Money for Nothing

By Econ70 | 03/01/2012

In Europe, Mario Draghi, the head of the ECB, is flooding banks with a $1 trillion euros ($1.3 trillion) at 1% in an effort to recapitalize them and maintain liquidity. Many banks are using this money to buy sovereign debt that pays high rates of interest. Unfortunately, as was the case here with QE1 and…

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Not all Debt is Equal

By Econ70 | 01/05/2012

While being in debt is not so great for a household–because interest payments leave the household and go to a bank, or credit card company, debt can be tolerable for a country. If the debt is largely internally held (Japan), interest payments go from the government to domestic creditor households. The problem is that to…

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