Pocket Change: Answers to Your Finance Questions | Online NewsHour | May 5, 2009 | PBS: "In the first installment of Pocket Change, a regular forum on personal finance, NewsHour economics correspondent Paul Solman and finance professor Zvi Bodie tackle viewers' questions on credit unions, credit scores, and whether gold makes a good investment."
and then a discussion of Savings and Investing from the PBS FinanceFallacy series:
"ZVI BODIE: It's what's left over after you consume your income. How you invest it is about, you know, how much of it goes into a savings account, how much of it goes under a mattress, how much of it goes into stocks and other risky assets. So, investing in and of itself is not taking risk. You can invest safely. It's simply how you are allocating your saving and the aggregate or the total investment in any given period of time is by definition equal to the total amount of saving.
PAUL SOLMAN: Well, but you can understand then why people would conflate the two and say, "Oh well, savings and investment - it's the same amount, so it's the same thing." But...
ZVI BODIE: Well, I think what causes the confusion is that you're using the word "safe" and you have things like savings accounts. So, in the popular parlance, as opposed to the economics definitions, it is the case that saving is what you put into a savings account."
Bodie goes further and actually plays the role of an interviewer:
"At an annual meeting of economists, Paul and Zvi asked several professors of economics about the SEC's explanations of saving and investing, as taught on the SEC's Web site. The overwhelming response: The explanations are wrong."
BTW the video gives you an idea of the exciting surroundings at most Finance/Econ conferences.
1 comment:
That video clip only goes to emphasize how much work needs to be done in retooling the SEC. Evidently, even in the smallest capacities.
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