The Opportunity Cost

You can’t have your cake and eat it, too.  It’s a silly old saying with a huge dollop of folk wisdom hidden in the middle of it.  But money spent is sometimes more than just money gone – in an integrated world it’s a choice to make one connection when another one might have been a better choice.

Rather than just measure how much money is going in and out, it might be better to understand what we could buy with the same money.  The technical term for this is “Opportunity Cost”, or what we give up by making the choices we do.

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Opportunity Costs

I’m too upset by the prospect of a government shutdown to write anything coherent.  It happens.  So I dug through the last time we had this problem potentially looming in 2011 and found this piece.  It’s not only still relevant, but it ties into our recent piece on the Triple Threat of forces on our economic health that no one is really dealing with.  I hope you enjoy this repeat from 31 August 2011.

You can’t have your cake and eat it, too.  It’s a silly old saying with a huge dollop of folk wisdom hidden in the middle of it.  But money spent is sometimes more than just money gone – in an integrated world it’s a choice to make one connection when another one might have been a better choice.

Rather than just measure how much money is going in and out, it might be better to understand what we could buy with the same money.  The technical term for this is “Opportunity Cost”, or what we give up by making the choices we do.

Continue reading

The Real Power

Between the political conventions, the people running for the second most powerful office in the land have to stand down for a moment and let the Big Guy speak.  That would be Ben Bernanke, who delivered his annual address at the Jackson Hole conference today.  You want real power?  If being able to print $1.6T ain’t it, I don’t know what is.

The speech was highly anticipated because in the past the occasion was used to announce rounds of Quantitative Easing.  There was hope there would be a third round of it, which is to say more greenbacks flowing out into the economy hot off the Fed presses.  It didn’t happen.  Bernanke spoke instead about what’s gone wrong and what they’ve done to try to get things to start back up.

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