How much debt is it reasonable for individuals to undertake?  I propose two criteria for answering this question.  First, you must be able to service the debt.  Second, the debt should be “productive” in the sense that the benefits of the activity being financed are greater than the cost of the debt.  These criteria can… Read more

When I worked for the Fed, there were televisions in our building’s gym, and they were always tuned to a financial channel. We joked about how the talking heads had an explanation for every market move. Then one day, someone told the truth. He said something along the lines of “we don’t know why the… Read more

Mistakes In 2012, Federal Reserve Chairman Ben Bernanke1 gave a speech on the importance of financial education.  People commonly make financial mistakes such as saving too little, taking on too much debt, holding too little life insurance, making bad investment decisions and paying excessive fees that are unnecessary.  The consequences of these mistakes can be… Read more