A Modern Allegory of Hansel and Gretel

Getting Out On Your Own

Sometimes when we get out on our own we find that things are harder than we thought they were going to be.  The freedom to do what we want doesn't measure up to our expectations.  But for some, the promise of getting what you want whenever you want is too enticing to pass up -- so we go into debt [usually by credit cards].

So we get a little here... and get a little there... and we don't really pay attention to the looming financial burdens that we are facing for our future.  

Eventually the credit card industry has us so indebted to them that there is no escape.  We get so deep into debt that we find it difficult to make a payment.  We end up missing a payment and suddenly our 2% APR credit card becomes 18% APR. 

Because our monthly payments are even higher now, we miss another payment.  This sends our APR rate through the roof to 30 or 40% because we are now a "credit risk."  We find ourselves scrimping and saving just to make the monthly payments on all of our different debt balances.

Luckily we finally figured out that debt was a bad thing and realized that the credit card companies are NOT trying to help us.  We started paying off our debts (using steps like Dave Ramsey's Debt Snowball) and ended up being debt free.


And we lived happily ever after.

Banking: Recollections of Pine Gulch

Today we will be reading a fictional story about how a "bank" started in California during the Gold Rush (1849).  While it's fictional, it does a good job of explaining how banks work, why our printed money is so complex, how loans work, etc.

The story is located here: http://pinegulch.blogspot.com

After reading the story, answer the following questions:

1. Why was there a demand for Slim's services in Pine Gulch?  
2. How did Slim use this demand to create a monetary system for the town?
3. Why was it important for Slim to go to San Francisco to get the ink and paper to write the receipts?  
4. Why did the people of Pine Gulch accept these receipts as currency?
5. How did Slim increase the money supply in Pine Gulch?  How did he decrease it?  Who benefited from this practice?
6. Why did Slim have to leave town after Big Bart shot him?
7. How did Slim become one of the richest men in Pine Gulch?
8. Did this story change your understanding of how money or banking works?  Explain.

When finished, print and turn in your responses.