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	<title>Business &#38; MoneyCategory: Economics &#124; Business &#38; Money &#124; TIME.com</title>
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		<title>Business &#38; MoneyCategory: Economics &#124; Business &#38; Money &#124; TIME.com</title>
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		<item>
		<title>Bernanke’s Dilemma: No Good Moves Left</title>
		<link>http://business.time.com/2013/05/22/bernankes-dilemma-no-good-moves-left/</link>
		<comments>http://business.time.com/2013/05/22/bernankes-dilemma-no-good-moves-left/#comments</comments>
		<pubDate>Wed, 22 May 2013 17:28:18 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Finance]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Jobs]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=80573</guid>
		<description><![CDATA[There’s a term in chess called zugzwang, which describes the point in a game when it&#8217;s your turn to move but every move you could make would worsen your situation. That’s pretty much what the chessboard looked like for Federal Reserve chairman Ben Bernanke when he testified before Congress this morning. What everyone most wants to know is when the Fed is going to start tapering off its bond-buying program (called Quantitative Easing), which has flooded the banking system with money for the past five years and kept interest rates abnormally low. And that was something Bernanke couldn&#8217;t answer. In his testimony, the Fed chairman gave a carefully hedged commitment that the central bank would continue buying bonds – currently $85 billion a month – until the economy is stronger. And he repeated last December&#8217;s official statement that the Fed intends &#8220;to maintain highly accommodative monetary policy as long as needed to support continued progress toward maximum employment and price stability.&#8221; When asked at what point the bond-buying policy might change, Bernanke was more evasive, saying that the Fed might need a few more meetings to make that decision. Asked if it would be decided by Labor Day, he demurred. Bernanke&#8217;s hedging isn&#8217;t primarily a sign of indecisiveness. His real problem is that given current economic conditions, there aren&#8217;t any good moves he can make. The conventional wisdom – and the presumption behind the Fed&#8217;s current policy – is that the economy is steadily improving, even if progress is slow. And while easy money eventually leads to higher inflation, that threat could still be several years away. So ideally, the Fed&#8217;s stimulus could get the economy back to a normal rate of growth before inflation becomes a problem, at which point the Fed could taper off its bond buying little by little and gracefully exit the picture. (MORE: The Unspeakably Wonky Idea That Can Solve the Corporate Tax Debate) But what if the economy isn&#8217;t getting better, or is improving so sluggishly that it will take years to get back to normal?<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=80573&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Federal Reserve</primary_category><primary_category_link>http://business.time.com/category/economy-policy/federal-reserve-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/169246414.jpg?w=240</featured_image>
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			<media:title type="html">Federal Reserve Board Chairman Ben Bernanke at a hearing before the Joint Economic Committee  on Capitol Hill, in Washington, D.C., on May 22, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<item>
		<title>Republicans Seem to Be Out of Economic Ideas &#8212; Here Are Two Suggestions</title>
		<link>http://business.time.com/2013/05/20/republicans-seem-to-be-out-of-economic-ideas-here-are-two-suggestions/</link>
		<comments>http://business.time.com/2013/05/20/republicans-seem-to-be-out-of-economic-ideas-here-are-two-suggestions/#comments</comments>
		<pubDate>Mon, 20 May 2013 09:45:14 +0000</pubDate>
		<dc:creator>Rana Foroohar</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[austerity]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=80396</guid>
		<description><![CDATA[If you think about thrift as a moral quality, it’s easy to understand why Republicans have gotten things so wrong in terms of macroeconomic policy over the past few years. Austerity, after all, has a folksy and intuitive appeal, the idea being that you can’t cure debt with more debt. No household could — and why shouldn’t the government be run like a stable household, never borrowing what it can’t repay quickly and easily? Of course, we know why not: Keynes explained the reason in his General Theory, and pretty much every modern leader who has tried to fight rising debt with austerity since then, from Herbert Hoover to the modern technocrats of Greece and Italy, has failed. The Germans, like many American conservatives, are still enamored of austerity. It appeals to their sense of thrift and fairness; but having spent time recently in Germany, I can see that, as in the U.S., this approach has also become a moral issue. The fact that so many European nations are trying to cut public spending all at once is clearly the reason that Europe is now officially in the longest recession since the creation of the euro zone. But belief in austerity persists because there&#8217;s a certain grim moral justice in the idea that debtor nations should pay for their crimes with deep, painful forced cuts. (MORE: The Mystery of the Incredible Shrinking Budget Deficit) Justice aside, austerity is a failed economic concept, a realization that is having major short-term ramifications in Europe (as I’ll be exploring in more detail in an upcoming TIME magazine story). But it may also have a longer-term impact on the 2014 congressional and 2016 presidential elections in the U.S. For some time now, conservative economic policy has revolved around two ideas: the supposed need to slash government budgets in order to cut the deficit, and the notion that tax cuts will spur growth (a.k.a. trickle-down economics). But as we’ve seen in headlines over the past week, the deficit is coming down fast, not because of cuts, but<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=80396&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">ranaforoohar</media:title>
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		<title>Car? House? Sorry: Graduates of 2013 Are Each $35,200 in Debt</title>
		<link>http://business.time.com/2013/05/17/car-house-sorry-graduates-of-2013-are-each-35200-in-debt/</link>
		<comments>http://business.time.com/2013/05/17/car-house-sorry-graduates-of-2013-are-each-35200-in-debt/#comments</comments>
		<pubDate>Fri, 17 May 2013 12:00:59 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Careers & Workplace]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economics & Policy]]></category>
		<category><![CDATA[Educational Financing]]></category>
		<category><![CDATA[Financial Education]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Saving & Spending]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=80188</guid>
		<description><![CDATA[The typical college graduate will leave campus this month owing nearly as much money as they stand to earn in their first year of full-time employment, new research shows. At a personal level, graduates toting up their private and government student loans, credit card balances, and personal debt will find the sum shocking. On average, they owe $35,200 and half say they are surprised by how much debt they have accumulated, according to a Fidelity Investments Cost-Conscious College Graduates Study. At a broader level, this debt has far-reaching implications for the economy as young people with starting pay of $44,455 spend much of it servicing debt—not buying cars and homes or beginning to save for retirement or emergencies. Some 70% of college grads have loans; many won’t pay them off for a decade. (MORE: The Myth of the Four-Year College Degree) The upshot is that young people are getting a late start building wealth. People in their late 20s to late 30s have 21% less inflation-adjusted wealth than those in the same age range 25 years ago, according to the Urban Institute. That’s partly due to the housing bust, which socked young people who had bought near the top. But student debt is a big factor. “Student loans are the second largest source of debt for today’s Americans in their late-20s to late-30s,” writes Caroline Ratcliffe of the Urban Institute in her blog. “By way of comparison, student loans were a relatively small component of debt for their counterparts in the 1980s.” Mortgages remain the largest debt source. Ratcliffe shared this view with the Federal Financial Literacy and Education Commission on May 14 as part of the Commission’s inquiry into student debt issues. She said that educating high school kids about college debt should be a priority, and added: “But teaching financial literacy at younger ages is also critical. The earlier in life a person begins to build wealth, the more time those assets have to compound and become more valuable. So the key is to teach more people to<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=80188&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Educational Financing</primary_category><primary_category_link>http://business.time.com/category/planning/educational-financing/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/01/rear-view-of-students-wearing-graduation-caps.jpeg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/01/rear-view-of-students-wearing-graduation-caps.jpeg?w=240" />
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			<media:title type="html">Rear view of students wearing graduation caps</media:title>
		</media:content>

		<media:content url="http://1.gravatar.com/avatar/d69b05e696e822e7e41ae630be72226a?s=96&#38;d=http%3A%2F%2F1.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">dankadlec</media:title>
		</media:content>
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		<item>
		<title>This Housing Upturn Looks Like the Real Thing</title>
		<link>http://business.time.com/2013/05/15/why-this-housing-upturn-looks-like-the-real-thing/</link>
		<comments>http://business.time.com/2013/05/15/why-this-housing-upturn-looks-like-the-real-thing/#comments</comments>
		<pubDate>Wed, 15 May 2013 09:45:32 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Construction]]></category>
		<category><![CDATA[Economic Indicators]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Finance]]></category>
		<category><![CDATA[Foreclosures]]></category>
		<category><![CDATA[Home-Equity Loans]]></category>
		<category><![CDATA[Jobs]]></category>
		<category><![CDATA[Mortgages]]></category>
		<category><![CDATA[Real Estate]]></category>
		<category><![CDATA[Real Estate & Homes]]></category>
		<category><![CDATA[Real Estate Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79982</guid>
		<description><![CDATA[Ever since the recovery began in 2009, a weak housing market has held back the U.S. economy. The first rebound in home prices was lackluster and after only a year was followed by another dip. But the recent upturn in home prices looks like the real thing. One clear sign of a turning point: In March, homeownership hit a 17-year low, while the 12-month gain in home prices was the biggest in seven years. Those two extremes suggest that the market has hit bottom. The people who are least well financed have been squeezed out, while demand is growing among people who can afford to pay higher home prices. If that trend continues – and there are good reasons to believe it will – a substantial burden will be lifted from the U.S. economy. The great surprise since the recession ended has been the weakness of the economic rebound, which has been particularly clear in the housing market. After falling 31% from 2006 to 2009, home prices rose almost 5% over the following year. But that recovery faltered, and during the next 20 months prices fell to a new low. Then the current recovery began, and barring another recession, all the evidence indicates that it will be sustainable: In the first quarter, home prices were higher (compared with a year earlier) in 133 of 150 metropolitan areas, according to the National Association of Realtors. On a national basis, the median home price gained 11.3%, the biggest yearly gain since 2005. (MORE: The Housing Mirage) The glut of homes for sale has diminished, down almost 17% compared with the previous year. In addition, the number of foreclosures in April (including bank repossessions and scheduled auctions) was 23% lower than a year earlier. Mortgage applications were up 7% in the most recent week, helped by low mortgage rates. Refinancings, which typically improve homeowners’ finances, have been generally rising in recent months and reached their highest level since December. And a Fannie Mae survey of consumer expectations for housing found that a majority of those surveyed in<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79982&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Real Estate &amp; Homes</primary_category><primary_category_link>http://business.time.com/category/personal-finance-2/real-estate-homes/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2012/03/600_ml_housing_03271.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2012/03/600_ml_housing_03271.jpg?w=240" />
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			<media:title type="html">Housing</media:title>
		</media:content>

		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>Forget &#8216;Buy American&#8217;? U.S. Retailers Push an &#8216;Imports Work&#8217; Campaign</title>
		<link>http://business.time.com/2013/05/13/forget-buy-american-u-s-retailers-push-an-imports-work-campaign/</link>
		<comments>http://business.time.com/2013/05/13/forget-buy-american-u-s-retailers-push-an-imports-work-campaign/#comments</comments>
		<pubDate>Mon, 13 May 2013 13:00:58 +0000</pubDate>
		<dc:creator>Brad Tuttle</dc:creator>
				<category><![CDATA[Asia]]></category>
		<category><![CDATA[Companies & Industries]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Emerging Markets]]></category>
		<category><![CDATA[Future of Retail]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Manufacturing]]></category>
		<category><![CDATA[Retail]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>
		<category><![CDATA[Smart Spending]]></category>
		<category><![CDATA[World Finance]]></category>
		<category><![CDATA[apparel]]></category>
		<category><![CDATA[Buy American]]></category>
		<category><![CDATA[china]]></category>
		<category><![CDATA[imports]]></category>
		<category><![CDATA[Made In America]]></category>
		<category><![CDATA[Made in China]]></category>
		<category><![CDATA[Made in the USA]]></category>
		<category><![CDATA[National Retail Federation]]></category>
		<category><![CDATA[socks]]></category>
		<category><![CDATA[TAP America]]></category>
		<category><![CDATA[Tariffs]]></category>
		<category><![CDATA[Trade Partnership Worldwide]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79685</guid>
		<description><![CDATA[Wanna support American workers? Buy imports. So says a new report, which claims that a cheap, robust imports marketplace not only helps American workers and families, but local farmers, manufacturers, and small businesses as well. You may not have noticed, but last week was promoted as something called &#8220;Imports Work Week.&#8221; The celebrate the importance of imports in the U.S., a group of business associations led by the National Retail Federation (NRF) has released a study showing the many ways that imports benefit American consumers and businesses alike. Cheaper prices are the most obvious benefit. &#8220;In the past decade, the price of television sets sold in the United States has dropped 87 percent. Computers have gone down 75 percent, toys 43 percent and dishes and flatware by a third,&#8221; the NRF&#8217;s Jon Gold explains in a blog post. &#8220;Why? The answer is easy – imports.&#8221; (MORE: Bangladesh Factory Collapse: Is There Blood on Your Shirt?) But the benefits don&#8217;t stop there, according to the study, which runs down how imports also help farmers, mom-and-pop businesses, working-class Americans, and even U.S. manufacturers. Here are a few of the groups that should love what imports do for them, per the report: • Imports improve American families’ standard of living. They help families make ends meet by ensuring a wide selection of budget-friendly goods, like electronics we use to communicate and many clothes and shoes we wear, and improve the year-round supply of such staples as fresh fruits and vegetables. • Imports support more than 16 million American jobs. A large number of these import-related jobs are union jobs, held by minorities and women, and are located across the United States. • More than half the firms involved in direct importing are small businesses, employing fewer than 50 workers. • American manufacturers and farmers rely on imports including raw materials and intermediate goods to lower their production costs and stay competitive in domestic and international markets. Factories and farms purchase more than 60 percent of U.S. imports. (MORE: Patriotic Consumer&#8217;s Dilemma: Hard to<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79685&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/108000176-e1368115358271.jpg?w=240</featured_image>
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			<media:title type="html">Detail of Made in China label on shirt</media:title>
		</media:content>

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			<media:title type="html">bradtuttle</media:title>
		</media:content>
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		<item>
		<title>The Made-Up Numbers Dominating the Immigration Debate</title>
		<link>http://business.time.com/2013/05/10/the-made-up-numbers-dominating-the-immigration-debate/</link>
		<comments>http://business.time.com/2013/05/10/the-made-up-numbers-dominating-the-immigration-debate/#comments</comments>
		<pubDate>Fri, 10 May 2013 16:18:21 +0000</pubDate>
		<dc:creator>Christopher Matthews</dc:creator>
				<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Government]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79710</guid>
		<description><![CDATA[The Heritage Foundation made a splash early this week with a report predicting that the current immigration reform bill being debated in the Senate would cost the U.S. government $6.3 trillion dollars in benefits like Social Security, Medicare, means-tested welfare, and other programs over 50 years. The basic logic behind the study is that undocumented immigrants are far lower skilled and less educated than the average American, and therefore these folks will, on average, take more in benefits than they will contribute in taxes. (MORE: The Gang Reaches Across the Aisle as Senate Immigration Debate Kicks Off) The analysis fomented significant backlash, not just from the liberal outfits you&#8217;d expect but also from conservative groups like the Cato Institute and the American Enterprise Institute that support immigration reform. The two biggest flaws in the report, according to these critics, were that it did not take into account any of the economic benefits of immigration and previously undocumented immigrants coming out from the shadows; and that it underplayed the high costs of the status quo. As Alex Nowrasteh of the Cato Institute puts it: &#8220;Heritage &#8230; largely ignores the wage increases experienced by immigrants and their descendants over the course of their working lives, how those wages would alter after legalization, and the huge gains in education amongst the second and third generation of Hispanics.&#8221; In addition, the Heritage report assumes that undocumented immigrants mostly up and leave when they reach the age of 55 &#8212; whereas under the reform bill they would remain in the U.S. and draw heavily on government programs. But this assumption doesn&#8217;t make a lot of sense: As Dylan Matthews points out  in the Washington Post, the reason there currently are not more older, undocumented immigrants in the U.S. is that they were legalized by a 1986 amnesty law. Regardless of the Heritage study&#8217;s flaws, it set many conservative supporters of immigration, like Florida Senator Marco Rubio, back on their heels. The last thing a deficit hawk wants is a proposal that will add trillions to the deficit over the next several<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79710&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economics</primary_category><primary_category_link>http://business.time.com/category/economy-policy/economics-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/rtxyof1.jpg?w=240</featured_image>
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			<media:title type="html">U.S.-born boy waves the U.S. flag as his family members from Lebanon wait to take the oath of citizenship during a naturalization ceremony in Los Angeles</media:title>
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			<media:title type="html">christopherrmatthews</media:title>
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		<title>Viewpoint: Ben Bernanke, Enabler of America&#8217;s Fiscal Dysfunction</title>
		<link>http://business.time.com/2013/05/08/viewpoint-ben-bernanke-enabler-of-americas-fiscal-dysfunction/</link>
		<comments>http://business.time.com/2013/05/08/viewpoint-ben-bernanke-enabler-of-americas-fiscal-dysfunction/#comments</comments>
		<pubDate>Wed, 08 May 2013 09:45:34 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Jobs]]></category>
		<category><![CDATA[Management & Leadership]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[Too-Big-To-Fail]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=79402</guid>
		<description><![CDATA[Federal Reserve chairman Ben Bernanke doesn’t get much respect. PIMCO’s Bill Gross, who oversees some of the country’s biggest bond portfolios, has warned that Bernanke risks rousing inflationary dragons.  NYU professor Nouriel Roubini, who correctly anticipated the 2008 financial crisis, has argued that Bernanke’s policies are failing to help the economy and are instead fueling a stock market bubble that will end in a financial crisis. Even experts who are sympathetic have been cutting at times. New York Times columnist Paul Krugman has acknowledged that the Fed chairman is a fine economist.  But his long-running disputes with Bernanke – known in some quarters as the Battle of the Beards – have included charges that Bernanke was assimilated by the Fed Borg, a reference to Star Trek’s collective alien intelligence that overwhelms individuality and personal will. Renowned investor and business magnate Warren Buffett has described Bernanke as &#8220;a gutsy guy,&#8221; but he has also criticized the Fed&#8217;s policies as brutal toward retirees, who depend on interest payments from their investments. Indeed, Bernanke himself acknowledged as much in a 2011 press conference: &#8221;We are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people. They have costs for savers. We have complaints from banks that their net interest margins are affected by low interest rates. Pension funds will be affected if low interest rates for a protracted period require them to make larger contributions. So we are aware of those concerns, and we take them very seriously. I think the response is, though, that there is a greater good here, which is the health and recovery of the U.S. economy.&#8221; (MORE: How Silicon Valley is Hollowing out the Economy) It’s understandable that a public official would feel obliged to do whatever is best for the country at any given moment. If the lack of sound long-term fiscal policies is holding back growth, then up to a point the Fed can justify pumping large quantities of money into the banking system as additional stimulus. But there is a limit. In the long run, excessive money creation may engender<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=79402&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Federal Reserve</primary_category><primary_category_link>http://business.time.com/category/economy-policy/federal-reserve-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/05/162795895.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/05/162795895.jpg?w=240" />
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			<media:title type="html">Ben S. Bernanke, chairman of the U.S. Federal Reserve, during a House Financial Services Committee hearing in Washington, D.C., on Feb. 27, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Austerity Strikes Back: Budget Hawks Regroup After the Reinhart/Rogoff Affair</title>
		<link>http://business.time.com/2013/05/01/austerity-strikes-back-budget-hawks-regroup-after-the-reinhartrogoff-affair/</link>
		<comments>http://business.time.com/2013/05/01/austerity-strikes-back-budget-hawks-regroup-after-the-reinhartrogoff-affair/#comments</comments>
		<pubDate>Wed, 01 May 2013 16:02:39 +0000</pubDate>
		<dc:creator>Christopher Matthews</dc:creator>
				<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Government]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78948</guid>
		<description><![CDATA[In recent years, we have had no shortage of pundits, politicians, and writers telling us of the economic doom &#8212; soaring interest rates, slower economic growth, and choking credit markets &#8211; facing the U.S. government if it doesn&#8217;t reign in its debt. Since the financial crisis, however, the U.S. has consistently experienced low interest rates, while a bevy of creditors have been ready to lend them money for next to nothing. And although the economy has grown somewhat slowly, there&#8217;s been scant evidence that this sluggishness is the result of high government debt. Then, two weeks ago, the austerity argument suffered a major setback when a paper written by Carmen Reinhart and Kenneth Rogoff &#8212; which purported to show that countries with debt loads above 90% of GDP see a dramatic decline in economic growth &#8212; was found to be rife with errors. It&#8217;s hard to underestimate how hard the unraveling of this seemingly arcane argument has hit the economic policy world. (MORE: Why the Argument for Austerity Took a Big Hit Yesterday) The affair has put the austerity movement in a bit of a bind. A recent report in The Washington Post suggests that some in the Republican Party want to move away from demanding entitlement cuts and towards fighting for revenue-neutral tax reform in the upcoming round of budget negotiations. While these shifting tactics are probably not the result of one debunked academic paper, it&#8217;s not a stretch to suggest that the right has failed to convince a majority of Americans of the urgent need for cuts to Social Security and Medicare. The problem with macroeconomics, however, is that it&#8217;s very difficult to prove any fact beyond the shadow of a doubt. So while America has not seen soaring interest rates, or fleeing creditors, and has experienced faster economic growth that European countries which have embraced austerity, not everyone is convinced of the wisdom of government debt in times of economic depression. Instead of admitting defeat, advocates of austerity have regrouped and retooled their arguments, which fall roughly into three camps: Keep<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78948&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/economy/</primary_category_link>
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			<media:title type="html">christopherrmatthews</media:title>
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		<title>Is the Price of Gold Signaling an Economic Slowdown?</title>
		<link>http://business.time.com/2013/04/29/is-the-price-of-gold-signaling-an-economic-slowdown/</link>
		<comments>http://business.time.com/2013/04/29/is-the-price-of-gold-signaling-an-economic-slowdown/#comments</comments>
		<pubDate>Mon, 29 Apr 2013 09:45:40 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economic Indicators]]></category>
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		<category><![CDATA[Emerging Markets]]></category>
		<category><![CDATA[Energy]]></category>
		<category><![CDATA[Europe]]></category>
		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Investing]]></category>
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		<category><![CDATA[New Energy]]></category>
		<category><![CDATA[Oil]]></category>
		<category><![CDATA[Portfolio Strategy]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[Wall Street]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78807</guid>
		<description><![CDATA[Friday’s GDP number was a disappointment. The consensus among economists was that growth for the first quarter would be at least 3% (at an annual rate adjusted for inflation). The actual number was only 2.5%. And even that wasn’t as good as it looked. Growth late last year was very weak, so part of the first-quarter gain was simply a short-term bounce back from the previous quarter. Nonetheless, those results appear to fit with conventional wisdom: A lethargic economy has managed to crank out minimal but steady growth for almost four years. And the outlook is slowly getting better rather than getting worse. Some contrarians challenge that view. They sees signs that the U.S. economy is losing momentum and is heading for another slowdown, if not another recession. The leading indicators of such a future downturn include price trends for important commodities, as well as for Treasury bonds. The most significant bellwether is the recent drop in the price of gold – the sharpest in 30 years. Since the U.S. abandoned the gold standard in the mid-1970s, consumer prices have quadrupled, but gold has risen more than ten-fold. The gold price hasn’t moved higher consistently – it was relatively flat during much of the 1980s and ’90s. But there have been only three periods in which gold prices suffered a significant and rapid decline. The first was from 1980 to ’82, when Federal Reserve chairman Paul Volcker raised interest rates to crush double-digit inflation and the U.S. economy experienced two closely spaced recessions. The second was in 2008, when the financial crisis caused a credit crunch and a worldwide recession. (MORE: A Nation of Renters: Should We Be Worried That Fewer Americans Own Homes?) The third period began in 2011, when gold peaked at $1,896 an ounce. Since then, the price has fallen to $1,440. Strikingly, this decline is occurring at a time when the Fed is pumping money into the banking system, interest rates are extremely low, and the U.S. economy has not had a negative quarter for nearly four years. Why<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78807&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/rtxymy9-copy.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/04/rtxymy9-copy.jpg?w=240" />
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			<media:title type="html">Watches and gold jewellery in a display case inside the Gold Standard jewellery store, specializing in purchasing raw gold and silver in New York City, on April 15, 2013.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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		<title>The Real Reason to Worry About China</title>
		<link>http://business.time.com/2013/04/28/the-real-reason-to-worry-about-china/</link>
		<comments>http://business.time.com/2013/04/28/the-real-reason-to-worry-about-china/#comments</comments>
		<pubDate>Mon, 29 Apr 2013 02:46:04 +0000</pubDate>
		<dc:creator>Michael Schuman</dc:creator>
				<category><![CDATA[Asia]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Financial Reform]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=78814</guid>
		<description><![CDATA[The world is worried about China, but not for the right reasons. Global financial markets were roiled after the world’s second largest economy notched only a 7.7% boost to GDP in the first quarter — a drool-worthy performance for most nations, but a disappointment for a country that routinely jumped 10% or more over the past three decades. Economists are busily debating the usual: Will China have a hard or soft landing? Will the government step in and stimulate growth? Those questions miss the bigger picture. The reality is that China is unlikely to witness those astronomical growth rates, at least for some time. We may never see them again. The recent slowdown is not a temporary cyclical blip or solely the knockoff effect of the tepid global recovery. China’s growth model is broken and can’t be so easily fixed. Since the start of capitalist reforms in the 1980s, China excelled by throwing tons of resources into a modernizing economy — mountains of cash to build factories, roads and apartment towers, and millions of poor people into making iPads, blue jeans and cars. Under China’s “state capitalism,” bureaucrats often directed the cash into massive infrastructure projects or favored industries. However, this growth engine can’t keep purring indefinitely. The pools of idle labor that filled Foxconn’s assembly lines are drying up — China’s one-child policy made sure of that, by aging the population more rapidly. The workforce has already started to shrink. Even more worrying, the state-led, investment-obsessed system spawns too much debt and too many factories, leading to wasted resources and a debased financial sector. (MORE: Can China Escape the Middle-Income Trap?) That’s what is happening in China today. Everywhere you look, the signs of rot are apparent. In a mad-cap quest to dominate green energy, China’s banks pumped billions into solar-panel manufacturing, creating hundreds of factories and vaulting China into the world’s largest producer. Now the sector has become a victim of its own excess: companies are failing, symbolized by the recent bankruptcy of market leader Suntech Power. Steel companies<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78814&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/economy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-china-economy-130429.jpg?w=240</featured_image>
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			<media:title type="html">A laborer works in a chemical plant in Hefei, central China&#039;s Anhui province, April 7, 2013.</media:title>
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			<media:title type="html">michaeljschuman</media:title>
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		<title>Europeans Are Thinking the Unthinkable: That Debt Defaults Might Make Sense</title>
		<link>http://business.time.com/2013/04/23/europeans-are-thinking-the-unthinkable-that-debt-defaults-might-make-sense/</link>
		<comments>http://business.time.com/2013/04/23/europeans-are-thinking-the-unthinkable-that-debt-defaults-might-make-sense/#comments</comments>
		<pubDate>Tue, 23 Apr 2013 07:00:01 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Europe]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Investing]]></category>
		<category><![CDATA[Labor]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=78185</guid>
		<description><![CDATA[The euro-zone crisis has slipped off the radar screen during the past couple of weeks as gun control and the Boston bombers have dominated U.S. news. But none of the euro zone’s problems have gone away. Political crises beset France, Italy and Spain. Smaller countries, from Portugal to Cyprus, face even more pressing financial troubles. Germany grows less and less willing to foot the bill for bailouts. And for the first time, serious public figures in Europe have begun openly discussing the pros and cons of allowing countries to default on their national debt. There is, in fact, a historical case for tolerating default. Argentina suffered a financial crisis in 1999 that led to a period of high unemployment. Over the next several years, it became harder and harder to maintain the value of currency. In 2002, the country defaulted on more than $100 billion in debt. Inflation soared, and workers&#8217; purchasing power plummeted. Savers lost a big chunk of their money. But a year later, growth bounced back to an 8% to 9% annual rate, and wages rose even faster. The same issues arose during the 2008 banking crisis. Ireland bailed out its banks, while Iceland couldn’t afford to and allowed a partial default. The results were that Ireland had no inflation, but unemployment topped 14% as growth ground almost to a halt. By contrast, in Iceland the currency lost almost half its value and inflation reached 5.4%. However, economic growth picked up slightly and unemployment didn’t rise much above 6%. (MORE: Why the Case for Austerity Took a Big Hit) In all these cases, policymakers had to choose whether working people or financial interests should be the ones to suffer most during a serious economic crisis. Default hurt affluent savers and financial institutions, but proved to be better for ordinary workers over the long term. What is happening now in Europe is that populations are resisting further austerity. In response, politicians and technocrats are beginning to question whether default might ultimately be less painful than doing what will be required to keep<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=78185&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Europe</primary_category><primary_category_link>http://business.time.com/category/economy-policy/europe-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-euro-default-130422.jpg?w=240</featured_image>
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			<media:title type="html">A man walks past a closed down business in Madrid</media:title>
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		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>Why the Argument for Austerity Took a Big Hit Yesterday</title>
		<link>http://business.time.com/2013/04/17/why-the-argument-for-austerity-took-a-big-hit-yesterday/</link>
		<comments>http://business.time.com/2013/04/17/why-the-argument-for-austerity-took-a-big-hit-yesterday/#comments</comments>
		<pubDate>Wed, 17 Apr 2013 12:00:36 +0000</pubDate>
		<dc:creator>Christopher Matthews</dc:creator>
				<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Government]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77904</guid>
		<description><![CDATA[Updated at 11:12 p.m. In the years following the financial crisis, America has been obsessed with debt. Hurting from the crisis, consumers and businesses have been busy paying off debt, while the federal government has ramped up its borrowing through a combination of stimulus spending and lower tax revenue. And of course all this new government debt — which has reached 73% of GDP and is expected to remain roughly at that level for the next decade — has many policymakers and citizens deeply concerned, to say the least. But exactly how concerned we ought to be over that debt level — and how radically we need to act to reduce it — remains hotly debated. Governments obviously need to be able to borrow, and nearly every government does so. But experts have reached no clear consensus over how much (relative to the size of its economy) a nation can safely borrow. That is, no consensus had begun to emerge until the appearance in 2010 of a paper, by economists Carmen Reinhart and Kenneth Rogoff, called &#8220;Growth in the Time of Debt,&#8221; which found that countries with higher debt levels tend to grow more slowly than those with little debt. For those who tend to see the rising debt load of the U.S. as a serious problem, these findings were just the evidence needed to prove that America had to cut back on spending, and fast. (MORE: When Will the Federal Debt Cause a Greece-Like Crisis in the U.S.?) Tim Fernholz at Quartz does a nice job summarizing just how influential this work has been in Washington and Europe. He points to a scene, from a recent book on the federal debt by Republican Senator Tom Coburn, in which a bipartisan group of senators meet with Reinhart and Rogoff, and are obviously in agreement with their conclusion that allowing total debt/GDP to grow beyond 90% would be very dangerous indeed. As Fernholz writes: It’s hard to get bipartisan agreement on anything in the Senate, but you can see influential legislators from both parties were listening closely<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77904&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Economics</primary_category><primary_category_link>http://business.time.com/category/economy-policy/economics-economy-policy/</primary_category_link>
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			<media:title type="html">christopherrmatthews</media:title>
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		<title>What&#8217;s Behind the Crash in the Gold Market?</title>
		<link>http://business.time.com/2013/04/16/whats-behind-the-crash-in-the-gold-market/</link>
		<comments>http://business.time.com/2013/04/16/whats-behind-the-crash-in-the-gold-market/#comments</comments>
		<pubDate>Tue, 16 Apr 2013 16:39:00 +0000</pubDate>
		<dc:creator>Christopher Matthews</dc:creator>
				<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77839</guid>
		<description><![CDATA[One of the more interesting phenomena to take place in the markets in recent memory has been the seemingly invincible rise in the value of gold. In the decade between 2001 and 2011, the price of gold rose from $256 per oz. to a high of $1,920 — a whopping 650% return for those lucky enough to have timed the trade perfectly. But since 2011, the gold market has shown signs of weakness, culminating in a multiday crash that began on Thursday and continued into Monday. According to the Wall Street Journal: Gold futures for April delivery fell $140.40, or 9.4%, Monday to a two-year low at $1,360.60 an ounce on the Comex division of the New York Mercantile Exchange. That extended their bear-market descent of more than 20% from their 2011 all-time high. Since Thursday, gold prices have declined by more than $203 an ounce, a record skid since the futures began trading in the U.S. in 1974. So what&#8217;s behind the remarkable rise in the value of gold — and what changed in recent days that has undermined investor confidence in it? (MORE: The Real Significance of the Bitcoin Boom (and Bust)) The first thing gold skeptics like Warren Buffett will remind you about the precious metal is that it doesn&#8217;t have nearly the utility of other commodities like oil or copper. Sure, we use it for jewelry or dental fillings, but mostly we just let it sit there. In 1998, Buffett famously quipped: &#8220;Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.&#8221; It&#8217;s true: unlike stocks, gold doesn&#8217;t pay a dividend. And unlike oil, it isn&#8217;t a vital commodity that powers other parts of the economy. Though Buffett may be justified in personally shying away from investing in the shiny metal, in other respects he underplays its significance. Gold has held an enduring place in<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77839&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>Commodities</primary_category><primary_category_link>http://business.time.com/category/wall-street-markets/commodities-wall-street-markets/</primary_category_link>
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			<media:title type="html">christopherrmatthews</media:title>
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		<title>The Real Significance of the Bitcoin Boom (and Bust)</title>
		<link>http://business.time.com/2013/04/12/the-real-significance-of-the-bitcoin-boom-and-bust/</link>
		<comments>http://business.time.com/2013/04/12/the-real-significance-of-the-bitcoin-boom-and-bust/#comments</comments>
		<pubDate>Fri, 12 Apr 2013 09:45:40 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Currency]]></category>
		<category><![CDATA[E-commerce]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economics & Policy]]></category>
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		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Finance]]></category>
		<category><![CDATA[Financial Privacy]]></category>
		<category><![CDATA[Financial Regulation]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Information Technology]]></category>
		<category><![CDATA[Retail]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Taxes]]></category>
		<category><![CDATA[Technology & Media]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Wall Street & Markets]]></category>
		<category><![CDATA[Wealth]]></category>
		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77371</guid>
		<description><![CDATA[The volatile rise-and-fall of Bitcoin has prompted lots of stories explaining why the online virtual currency is a classic bubble. Many compare it to tulip mania in 17th century Holland, where prices of rare tulip bulbs soared to absurd heights and then crashed, ruining the speculative investors who had bought them. But the Bitcoin phenomenon is more than a bubble. It says something important about the current and future state of the global economy. The scale of the recent boom-and-bust has been staggering indeed. At the start of the year, a Bitcoin was worth $13.51. Earlier this week, it traded as high as $266. And on Thursday, it plummeted to less than $100, as one of the exchanges where Bitcoins are traded closed temporarily. This would be comparable to the exchange rate for the British pound soaring from $1.62 (where it was on Jan. 1) to $31.90 and then falling back to $12. Such monumental appreciation and volatility are clearly the result of speculation — people buying the online currency just because they think its value will rise, not because they want to use it to purchase goods and services. But Bitcoins’ gains are not the result of speculation alone. They partly reflect the fact that the Bitcoin system is much better designed than previous online currencies. And more significantly, the run-up also reflects anxiety about the safety of the global banking system and the stability of major international currencies. (MORE: No Money, No Problems: Canada Considers Completely Digital Currency) The technicalities of the Bitcoin system are complex, but to make this online currency more successful than previous versions, the designers overcame two key challenges. First, to prevent counterfeiting, they attached a history of transactions to each currency unit — but allowed users to keep their transactions nearly anonymous. Counterfeiting is hard because fake Bitcoins would need an authenticated history to pass muster. Second, they strictly controlled the supply of Bitcoins outstanding — thereby saving it from the disastrous fate of, for example, the paper currency known as assignats that were issued during<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77371&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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		<slash:comments>0</slash:comments>
	<primary_category>World Finance</primary_category><primary_category_link>http://business.time.com/category/world-finance/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-bitcoin-130412.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/04/biz-bitcoin-130412.jpg?w=240" />
		<media:content url="http://timebusinessblog.files.wordpress.com/2013/04/biz-bitcoin-130412.jpg?w=240" medium="image">
			<media:title type="html">Bitcoin Value Soars And Drops</media:title>
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		<media:content url="http://2.gravatar.com/avatar/b8875a12f713f52ecc28fe72efed7fd4?s=96&#38;d=http%3A%2F%2F2.gravatar.com%2Favatar%2Fad516503a11cd5ca435acc9bb6523536%3Fs%3D96&#38;r=G" medium="image">
			<media:title type="html">michaelsivy</media:title>
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		<title>Was Thatcherism Good (or Bad) for the Economy?</title>
		<link>http://business.time.com/2013/04/09/was-thatcherism-good-or-bad-for-the-economy/</link>
		<comments>http://business.time.com/2013/04/09/was-thatcherism-good-or-bad-for-the-economy/#comments</comments>
		<pubDate>Tue, 09 Apr 2013 07:00:28 +0000</pubDate>
		<dc:creator>Rana Foroohar</dc:creator>
				<category><![CDATA[Austerity]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Europe]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Uncategorized]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77178</guid>
		<description><![CDATA[Margaret Thatcher was known as the woman who, from 1979 to 1990, brought austerity and — at least for part of her tenure — economic growth to a stagflation-riddled Britain. She’s also known as a heedless free-market deregulator who set the stage for financial boom and bust, as well as for growing inequality. At a time when the debate over growth and austerity is front and center in the U.K., the U.S., Europe and much of the rest of the world, what is the legacy of Thatcher economics? Below, a look at some of the Iron Lady’s key economic ideas and what, if anything, they have to teach us today. A focus on inflation vs. unemployment. Perhaps it was justified back then, given that inflation in Britain in the late 1970s was heading toward 20%. But as Capital Economics managing director Roger Bootle points out in his smart look at Thatcher’s legacy in the Telegraph, the result of the government’s policy of fighting inflation by hiking interest rates fast and hard was “a cripplingly high pound, which devastated much of British industry, causing unemployment to soar.” Poverty and inequality went up radically under Thatcher, and the latter has stayed high since, a factor that many economists believe has impeded a more robust consumer recovery. While mass privatization (some of it successful, some not) did eventually create growth during the Thatcher years, GDP never rose by more than a couple of percentage points annually, even during the 1980s boom years. The verdict: in an era in which globalization and technology are keeping inflation down over the long term, and unemployment high, the Iron Lady’s policies are retro, and would be counterproductive. Public spending and tax cuts. Both Thatcher and her U.S. counterpart Ronald Reagan wanted to boost markets and shrink the state, but Reagan was a supply sider who focused almost solely on tax cuts (indeed the amount of public spending relative to GDP actually increased under Reagan). Not so the British conservatives. Thatcher was somewhat less enamored of “trickle-down economics” than Reagan and ultimately believed<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77178&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Europe</primary_category><primary_category_link>http://business.time.com/category/economy-policy/europe-economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/108108482.jpg?w=240</featured_image>
		<media:thumbnail url="http://timebusinessblog.files.wordpress.com/2013/04/108108482.jpg?w=240" />
		<media:content url="http://timebusinessblog.files.wordpress.com/2013/04/108108482.jpg?w=240" medium="image">
			<media:title type="html">Margaret Thatcher</media:title>
		</media:content>

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			<media:title type="html">ranaforoohar</media:title>
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		<title>A Yen for Cash: How the Bank of Japan Could Threaten the Global Economy</title>
		<link>http://business.time.com/2013/04/08/a-yen-for-cash-how-the-bank-of-japan-could-threaten-the-global-economy/</link>
		<comments>http://business.time.com/2013/04/08/a-yen-for-cash-how-the-bank-of-japan-could-threaten-the-global-economy/#comments</comments>
		<pubDate>Mon, 08 Apr 2013 16:52:00 +0000</pubDate>
		<dc:creator>Michael Schuman</dc:creator>
				<category><![CDATA[Asia]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=77110</guid>
		<description><![CDATA[Japan has been an experiment in economics ever since its crushing defeat at the end of World War II. First, Tokyo employed inventive techniques to rebuild its economy and wealth — the export-led, state-directed system in which bureaucrats “targeted” industries for special support — that broke with economic tradition and became a development model for the rest of the region to follow. Then after the country’s massive stock-and-property-price bubble exploded in the early 1990s, Japan became a much examined case study in how to handle (or not handle) a financial crisis. After that, economists have puzzled over why Japan has been unable to escape the long stagnation it has suffered ever since. Now Japan is embarking on yet another set of unconventional policies in an attempt to revive itself, which, if successful, could rewrite the rules of fiscal and monetary policy. Whatever the result, economists will likely be studying Japan for decades to come. On Thursday, the new governor of the Bank of Japan (BOJ), Haruhiko Kuroda, announced that the central bank would double the monetary base of the country — adding an additional $1.4 trillion — by the end of 2014 in an attempt to end the deflation plaguing the economy. To achieve that, Kuroda will buy government bonds and other assets to inject cash into the economy — what has now become familiar as quantitative easing, or QE — to bump inflation up to a targeted 2%. The plan is part of a greater strategy ushered in by new Japanese Prime Minister Shinzo Abe to restart the economy through massive fiscal and monetary stimulus. It also expands on the efforts by the Federal Reserve, Bank of England and European Central Bank to stimulate growth and smooth over financial turmoil by infusing huge sums of new money into the global economy. Even by the standards of central-bank largesse since the 2008 financial crisis, however, the BOJ’s plan is massive, unprecedented and untested. You’d think that traditional economists would be screaming that revving up the cash printing presses on such a scale would spark hyperinflation and turn<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=77110&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/04/biz-japan-bank-130408.jpg?w=240</featured_image>
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			<media:title type="html">Pedestrians are watching Tokyo stock indexes on a public display board in Tokyo, April 8, 2013.</media:title>
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			<media:title type="html">michaeljschuman</media:title>
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		<title>Why Derivatives May Be the Biggest Risk for the Global Economy</title>
		<link>http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/</link>
		<comments>http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/#comments</comments>
		<pubDate>Wed, 27 Mar 2013 15:06:48 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Banking]]></category>
		<category><![CDATA[Bonds]]></category>
		<category><![CDATA[Commodities]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economics & Policy]]></category>
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		<category><![CDATA[Federal Reserve]]></category>
		<category><![CDATA[Financial Reform]]></category>
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		<category><![CDATA[Investment Banking]]></category>
		<category><![CDATA[Markets]]></category>
		<category><![CDATA[Municipal Government]]></category>
		<category><![CDATA[Private Equity]]></category>
		<category><![CDATA[Stocks]]></category>
		<category><![CDATA[The Economy]]></category>
		<category><![CDATA[Too-Big-To-Fail]]></category>
		<category><![CDATA[Wall Street]]></category>
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		<guid isPermaLink="false">http://business.time.com/?p=75881</guid>
		<description><![CDATA[Four years after the U.S. recession ended, the global economy is still beset by problems. The present danger comes from Cyprus – where the sea foam once gave birth to the goddess Aphrodite but now only creates froth in panicky financial markets. The proposed bailout plan for troubled Cypriot banks would impose losses of up to 40% on the largest depositors. And that, in turn, could undermine confidence in the banks of other troubled euro zone countries. Cyprus is only the latest challenge for global financial stability, however. In the U.S., deteriorating urban finances – from Detroit to Stockton, Calif. – threaten municipal bond holders, public-sector workers, and taxpayers. In addition, a rise in long-term interest rates seems inevitable sooner or later, either because of inflation or because the Federal Reserve backs away from its easy-money policies. Higher interest rates would mean big losses for bond investors, and also for government-sponsored entities, such as Fannie Mae and Freddie Mac, that hold mortgage-backed assets. The greatest risk of all, however, may be one of the least visible – namely, the expanding, shadowy market for derivatives. These highly sophisticated investments have contributed to financial disasters from the 2008 bankruptcy of Lehman Brothers to J.P. Morgan’s 2012 trading losses in London, which totaled more than $6 billion. (MORE: The $600 Billion the IRS Can&#8217;t Collect) Basically, derivatives are financial contracts with values that are derived from the behavior of something else – interest rates, stock indexes, mortgages, commodities, or even the weather. Just as homebuyers make only a down payment when they buy a house with a mortgage, derivatives traders put down only a small amount of cash. Moreover, one derivative can be used to offset or serve as collateral for another. The result is that a massive edifice of derivatives can be supported by a relatively small amount of real money. Some derivatives, such as typical stock options, trade on exchanges. But many are simply private contracts between banks or other sophisticated investors. As a result, it’s hard to know the total<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=75881&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Can the U.S. Dollar Become Almighty Once Again?</title>
		<link>http://business.time.com/2013/03/20/can-the-u-s-dollar-become-almighty-once-again/</link>
		<comments>http://business.time.com/2013/03/20/can-the-u-s-dollar-become-almighty-once-again/#comments</comments>
		<pubDate>Wed, 20 Mar 2013 14:35:25 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Austerity]]></category>
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		<category><![CDATA[World Finance]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=75257</guid>
		<description><![CDATA[Financial turmoil in Cyprus, where the parliament rejected a plan an eurozone bailout deal that would have taxed bank deposits, is prompting investors to shift cash from the euro zone to the U.S. That’s boosting the value of the dollar &#8212; and it’s just the latest installment in a story that has helped the dollar strengthen for more than a year. Despite gridlock in Washington and a string of economic mishaps, the dollar has risen by 7% since late 2011. That’s a striking turnaround for a currency that was in relentless decline for decades. If the upward trend continues – and there are good reasons to think it will – then the U.S. dollar could become almighty once again. The dollar’s decline over the past 30 years has been far greater than most Americans realize. It has lost almost half its value against other major currencies since 1985 and is down 33% in the past 11 years alone. Indeed, the value of the U.S. dollar is lower today than it was in 2009 when the recession ended. In part, this fall occurred because of government policies in Europe and Japan that kept the euro and the yen overvalued. A weak currency can bolster a country’s economy in the short run, by making goods cheaper for foreign buyers and thereby encouraging exports. But over the longer term, a robust economy is typically accompanied by a strong currency. A currency rises in value when more foreign money is flowing in than is flowing out. These inflows occur not only because of export sales but also because foreigners see investment opportunities or are seeking safe places to park their cash. As a result, a stronger dollar is a bellwether of an improving economy and a brighter outlook for U.S. stocks. And there are three reasons economists think the dollar’s rise could continue: (MORE: Cyprus: The E.U. &#8216;Rescue That Risks Backfiring) Other major countries are worse off economically. The U.S. economy may be sluggish, but it has grown for 14 straight quarters since the recession ended<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=75257&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>World Finance</primary_category><primary_category_link>http://business.time.com/category/world-finance/</primary_category_link>
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			<media:title type="html">michaelsivy</media:title>
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		<title>Coming Soon: New Standards for Teaching Kids about Money</title>
		<link>http://business.time.com/2013/03/12/coming-soon-new-standards-for-teaching-kids-about-money/</link>
		<comments>http://business.time.com/2013/03/12/coming-soon-new-standards-for-teaching-kids-about-money/#comments</comments>
		<pubDate>Tue, 12 Mar 2013 16:36:34 +0000</pubDate>
		<dc:creator>Dan Kadlec</dc:creator>
				<category><![CDATA[Decision Making]]></category>
		<category><![CDATA[Economics]]></category>
		<category><![CDATA[Financial Education]]></category>
		<category><![CDATA[Financial Planning]]></category>
		<category><![CDATA[Insurance]]></category>
		<category><![CDATA[Personal Finance]]></category>
		<category><![CDATA[Planning]]></category>
		<category><![CDATA[Retirement]]></category>
		<category><![CDATA[Saving]]></category>
		<category><![CDATA[Saving & Spending]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=74432</guid>
		<description><![CDATA[In coming weeks and months, a new set of standards for financial literacy will cross the desks of educators across the country. The hope is that schools will embrace these guideposts and begin to wedge money lessons into students’ daily activities. The Council for Economic Education, a nonprofit promoting financial education, developed the new standards at the request of and with input from educators at all levels. “We have a specific plan to go state by state and get these implemented,” says Nan Morrison, CEO of the council. The new standards, to be formally unveiled next month, establish clear benchmarks for what kids should know by the end of grades 4, 8, and 12. They are broken into six personal finance categories: Earning income This includes collecting rent, stock dividends and interest on bonds. It also includes a discussion of the labor market and how education may lead to higher wages. Buying goods and services This includes planning, comparing, budgeting and making choices. Saving This includes near- and long-term goals and how time, interest rates and inflation affect savings. Using credit This includes borrowing options and how credit history helps determine availability of credit and the rate of interest that you pay. Investing This includes risk, rates of return and diversification. Protecting and insuring This includes potential loss of health, assets, income and identity, and how behavior affects the cost of insurance. The council’s new standards are clear and concise. In the section on saving, for example, the standards state that by the end of 4th grade a student should know that “income is saved, spent on goods and services, or used to pay taxes,” and that students can use this knowledge to “explain the differences between saving and spending and give examples of each.” By the end of high school they should be able to “identify instances in their lives where they decided to buy something immediately and then wish they had instead saved the money for future purposes.” (MORE: Why Financial Literacy Fails) The standards emphasize developing critical<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=74432&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Financial Education</primary_category><primary_category_link>http://business.time.com/category/planning/financial-education/</primary_category_link>
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			<media:title type="html">dankadlec</media:title>
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		<title>Why Many Americans Feel Like They&#8217;re Getting Poorer</title>
		<link>http://business.time.com/2013/03/05/why-many-americans-feel-like-theyre-getting-poorer/</link>
		<comments>http://business.time.com/2013/03/05/why-many-americans-feel-like-theyre-getting-poorer/#comments</comments>
		<pubDate>Tue, 05 Mar 2013 13:00:32 +0000</pubDate>
		<dc:creator>Michael Sivy</dc:creator>
				<category><![CDATA[Economics]]></category>
		<category><![CDATA[Economy]]></category>
		<category><![CDATA[Economy & Policy]]></category>
		<category><![CDATA[Government]]></category>
		<category><![CDATA[Jobs]]></category>
		<category><![CDATA[Labor]]></category>
		<category><![CDATA[Taxes]]></category>

		<guid isPermaLink="false">http://business.time.com/?p=73756</guid>
		<description><![CDATA[Data released by the Commerce Department last week showed that personal income fell 3.6% in January, the biggest decline in 20 years. The drop was even bigger when taxes and inflation are taken into account. Real personal disposable income fell by 4%, the biggest monthly drop in half a century. In part, this is a statistical blip. Companies accelerated certain payments – giving year-end bonuses in December rather than January, for example – so that employees could avoid higher taxes going into effect for 2013. But even if that blip is smoothed out, real aftertax income is lower than it was six months ago. What this means is that the U.S. economy is not merely recovering from the recession more slowly than one might like, but is actually getting worse for many Americans. Despite three-and-a-half years of uninterrupted growth in real GDP and a decline of more than two percentage points in the unemployment rate since 2009, the standard of living is falling for as much as half the population, particularly if you look beyond monthly numbers to longer-term trends. (PHOTOS: America Copes with a Stagnant Economy) Commentators assessing a recovery in progress naturally tend to focus on changes from one month or quarter to another. But what really matters is not how the economy compares with where it was in earlier time periods, but how it compares with where it would now be if it were fully utilizing all of its resources. Economists call this level &#8220;full capacity,&#8221; and it rises over time as the population grows, technology improves and facilities are upgraded. When a recession occurs, the economy&#8217;s actual output drops significantly below the full capacity level, creating what&#8217;s known as an &#8220;output gap.&#8221; Once the recession ends and a recovery begins, there&#8217;s normally a period of well-above average growth so that actual output regains the ground lost during the recession and comes back close to full capacity. But since the most recent recession ended, growth has never been fast enough to close the output gap – indeed, the gap has<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=business.time.com&#038;blog=31173800&#038;post=73756&#038;subd=timebusinessblog&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
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	<primary_category>Economy &amp; Policy</primary_category><primary_category_link>http://business.time.com/category/economy-policy/</primary_category_link><featured_image>http://timebusinessblog.files.wordpress.com/2013/03/biz-poorer-0305.jpg?w=240</featured_image>
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			<media:title type="html">A homeless man looks from the window of a condemned house in Warren, Ohio, Oct. 28, 2012.</media:title>
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			<media:title type="html">michaelsivy</media:title>
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