GRESHAM'S DYNAMIC

I have a wonderful coffee-table book on my bookshelf - it used to be on the coffee-table - called, The Way Things Work, by David Macaulay. It explains in the simplest terms and with gorgeous illustrations, the dynamics of the most important devices in our world, everything from gears and levers to nuclear power. If you find yourself looking at things and asking "how" or "why," this is the book for you.

I have a friend in Canada who enjoys torturing me by emailing links to articles and videos that detail the flaws in American life - Canadians have serious emotional issues, as I'm sure you know - but he recently sent one that so thoroughly explains our current recession that I thought I should pass it along. How is it possible that a modern economy, with all its built-in safeguards, could crumble so completely? The answer is an economic theory called, Gresham's Dynamic. This theory, you probably won't be surprised to discover, follows a theory of logic, Occam's Razor, which states that, all things being equal, the simplest answer to any question is probably the right one.

This brief lecture by Dr. William Blake, whose classroom persona resembles an SNL parody of college life, should provide an "Aha" moment. Frighteningly, it makes perfect sense.