How the U.S. Economy is Like a Casino

By Kasia Cieplak-Mayr von Baldegg

What's the difference between fiscal policy and monetary policy? Of the hundreds of questions submitted by readers to our Economics in Plain English video series, this one struck us as a fun challenge. What are monetary and fiscal policy? What are they for? And is it possible to explain it quickly and painlessly?

In the short video above, business editor Derek Thompson offers up a useful way to think about it. Capitalism only works if people with money are willing to take risks. So imagine the U.S. economy as a giant casino. In a recession, there aren't enough people making bets at the table. Fiscal and monetary policy use different strategies to get gamblers to gamble -- to spend their money and power the economy.

Don't miss Thompson's introduction to the project and the previous installments, which you can watch here.

This article available online at:

http://www.theatlantic.com/business/archive/2013/08/how-the-us-economy-is-like-a-casino/278900/