The financial crisis, as explained to a 14 year old

Kevin: Imagine that I let you borrow $50, but in exchange for my generosity, you promise to pay me back the $50 with an extra $10 in interest. To make sure you pay me back, I take your Charizard Pokémon card as collateral …

Let’s say that the Charizard is worth $50, so in case you decide to not return my money, at least I’ll have something that’s worth what I loaned out.

But one day, people realize that Pokémon is stupid and everyone decides that the cards are overvalued. That’s right—everybody turned twelve on the same day! Now your Charizard is only worth, say, $25.

At the same time, you’re having trouble paying back the $60 you owe me. So what would you rather do: try and pay me back the $60 or just default and give me your $25 Charizard?

Olivia: I’d give you the Charizard.

Kevin: Exactly. Who wouldn’t? Now, the bank — I mean me — has lost $25 when I expected to make $10. What’s the lesson here?

Olivia: Pokémon is dumb

Really, our economy would be in a much better state right now if financial institutions had traded in something more stable, like Meowth cards.

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5 thoughts on “The financial crisis, as explained to a 14 year old

  1. The cut, the matters, the deal, the guidance I guess these are somethings we shall journal and find answers for…When did it Start? assuming with a law, school and car loan financial promissary note. I guess these are somethings we’ll just have to journal and find answers for
    resolve? justice? pardon? and forgivness?
    there are many reasons couples struggle
    I guess our daily cut, deal, guidance and law are some struggles we will journal and find answers for. Our home work and unexpected mushy issues are what we will have to face,journal and find answers for. Tarot readings, Crystal ball and star gazing with fire light looks interesting we shall study them. Business, law, writing and rewriting, pardoning, resolve we shall find answers. Amin they look interesting we shall study them. God bless

  2. No! I was told I was just a joke! in other words take take finance, law, business seriusly. (they look intersting we shall study them) seriously ?studies? I guess we will have to journal them and find answers for them.

  3. money matters. explanation of comment. The comment is more of a collaboration of various words popping into my mind randomly. Not to be taken as a stream of compilation of chapters and verses. A journal exercises for new bloggers like me.

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