Andrew's Economics Blog

Taxes - How does the government spend money?

2007-05-23T10:06:00.000-05:00

The governments spends there money on multiple areas such as:

Military 51% - They spend this money for veteran benefits, interest in the national debt, military personel housing construction and the development of new arms.

Medicare 17% - The national health insurance program for people 65 or older and under 65 with disabilities and people with permenant kidney failure.

Medicaid 16% - This program pays for medical assistance to families and individuals who meet certain eligibility based on income. This is the largest source of medical and health resource in United States.

Misc. 13% - Payments for people receiving health care at the time services are used, and other government projects.

Savings and Debt

2007-05-20T09:54:00.000-05:00

bubblegum juice

U.S. Trade Deficit: Getting Better?

2007-05-14T09:58:00.000-05:00

This article is about how the exports are reflecting the the US dollar and how the trad deficit is getting larger. The US currently has a negative negative balance of trade which is known as the trade deficit or trade gap. This is created because the US is imports, more then they export. Although things are currently changing because however our dollar decreased in value we are now highly sought because with the exchange rate foreign countries are really getting a more for there money. Since our products are more sought after, we are exporting more. This increases our GDP as well as increasing domestic jobs, but most of all our trade deficit will go down. Vehicles, diesel, earth moving equipment, shovels, factory machinery and digital components to build a modern telecommunications back bone are just some of the American made products being exported to nations abroad.

Taxes - How does the government get money?

2007-05-08T09:37:00.000-05:00

The three main taxes in United States we pay are Federal Taxes, State Taxes, and City/Local Taxes. We also pay miscellaneous taxes such as the pollution tax. The Federal Tax covers the payroll and income tax which is taken out from your wage, the estate tax which is collected from a deceased person's estate, and the excise tax which is taken from the sale of tobacco, gasoline and alcoholic beverages. The State Taxes are mostly the same as the Federal Taxes but also have a General Tax which includes the sale of most general purchases. The City/Local taxes are basically the same as the Federal and State Taxes.

Compound Interest and the rule of 72

2007-03-14T08:37:00.000-05:00

The rule of 72 is a quick and accurate tool to predict how fast your will double in a given amount of time with a select interest. By dividing 72 by the annual interest rate you will get your answer. For example if you have $1,000 in the bank and you have 6% interest. 72 divided by 6 is 12. That means it will take 12 years for your money to double. Albert Einstein was originator behind this method. It is very valuable when you are managing money.

Compound interest is interest which is calculated not initial but during the a accumulated period of times. Money you earn yearly through interest. Is accumulated when the interest is added yearly.

Insider Trading Scandal - What Happened?

2007-03-02T09:35:00.000-05:00

On March 1, a group of current and former employees of U.S. top banks were charged for insider trading. They are accused of using leaked information and even blackmailing to make millions of dollars on the stock market. The case involved 13 people from four major Wall Street investment banks (UBS, Morgan Stanley, Bank of America and Bear Stearns). All the men were arrested and four pleaded guilty. They are estimated to have gained $8 million through insider trading. Insider trading is illegal because it give a unfair advantage to those who have money in the stock market. Insider trading allows you know if stock is going to drop or rise before the public does.

Dow down 416 pts! - Why?

2007-02-27T21:45:00.000-05:00

The Dow Jones drop was devasting to the whole stock market. Everyone was selling due to thoughts of overinflation and the lost of value of stocks left and right. But it did not start with Dow Jones, it started millions of miles away in China. The market initially fell in China when rumors stirred of the Chinese governments intentions of raising interest rates and reducing more of the money available for lending. This caused a stir and led to a 9% percent drop in the Chinese stock market. This caused chaos in America and led to 416 points drop at Dow Jones. This is the worst day of trading in the states since after the 9/11 terrorist attacks.

This left me highly frustrated with all the stocks I owned. My stocks were already in decline so this added insult to injury. Disheartened, I sold all my stocks I originally owned. I invested in cheaper stocks and small companies hoping to start with a clean slate.

Opportunity Costs

2007-02-26T21:14:00.000-05:00

Opportunity Costs is the price to we have to pay to do something. It does not have to be a financial gain or loss but can relate to any aspect of life. We think about opportunity costs when we try to make a decision and weigh out the advantages and disadvantages. A real life example of this is everyday when I wake up to go to school. I extremely dislike waking up at 6:30 every morning. I contemplate if I should continue sleeping then wake up a hour later and party all day or I could go to school see some of my friends and leave school whenever I want. I usually decide to go to school because of my eagerness to graduate high school on time. If I do not go to school, I will probably fail my classes (noted from prior experience) and I will prolong my high school career longer then its expiration date. I also consider that I leave school @ 12 PM and that I have good friends and teachers to get me through the day. And Friday's, Weekends, Vacations, and Summer were made for partying.

Another example is when I decided to start my record label and book shows. I knew that this would be costly investment. I did not expect to make lots of money or any at all. Although I did make money that went back into releasing more music. I did not gain large profits that would allow me to call myself a "everday P.Diddy" or "baller" but the benefits outweighed the disadvantages. Through my record label and booking shows I've met so many awesome people who are the nicest people I'll ever meet. They offer me a helping hand whenever and have provided me with free clothing (band tees) and a place to sleep. I personally prefer to be rich in friends, not in the monetary value.

My last example is the United States government. The government can use our tax dollars for the poor education system, unprosperous and underdeveloped cities / neighborhoods and health care. Or they could use our tax dollars to fight a war in Iraq based on lies that only benefits the giant corporations, stopping gay marriage and Mexicans from coming over the border. The government evidently chose to fight the war in Iraq because they value dollar signs (profit over people) and they continue to keep United States free from extremely dangerous Mexican immigrants and gay marriages. hooray *sarcastically*!

Types of Economic Systems

2007-02-15T20:47:00.000-05:00

There are many different types of economic systems. The first one I will discuss is the Traditional Economic System. The people that live in this economic system continue to live in the traditional ways of their ancestors. They continue to harvest their own food, produce their own clothing and shelter. DIY! Traditon determines what they do for a living and how they live their life. Another economic system is Command Economic System. This economic system is completely controlled by the government. You are not allowed to open a small business or doing anything of your liking. The government controls what goods are needed to be made and how people's skills are used. Another completely opposite economic system is the Market Economic System. Economic decisions are based in the hands of the consumer. America has this economic system. We as Americans do not take control of this system by boycotting evil corporations such as Wal-Mart who destroy communities and have a disregard for the rights of their employees. We control this economic system through supply and demand. No country has any economic system fully 100%, most countries have a Mixed Economic System. This economic system has some government control and some free enterprises.

There is also differences in communism and socialism. In a communist economic system the government controls all means of production. They own and control production. In a socialist economic system, the people have a little more power. The government controls major industries such as power plants, railroads, banks, and airlines. Citizens are allowed to start business such as factories, stores or farms.

Stock Market Game - 1 - Initial Investment Strategy

2007-02-08T20:32:00.000-05:00

Before I chose my stocks for the game I did alot of research. I scoured the internet for the best stock and I found many helpful resources from websites such as New York Times and Forbes. I chose my stocks based on information found on these sites. I could not find enough information on penny stocks though, I usually ran into websites that you had to pay a fee to earn insider information on rising penny stocks. I originally bought stocks from Southwest Airlines (LUV) because I read that they are the only airline company that stays consistently successful. I also bought stock from American International Group, Inc. (AIG), there stock was on the rise. I later bought stock from Google (GOOG). Even though it was highly expensive, I think about $467. But it was only to get more expensive as Google continues to takeover the whole world, they are rumored to be in the bid for Uganda.