February 26, 2012

Do we need a Nobel Prize in Economics?

The scientist Alfred Nobel never wanted a Nobel Prize in Economics. The prize "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" was actually invented in 1968 by the "FED of Sweden" to celebrate the bank's 300 year anniversary. For example: The Nobel Price in Economics winners Myron Scholes and Robert Merton created the Hedge Fund: Long Term Capital Management. Because of flaws in their model, the Hedge Fund went bust in 1998.

A professor recently said that the biggest economic problems is a tsunami of misinformation. This is actually one of the reasons Trejdify.com exists - to try to find the best economic resources and avoid strange articles with misinformation. Here are 3 common misconceptions:
  1. Most of what Americans spend their money on is made in China. The fact is that 2.7 percent goes to products and services that are made in China. 88.5 percent goes to US-made products and services. For example:
    • Durable goods such as cars: 12 percent from China, 66.6 percent from the US
    • The US imported $399 billion worth of goods from China in 2011 - that is 2.7 percent of the entire economy
  2. The US owe most of the debt to China. The fact is that China owns 7.6 percent of the US government debt or $1.13 trillion. But who owns the rest? For example: 
    • Government trust funds: $4.4 trillion
    • Federal Reserve: $1.6 trillion
    • Private US investors: $3.1 trillion
    • Japan $1 trillion
  3. The US imports most of the oil from the Middle East. The fact is 9.8 percent of the oil comes from the Middle East. 49 percent of the oil is produced in the US and much of the imports comes from Canada and Mexico