Jonathon Jarvis – The Crisis of Credit

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Aside from the wonderful graphics this video provides an excellent overview of the credit crisis, what motivated it, how it expanded and why the whole house of cards collapsed.

What’s missing early on is an explanation of the 1% lending rate set by the Federal Reserve. After viewing this video you should ask yourself are few questions…why was the interest rate at 1%? What motivates the Federal Reserve to set rates so low? Would the marketplace have set a more realistic (read higher rate) sooner thereby putting the brakes on the situation before it became wildly out of control?

In short, would it all have happened if the marketplace truly established the cost of borrowing?

If you ask yourself those questions and do a little research you may determine that central control of the cost of capital (the Federal Reserve) is not the most efficient way to allocate capital.

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s