Critique of Federal Reserve Podcast

Today, I reviewed Ashley and Justin's podcast on the Federal Reserve, which was very well presented. Not only was it very informative, but it was easy to listen to. It also touched on all the major points about the Fed, including its purpose, responsibilities and structure.

Another good aspect of the podcast was its style. It was created in the form of a study session between two students in an economics class. Although that would appear to be the most common format, it was very unique amongst the many podcasts; especially the pictures with the captions at the beginning and the ending of the podcast. The simplistic language they use also helps to make the podcast more listenable. It is much easier to listen to two students converse about the Federal Reserve rather than a teacher lecture about it. All in all, I believe this podcast was very educational.

I GIVE IT TWO THUMBS UP!!!

Compound Interest and the rule of 72

Compound Interest
When people talk about Compound Interest they are referring to the amount of money made solely through interest. Compound Interest is just the formal way of saying "making interest off your interest." Here is an example:

Example 1: Let's say I put $100 in the bank and my interest rate is 10%. After the first year, I will have made $10 interest on my $100, leaving me with a total of $110. Then, after another year I will have made $11.00 (10%) interest on my $110, which leaves me with a total of $121. Within 10 years, I would have made $159.37 interest on my $100. That's a lot of free money that I could use for college.

The Rule of 72
The Rule of 72 is an equation (72/x) used for compound interest. It allows a consumer to calculate the amount of time it takes to double their money, based on the annual interest. Likewise, it allows consumers to determine the required annual interest rate in order to double their money in a specified amount of time. Here are two examples:

Example 1: I have invested $100 in the bank. I would like to double my money within the next 5 years. In order to do that I have to use the following equation:

(72/x), where x is the number of years.
So, 72/5 is equal to 14.2.
Therefore, the annual interest rate must be at least 14.2%
for me to double my money in five years.

Example 2:I have invested $100 in the bank. My current annual interest rate is 7%. In order to determine the number of years it will take for my money to double I must use the following eqaution:

(72/x), where x is the annual interest rate.
So, 72/7 is equal to about 10.29.
Therefore, it will take me 10.29 years in order to
double my money with an annual interest rate of 7%.

Insider Trading Scandal-What Happened?

On Thursday, March 1, 2007, thirteen people were arrested for insider trading dating back to the 1980’s. According to the New York Times, some Wall Street Journal employees have been secretly exchanging information with employees of USB and Morgan Stanley. These secrets allowed them to buy or sell stocks before the news is made public. Amongst these people included Mitchel Guttenberg, a executive director at USB, David Tavdy, Erik Franklin, and Randi and Christopher Collotta. They were charged with conspiracy to commit securities fraud and securities fraud. If convicted guilty, they will serve about 25 years in prison.