Immediately after this photo was taken, Uncle Chad espoused Austrian economics and the once-happy dinner turned sour.
Photo: Lambert/Getty Images
Your family’s conversation at Thanksgiving dinner will probably begin with fairly innocent topics — Miley Cyrus, Snapchat, rent prices in Brooklyn — and move on to slightly more serious ones, like the Iranian nuclear deal. But the overwhelming odds are that, sometime between the second helping of turkey and the pumpkin pie, someone at your Thanksgiving table will bring it up: the economy.
For most people, the economy is a dreaded subject. It’s dry. It’s hard to understand, even for experts. Lucky for you, when your Uncle Chad (and it’s always Uncle Chad) starts talking about the stock market, the deficit, or Ben Bernanke’s money-printing machine, these handy talking points will help.
The subject: Government spending and/or “the deficit”
- The one-minute summary: Conservatives hate government spending, and they think that adding to the $17 trillion national debt will push us into economic Armageddon. Liberals don’t love debt, but they think it’s too dangerous to cut back on spending right now, given that we’re still recovering from a historic recession that has put millions of people out of work.
- What Uncle Chad will say: “Obama’s spending is out of control. It’s like if I sat down at the kitchen table and told my wife I was gonna buy a brand-new Jaguar on a plumber’s salary. A family can’t spend more than it makes, and neither can the government.”
- Is he wrong? Yes. The deficit is actually shrinking a lot right now. It fell 37 percent in the last fiscal year alone, thanks in large part to a recovering economy and a very dumb spending-cuts program known as sequestration. All that cutting hasn’t helped; in fact, it has made it harder for the economy to grow. Even conservative economists say that we’ve shrunk the deficit too much, too quickly.
- Say this to end the argument: “How about this? I’ll buy you a Jaguar if you show me a period in American history when sharp reductions in government debt were followed by economic growth.”
The subject: Bitcoin
- The one-minute summary: Bitcoin is a virtual, math-based currency that is used to buy drugs, pizza, and lots of other things in an anonymous, peer-to-peer exchange. The price of Bitcoin has been shooting up like crazy – they’re worth $1,000 apiece, as of today. A lot of geeks think it’s going to replace currency altogether. Others think it’s a fad, like Pogs or Macklemore haircuts.
- What Uncle Chad will say: “My stockbroker says this thing is gonna be worth $1 million soon. I’m going to buy some as soon as I get my Christmas bonus.”
- Is he wrong? Maybe. A few months from now, Bitcoin could be worth $1 million, or $1. It’s all gambling now. Bitcoin will never replace money – it’s too volatile for that – but it could have lots of other interesting uses, including as the middle layer of global payments.
- Say this to end the argument: “Speaking of bubbles, could someone pass the Prosecco?”
The subject: Quantitative easing (“QE”)
- The one-minute summary: Since the financial crisis, the Federal Reserve (the money-think place in Washington) has been boosting the economy by buying a lot of stuff from banks. That program is called quantitative easing. It’s been pushing stock markets to all-time highs, and it’s made a lot of people on Wall Street very rich. It’s probably going to end soon.
- What Uncle Chad will say: “The markets are addicted to easy money, and Ben Bernanke just keeps printing, printing, printing. We’re going to get massive inflation and the dollar will become worthless. You’ll see, it’ll be the Weimar Republic all over again.”
- Is he wrong? Yes. There has been no significant inflation since the end of the financial crisis, despite the dire warnings of Bernanke haters. And while QE hasn’t worked perfectly, it’s helped keep unemployment from rising to Depression-era levels.
- Say this to end the argument: “You know, Uncle Chad, you’re right. The dollar is being totally debased by all this reckless money printing. Hey, how’s your gold fund doing these days?”
The subject: Wall Street greed
- The one-minute summary: Wall Street banks break the law sometimes, and are generally greedy.
- What Uncle Chad will say: “If Eric Holder and his cronies actually did their job, all these crooks would be in jail.”
- Is he wrong? Not totally. There was a lot of bad behavior on Wall Street this year. (As in every other year.) But this has been a historic year in terms of punishing Wall Street misdeeds. Eric Holder wrung a $13 billion settlement out of JPMorgan Chase for mortgage fraud – the largest corporate settlement in history. Hedge funds are pleading guilty to insider trading. And while it’s true that no major bank executives went to jail over the financial crisis, the new chair of the SEC, Mary Jo White, is taking a tougher approach to busting financial crimes than her predecessors.
- Say this to end the argument: “Unfortunately for Eric Holder, it’s not against the law to be stupid.”
The subject: The tech bubble
- The one-minute summary: Lots of Silicon Valley companies are receiving extremely high valuations, like they did in 1999. Snapchat just turned down a $3 billion offer from Facebook. Pinterest is worth almost $4 billion. Some of these companies don’t make any money.
- What Uncle Chad will say: “It’s Pets.com all over again.”
- Is he wrong? He might not be, actually. But it’s probably melodramatic to compare today’s tech scene to 1999. Lots of web companies actually have revenue models now, and the popularization of the Internet has given them much more growth potential than they would have had back in the dial-up days. Also, fewer of today’s tech companies are trading on the stock market, so if they fail, the losses will fall to private investors rather than the general public.
- Say this to end the argument: “Speaking of bubbles again … can someone open another bottle of Prosecco?”
The subject: The poor
- The one-minute summary: Five years after the recession, we’re still at 7 percent unemployment. Incomes have stagnated, and the minimum wage is stuck at $7.25 an hour. Lots of people are underemployed, or working multiple jobs to make ends meet. 47 million Americans live in poverty, and a sixth of the country now depends on food stamps.
- What Uncle Chad will say: “I was unemployed for two days in 1987. Took out the phone book, called up every company in my town, and got a job. People just need to work harder, and depend less on government handouts.”
- Is he wrong? Yes. For most people, getting back on the job isn’t that easy. Long-term unemployment is a vicious cycle – some companies won’t hire the unemployed, meaning that many people who lost their jobs during the recession still haven’t gotten back up to speed. And while it’s true that record numbers of people are receiving government assistance, that’s mostly because of the recession. If we want to shrink the number of people who depend on food stamps, we need to make the economy grow for everyone, not just the rich.
- Say this to end the argument: “If the minimum wage had grown as fast as the income of the top 1 percent since 1968, it would be $28 an hour.”
The subject: The debt ceiling and/or government shutdown
- The one-minute summary: Congress spent a lot of this year arguing about whether to raise the debt ceiling – the amount of money the government is permitted to borrow. In the end, the government had to shut down because House Republicans held the debt ceiling hostage over their concerns about Obamacare. Then, days before a potential default, House Republicans caved and agreed to raise the limit temporarily.
- What Uncle Chad will say: “Who cares if the government shuts down? Doesn’t affect me. And the debt ceiling should never be raised. Gotta pay our bills.”
- Is he wrong? Yes. The government shutdown cost 120,000 jobs and $2 billion in lost productivity, according to government estimates. And a debt ceiling breach would have been catastrophic. What we need to do is eliminate the debt ceiling altogether – it’s a relic from olden times, and all it does now is ensure a perpetual supply of fresh government crises.
- Say this to end the argument: “Ronald Reagan raised the debt ceiling 17 times, so it can’t be all that bad, right?”
Bonus lightning round: Here are a few Wikipedia entries you might want to scan on your way to Grandma’s house: Janet Yellen, Libor scandal, London Whale, fracking.
