October 14, 2008
Written by Jim Flink
KANSAS CITY, Mo. -- College professors are using the current economic crisis as an instructive tool, but it hasn't been easy.
UMKC economics professor Dr. Stephanie Kelton said it's been more challenging to teach economic history because there is so much going on in the financial markets right now.
"It really has been difficult. They have derailed my lecture on at least two occasions," Kelton told KMBC's Jim Flink.
Kelton said this isn't your parents' economy.
"In the old days, you knew your banker. And the bank had a vested interest in extending credit to people who would be credit-worthy," Kelton said.
The problem is that mortgages became much more complicated.
"It's the fact you can bundle these mortgages and then strip them down to tranches, and then create paper to back the paper. It's the derivatives; it's a pyramid of financial derivatives," Kelton said. "It's almost like a cancer that hasn't been fully diagnosed. We don't know how far it's spread."
Kelton said discussions in her economics classes include everything from supply and demand to bailouts and regulators.