Ask Mr. Finance Person
Today, we are pleased to announce the latest from guest-columnist Ask Mr. Finance Person, whose writings have been rated among the top 1,000 columns enjoyed by laboratory rats. Ask Mr. Finance Person first gained notoriety for his insightful comments on the causes of the Great Depression and later made his fortune selling long-term equity debentures of fiduciary trust instruments to the retired Eskimo community.
Q: What exactly were your insightful comments on the causes of the Great Depression?
A: Well, you see, a lot of people had, like, not very much money, and they were, you know, kind of depressed about it.
Q: Oh, I see.
A: Yeah, a lot of people have misunderestimated the correlation between the lack of money and the greatest economic crises of our times. You’d be surprised how often the two go together.
Q: And would the same correlation, so-called, hold true for the current crises involving the banking and credit industries?
A: Oh, yeah. The problem today is that the banks can’t get their hands on enough money.
Q: I thought banks had all the money.
A: Shows how much you know. They spent all their money the past few years buying up creative mortgage debt obligations which were, from a technical financial perspective, worthless.
Q: Why on earth did they do that?
A: It was buried in the fine print and by the time they discovered it, it was too late.
Q: So how are the banks going to get more money?
A: The Federal Reserve (motto: This Stuff Sure is Complicated) is working on it but they’re kind of in a tough spot because they can’t just print more money or just take money from someone else without making things a lot worse.
Q: What exactly is the Federal Reserve?
A: The Federal Reserve was established to give the top economists in the country the opportunity to see if that which was true in economic theory worked in real life.
Q: So what are they going to do?
A: It’s really anyone’s guess at this point.
Q: How is this different than 1929?
A: Back then, everyone ran out of money because the Federal Reserve got their debits and credits mixed up.
Q: I’ve never understood the difference between a debit and a credit.
A: A debit can be a good thing if you’re talking about assets like your house or that collection of 1973 editions of Newsweek magazine personally autographed by the editor or it can be a bad thing if you’re talking about the mysterious charge on your bank statement from Uncle Al’s Hemp Emporium in Pakistan; a credit is exactly the opposite.
Q: How do you know about Uncle Al’s?
A: Let’s not talk about that, ok?
Q: Sure. Where to we go to see pictures of your house?
A: Um…follow this link.
Q: Hey, nice house.
A: Thanks.
Q: One last question: can you tell me how to juice up the returns on my certificate of deposit investment positions?
A: Juice up?
Q: It comes from two Latin words meaning, “to make a bunch of money” and “for me”
A: Well, sure, here’s the secret. When average interest rates are slightly above the long-term average, purchase at a discount a mid-long-term callable bond that pays above the long-term average but slightly less than the prevailing rates. Then, when rates drop to less than the long-term average, the bank will call you at face-value and you’ll be walking around with a pile of extra dough in your pocket.
Q: What?!
A: Looks like we’re out of time. Good luck with that whole money thing.
Q: What exactly were your insightful comments on the causes of the Great Depression?
A: Well, you see, a lot of people had, like, not very much money, and they were, you know, kind of depressed about it.
Q: Oh, I see.
A: Yeah, a lot of people have misunderestimated the correlation between the lack of money and the greatest economic crises of our times. You’d be surprised how often the two go together.
Q: And would the same correlation, so-called, hold true for the current crises involving the banking and credit industries?
A: Oh, yeah. The problem today is that the banks can’t get their hands on enough money.
Q: I thought banks had all the money.
A: Shows how much you know. They spent all their money the past few years buying up creative mortgage debt obligations which were, from a technical financial perspective, worthless.
Q: Why on earth did they do that?
A: It was buried in the fine print and by the time they discovered it, it was too late.
Q: So how are the banks going to get more money?
A: The Federal Reserve (motto: This Stuff Sure is Complicated) is working on it but they’re kind of in a tough spot because they can’t just print more money or just take money from someone else without making things a lot worse.
Q: What exactly is the Federal Reserve?
A: The Federal Reserve was established to give the top economists in the country the opportunity to see if that which was true in economic theory worked in real life.
Q: So what are they going to do?
A: It’s really anyone’s guess at this point.
Q: How is this different than 1929?
A: Back then, everyone ran out of money because the Federal Reserve got their debits and credits mixed up.
Q: I’ve never understood the difference between a debit and a credit.
A: A debit can be a good thing if you’re talking about assets like your house or that collection of 1973 editions of Newsweek magazine personally autographed by the editor or it can be a bad thing if you’re talking about the mysterious charge on your bank statement from Uncle Al’s Hemp Emporium in Pakistan; a credit is exactly the opposite.
Q: How do you know about Uncle Al’s?
A: Let’s not talk about that, ok?
Q: Sure. Where to we go to see pictures of your house?
A: Um…follow this link.
Q: Hey, nice house.
A: Thanks.
Q: One last question: can you tell me how to juice up the returns on my certificate of deposit investment positions?
A: Juice up?
Q: It comes from two Latin words meaning, “to make a bunch of money” and “for me”
A: Well, sure, here’s the secret. When average interest rates are slightly above the long-term average, purchase at a discount a mid-long-term callable bond that pays above the long-term average but slightly less than the prevailing rates. Then, when rates drop to less than the long-term average, the bank will call you at face-value and you’ll be walking around with a pile of extra dough in your pocket.
Q: What?!
A: Looks like we’re out of time. Good luck with that whole money thing.
posted by brandywine on Saturday, March 29, 2008
3 comments
