Money for Nothing is the latest documentary to cast a stone on the many culprits in bringing about the Great Recession. While it does a decent job of breaking down the convoluted calculus of the United States economy into rote concepts (printing lots of dollars decreases the value of the dollar and lowers interest rates, which in turn encourages people to spend money that is less than what it’s worth), I’m not sure how much of the information is novel.
After four years, we’ve been bombarded with fingers that point to the banks, the irresponsible consumers, predatory lenders, Wall Street, capitalists, the 1%, people trying too desperately to keep up with the Joneses, et al.
Because of this, it’s difficult to watch Money for Nothing without thinking, Well, d’uh.
I suppose the most poignant bit of information comes in the assertion that the Federal Government “created the incentive to borrow” by consistently lowering interest rates. In turn, this provides the “illusion of being richer.” People can buy bigger houses because they can borrow more money. Or, they can renovate these houses because the illusion of value is increased.
The heart of the problem here – something that Money for Nothing touches on, but not as much as it should – is the consumers’ misunderstanding about how the economy works blatantly contributed to the recession. This is not to say that consumers were the only ones at fault, but simple math dictates that if Jack has two goats, and he wants to trade them for a bicycle worth three goats, then he can’t just go home and create another goat; he would have to take the time to breed a goat.
In other words, earning money, as opposed to borrowing, takes time – something that we are unfamiliar with enduring. And investing borrowed money creates no equity. It’s a macrocosmic version of robbing one to pay the other.
