgiving” episode where we all talk about something we’re grateful for, and I’m having trouble coming up with something. Here’s what I’ve got so far:
- I’m grateful for consumer loans. After all, they help us out in rough times and allow us to invest in ourselves and our futures through mortgages and student loans. On the other hand, they also raise the price of everything through their availability. In fact I spent a couple of weeks ago on the show arguing that all college debt should be forgiven and that state colleges should be free. So I don’t think this works.
- I guess I’m thankful for inflation, in a sense. I mean, inflation makes it easier on debtors, since their debt is constantly dwindling in value, and it’s certainly better for an economy than deflation. But on the other hand, it can get out of hand and that’s bad, and it’s hard to control. So in the end I’m not actually all that excited by inflation.
- I could just be grateful for the entire financial system working at all. If you think about how much we depend on its functioning, to take out loans, to use our credit and debit cards, and to get paid monthly, it’s kind of amazing. On the other hand, if you think about the way finance deals with poor people, squeezing them for nickels and dimes, then you kind of lose respect. In fact it makes you want to be grateful for the CFPB instead, but that’s not financial enough.
- Finally, I’m thinking about how much I appreciate insurance. Yeah, I know there are plenty of problems with insurance (for example how cray-cray medical prices are for those without insurance, but I tend to blame a lack of reasonable transparency regulation on pricing in medicine on that, not insurance per se). But if you just think about how much insurance actually does for us, whether it’s medical or fire or car or life insurance, then you appreciate that it more or less functions as intended: to even out the bumpy risks of everyday life.
I’m still thinking about this question, and I’d love to hear your ideas!
mathbabe 
I’m grateful for ATMs that are separate from bank branches. (I am not grateful for bank branches that exist only to make people feel like the bank must be solid since it has these big, useless branches at ground level in desirable locations, that are then closed at night, where a more interesting store/restaurant could be.)
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I’ll take a bit of larger prospective – in general economics is one of the foundations making modern (in opposition to primitive) society work.
Considering a simplified version of evolution: in principle it was each person on its own, then there was barter, then there was money, then there were “derivatives” of money (loans, insurance, ATM, etc). Each step up the stairs of complexity adds comfort to our lives, but at the same time possibility of gaming the system and unfairness.
Hence I would say I’m grateful for everything that makes living “easier” – e.g. possibility of helping people that without some sort of welfare wouldn’t stand a chance, or simply not having to go hunting when I want a steak. I am NOT grateful for the unbalances and holes in the system, not sure whether we can have one without the other though.
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1.NO. Student Loans should be refinanced at today’s lower interest rates instead. Americans don’t appreciate Free.
2. Little Inflation is good; High inflation is bad. Frau Yellen & Fed are wresting with this problem as her predecessor did & Volker did same with high inflation 35 years ago.
3. The CFPB is good, but hobbeled by the Congress. The Big Banks should be required to design a low cost package for Poor People as a cost of doing business or have Banks fund a such a package thru our Postal System like Europeans do.
4. Yes.
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In Iceland, the 26th banker has been jailed for their role in the 2008 financial crisis
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I’m thankful that money is nearly universally accepted for transactions.
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On 3, I’m grateful I don’t have to carry pieces of metal around in order to buy things. And can buy stuff from somewhere more than a mile away.
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I’m thankful for the non-bankster innovation in finance, the promising but fragile cryptocurrency such as Bitcoin. If the protocol can be developed to not only directly and securely deliver value worldwide without exorbitant cost, but to also create a universal currency independent of nationalistic, empiricist, elitist manipulation, then it could become again what the pre-bankster Templars originally invented for oft-robbed pilgrims — long-distance banking.
To me such would only be possible if cryptocoin would become immediately transferable to some form of the digital capacity that creates it — such as online credit for cloud value or other server storage and software access. Dreaming on…
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Pretty much EVERYthing about finance and economics scares me right now for the near-term future of the world! 😦 Only thing I’m thankful for is low gas prices, helping hold inflation in check and give the decimated middle-class a little wiggle room.
Perhaps also grateful for the modicum of power the internet accords consumers to hold corporations’ feet to the fire, more-so than in the past.
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Hi from NZ (probably not a hobbit, toes mostly hair-free, partial to second breakfast and mushrooms though),
I’m thankful for those aspects of finance that explain how things are currently working and supply enough information about why they work that way that we can hope to change things to be better.
I don’t like financial explanations that assume that because “human nature” is the primary driver of the way things are means that they have to work that way.
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ATMS, as already mentioned. I remember my parents having to plan which one would spend lunchtime at the bank to get cash. ATMs that work internationally: I remember having to order travellers’ cheques and foreign currency the first couple of times I went overseas. [I’d put European monetary union down, but that had bad effects too.]
Credit cards in the sense of being able to pay for things without cash and remotely by mail, phone, or internet (the loan aspect is probably not socially useful).
Something you don’t have in the same way as here in NZ: EFTPOS. That is, using ATM cards for purchases in stores, at extremely low cost and low risk to the merchant. Lots of places don’t take credit cards, but everywhere takes EFTPOS.
PAYE tax: efficient, relatively low pain, high compliance. If we could make it work for non-employees the world would be a better place.
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I’m grateful for Black-Scholes, because it helps keep the market for business doctoral candidates tight.
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Hmm, that can be taken in different ways. The very narrow range of validity of Black-Scholes will always create a volatile Phud market as long as academics believe that its #BadMath can somehow be tweaked or contorted into applicability in the real world.
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I was thinking more about the utility of closed forms that can be easily taught to MBAs.
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But I do believe that many of the modified options pricing formulas do pretty well, or at least address the critiques of B-S (vol smile, Gaussian dist of underlying etc., asymmetry in returns, poor modeling of risk-free rate, etc.)
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Reblogged this on Alina's Blog.
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I’m not sure if creamy ‘spiked’ drinks followed by that graph was a pun or not, but if it was it was a very good one.
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