Brother, can you spare a dime?

April is Financial Education Month. The question posed here was symbolic of the Great Depression of the 1930s. Unfortunately, many economists think that this phrase may also presage the arrival of another severe economic recession caused in part by the deficit spending on the war in Iraq and the bursting of the sub-prime mortgage and housing bubbles.

Today, unlike the Great Depression, the government has many tools available to regulate the banking and investment industries and promote greater economic stability. The Securities and Exchange Commission (investments) and the Federal Reserve (banking) have the responsibility to look for financial abuses and rein them in, much like traffic lights, speed limits, and ticketing violators help to control driving abuses.

The prevailing philosophy of government leaders has been to view regulations as impediments to economic progress. This attitude causes financial regulatory agencies to look the other way, viewing the abuses of banks and Wall Street as "creative financing strategies."

Financial literacy is one of the major goals of the 21st Century Skills movement for K-12 education. The current economic mess was caused, in part, by the financial illiteracy of millions of people who don't understand the risks and rules of borrowing money and using credit cards. Most of these people were educated in schools whose curriculums didn't include financial literacy as essential.

The current economic mess should provide the impetus to value the importance of economic and financial literary at all levels of K-12. Until that happens, teachers can help students understand more about the current crisis, what caused it, and how it might be prevented from happening again.

Assign students to address the following essential questions for critical thinking (you can create or substitute others), using at least three sources in a report of about 200 words:

• What is the responsibility of the Securities and Exchange Commission?
  
  
• What is the responsibility of the Federal Reserve Bank and FRB Chairman, Ben Bernanke?
  
  
• What is the responsibility of the Federal Reserve Chairman?
  
  
• What actions could have been taken to prevent the housing and sub-prime mortgage bubbles?
  
  
• Why these actions not taken?
  
  
• What are your recommendations for getting the economy out of this recession?

1. Click the Topics tab
   
   
2. Type "subprime mortgage" in the Search box
   
   
3. Click View Document in the subtopic Subprime lending AND Economic impact
   
   
4. Click the Newspapers tab

Click the Topics tab

Type "housing bubble" in the Search box

Click View Documents in the subtopic Housing AND Federal Reserve Board

Click the Newspapers tab