The 2008 Financial Crisis: How Would You Grade the Government Response?

I really like this video.  It correctly points out many challenges we may still face today.

Let’s start by defining a few things.

moral hazard:  “A moral hazard is where one party is responsible for the interests of another, but has an incentive to put his or her own interests first.”  http://www.cato.org/pubs/journal/cj29n1/cj29n1-12.pdf 

crowding out:  Governments often borrow money (by issuing bonds) to fund additional spending. The problem occurs when government debt ‘crowds out’ private companies and individuals from the lending market.   http://www.investopedia.com/terms/c/crowdingouteffect.asp#ixzz1W9e6tlsc

A question to consider when you hear about the government borrowing more to pay for a program:  Is the program or service so important that you are willing to borrow from China to pay for it?

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About Christopher Hessenflow

Christopher Hessenflow is a financial planner in the Chicago area. He works with all sorts of people who are much more interesting than he is. He enjoys his career which lends him time to think and, sometimes, be creative. Chip was born bald.
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