Ron Paul Sets Financial Record for Presidential Candidate

Amusing Theme Yields Impressive Funds for Presidential Candidate Ron Paul

Air Force veteran, Congressman, and obstetrician Dr. Ron Paul is one of the most interesting presidential candidates for the 2008 election. Ron Paul inspires energetic loyalty and outperforms other alleged "frontrunners" in some respects. Paul's supporters ("Paulites") spontaneously organized an earnest if humorously named "Guy Fawkes Day" "money bomb" of 1-day fundraising yesterday which apparently set a record:

From Baltimore Sun:

It is people voting for someone other than the establishment, odds be damned.

Paul already had raised a stunning $5 million in the last quarter, and he has set a goal of $12 million for this final quarter of the year. And, according to his campaign Web-site, Paul raised more than $3.1 million in 19 hours on Monday, marking the single largest fundraising effort of the 2008 election cycle.

As of 4 pm, the campaign maintained, it had raised $2.7 million, surpassing the record for the largest online presidential primary fundraising effort in a single day, and by 6:30 pm, the campaign said it had surpassed Republican Mitt Romney’s $3.1 million record for single-day fundraising this year. This morning, the Web-haul was reported at $3.8 million-plus.

Commenters asserted that the final tally was $4.2 million.

(Update 11/13/07: CNN reported Ron Paul's 1-day total as $4.38 million.)

Ben Bernanke on South Park?

Gangrene on the Greenback: The Falling US Dollar

If South Park did Ben Bernanke and Federal Reserve monetary policy:

Bernanke's Zimbabwe Plan for the US Economy

Fed Raids Your Paycheck and Bank Account To Bailout Banks, Wall Steet, and Mortgage Delinquents

Ben Bernanke Music Video

Here is a Columbia Business School (CBS) spoof of Ben Bernanke's appointment as Chairman of the United States Federal Reserve, based on "Every Breath You Take" from The Police Synchronicity Album:

See more Fed spoofs:
Canada Forces US Federal Reserve To Raise Interest Rates?
Alan Greenspan: Fun with Financial Armageddon and Famous Movies

Canada Forces US Federal Reserve To Raise Interest Rates?

Here is a Saturday Night Live (SNL) Golords spoof of foreign frustration with "Easy Al" Greenspan's loose US monetary policy in 1998:

(Warning: violence and sexual content)

Except for a 25 basis points (bps) hike on March 25, 1997, the Fed only held or lowered the Fed-funds benchmark interest rate for over 4 years after Februart 1, 1995 and until June 30, 1999 while the stock market bubbled. The Fed dropped 75bps in September-October-November 1998 to 4.75% (deja vu now?).

See more Fed spoofs:
Ben Bernanke Music Video
Alan Greenspan: Fun with Financial Armageddon and Famous Movies

Alan Greenspan: Fun with Financial Armageddon and Famous Movies

Which movie best explains Alan Greenspan's tenure as Chairman of the United States Federal Reserve?

Comment on these and post your own choices.

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Dr. Greenspan: Or How I Learned To Stop Worrying and Love the Bubble

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Greenspan: The Man with the Golden ARM

(ARM=Adjustable Rate Mortgage)

See more Fed spoofs:
Canada Forces US Federal Reserve To Raise Interest Rates?
Ben Bernanke Music Video
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Greenspan Needs YOU to Bail HIM Out?

Brother, Can You Spare a Trillion?

Greenspan Needs YOU to Bail HIM Out?

Americans’ Net Worth in the Federal Reserve’s Survey of Consumer Finances (SCF)

What if a Quarter of Your Wealth Were Imaginary?

Net worth is a favorite topic in the buck-o-sphere (personal finance blog-o-sphere) and many people pounce on a government or media report to see how they stack up against their fellow Americans. You need to understand the source of the information and know how to read economic and financial reports correctly.

The Federal Reserve’s triennial Survey of Consumer Finances (SCF) and specifically its net worth numbers provide good examples on what to watch.

Time Lag

A report that comes out today might have no current data and instead be based on data from a few years ago. The 2003 SCF report used 1998-2001 data. The 2006 SCF report used 2001-2004 data. Most people will not see 2007 data until the 2009 SCF report.

Forgetting this point can lead to faulty decisions. One blogger recently linked to a 2003 article and compared his/her 2007 net worth to 2001 data.

Real (Inflation-Adjusted) V. Nominal Dollars

The SCF adjusts for inflation but its tables are not labeled as “real” dollars, making it too easy for the casual reader to assume nominal (un-adjusted) dollars. Further, the SCF uses a “current methods” adjusted CPI which assumes less of an inflation bite than the official CPI does.

How Do They Get People’s Financial Information?

The SCF is a survey, not a census. Like much government data, the results depend on “Gallup poll” types of problems such as sampling error, weighting, refusal to participate, and similar issues. The survey firm NORC conducts the survey of approximately 4,000 families to estimate the United States (a statistically significant sample). The accuracy of the Federal Reserve’s SCF depends upon the accuracy of Joe Sixpack’s financial self-knowledge when questioned by NORC.

Whose Net Worth?

The SCF’s “family” is technically the Primary Economic Unit (PEU) of a household. The SCF uses an unusual definition of “family” that includes single-person households. The PEU is a hybrid between other government definitions of family and households. The average US family is a bit over 3 persons and the average household is a bit under 3 persons.

“Age” is the age of “head” of “family” and the age of others in the PEU can vary from that, so 2 “40-year-old” households might have very different average ages (is the spouse 30 or 50?) and therefore have had different amounts of time to accumulate wealth.

What Counts?

The medians of many assets and debts are “conditional medians” that exclude zero to show a typical holding of a family that possesses the item in question (e.g., the median debt of debtors, not the median debt of everyone including debt-free people, which would lower the figure considerably).

The SCF counts a 401k but it ignores a defined-benefit pension (by the way, the proper absence of a defined-benefit pension from “net worth” is another reason why net worth is for measuring current wealth and is not very good at estimating future wealth). The SCF also ignores Social Security. The SCF appears to ignore tax liabilities.

Paper Profits

Net worth includes volatile asset prices (stocks, real estate) that can bubble or crash. Median unrealized capital gains ("paper profits") accounted for about 25-30% of median net worth for all but the youngest age group (under 35) in 2004 (before the 2005-2006 housing bubble apogee). Remember that about a quarter of median net worth is not real yet.

The only bad part about learning all this is that you might get upset more often when you see how other people misuse the SCF and similar statistics.

Should Bernanke Resign?

Should Ben Bernanke Resign? Who Should Be the New Federal Reserve Chair?