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 flyguy51
Joined: 8/11/2005
Msg: 114
Banks and the financial systemPage 6 of 7    (1, 2, 3, 4, 5, 6, 7)
Gingerosity:

Being downunder I have been spared the GFC, and the politics of GFC.

You might want to ask yourself how your country has been spared the majority of the crisis.
 gingerosity
Joined: 12/10/2011
Msg: 115
view profile
History
Banks and the financial system
Posted: 3/19/2014 5:32:33 AM
Drink
Thanks, will watch it later. 4 hours is a lot to take in. This one is only 6 minutes https://www.youtube.com/watch?v=LCRNI04tnN8

Igor

Simple example: in the days before food markets were regulated by the government, the way that the "free market" achieved balance when an unscrupulous or incompetent business began selling tainted food, was that PEOPLE WOULD DIE. The way that the business was recognized to have been incompetent or intentionally fraudulent, was via a large number of people suffering. Only then, would the "balancing" that the free-marketers wax rapturously about would take place, and the business would go under, because people would cease buying from them. Even then, if all of the local food processors were equally incompetent (which was all too common), there would be no way for everyone to even KNOW that bad practices were the cause of the deaths, so all of the businesses would continue selling poisoned products.

THAT is the kind of world that "unfettered markets" advocates want us all to return to.

Not really. The argument is well made, but the objection to this kind of argument isusually that it doesn't count the good effects of free markets that we don't currently see, only the bad effects that we would see. The net effect is what we need to know. How many people die of starvation becuase the cost of food is too high, perhaps because of regulations, tariffs, etc? What is the nutritional content of the foods that people can afford, and what diseases are therefore more abundant? How many deaths do the food regulations actually prevent?

These questions are not a counter-argument, they are just questions to illustrate the point that we need more information. The statement 'absence of food regulations results in fewer deaths than presence of food regulations' is a testable hypothesis. On what evidence shall we rejected it?

On a related note, when did we decide that 'numbers of deaths' is the sole metric we must use to determine the desirability of an economic system? Does freedom, equality of opportunity, equality of results, happiness, and whatever else you want to include need to be weighed up as well? What good would it do to have a world of misery where no-one dies before 100? Not much, so obviously we need to take into account other factors affected by system changes as well.

Can anyone here really say they have done in-depth study of ALL of the overt and hidden consequences on every desirability factor in considering whether this system vs that system is better? I certainly haven't, that's why I don't apologise for trying to keep an open mind.

Demi

One of the ideas of the free market system is that rational self-interest can, by itself, preserve the markets and keep the economy stable (this is one of the reasons why free market advocates so oppose government regulation/intervention). Among the many who have come up with rationales for this idea is mathematician John Nash

I've never heard anyone use an argument from stability or mention Nash equilibria when discussing these things. It is always about what effects do we observe in the real world.

My thinking is that the laissez faire system that people like Friedman endorsed are, more often than not, prone to economic crashes, and that strong government regulations are needed to prevent market participants from taking undue risks.

What evidence have you used to come to that conclusion? We've just been discussing how the 20th and 21st century examples such as depressions and financial crises occurred within regulated systems, so in my view are not particularly valid data to use for examining free market behaviours.

You're also assuming that economic crashes are bad. I may agree with you, but our methods may differ. What criteria are you measuring? Inequality, unhappiness... what? We can't just assume these things if we're going to do this properly.

Flyguy

You might want to ask yourself how your country has been spared the majority of the crisis.

As far as I have been able to tell it was mainly becuase the crisis was concentrated in North America and Europe, and as you can see here http://topforeignstocks.com/2012/10/06/australias-major-trading-partners-in-2012/
all of Europe and the Americas account for only 8% and 6% of our exports respectively. It's true our biggest trading partner, China, did come off double-digit growth in the crisis, but it's still growing at around 7.5%. As well as the coincidence of favourable geography and geology, we were fortunate to have a cultural legacy of egalitarianism and distrust of authority due to our imperial convict past that helped us evolve some differences in governance. We required our banks to have higher fractional reserves than you guys did, and when the bubble burst we had single-digit government debt compared to your 60-odd% of GDP (now more like 100%, isn't it? Ouch!).
 flyguy51
Joined: 8/11/2005
Msg: 116
Banks and the financial system
Posted: 3/19/2014 7:41:12 AM

As far as I have been able to tell it was mainly becuase the crisis was concentrated in North America and Europe, and as you can see here http://topforeignstocks.com/2012/10/06/australias-major-trading-partners-in-2012/
all of Europe and the Americas account for only 8% and 6% of our exports respectively. It's true our biggest trading partner, China, did come off double-digit growth in the crisis, but it's still growing at around 7.5%. As well as the coincidence of favourable geography and geology, we were fortunate to have a cultural legacy of egalitarianism and distrust of authority due to our imperial convict past that helped us evolve some differences in governance. We required our banks to have higher fractional reserves than you guys did, and when the bubble burst we had single-digit government debt compared to your 60-odd% of GDP (now more like 100%, isn't it? Ouch!).

Yeah, you are pretty much correct-- although Canada also avoided the crisis, so that goes against the idea that being in North America means being in the crisis. So, a bit of luck, a lot of preexisting prosperity, and common-sense banking regulations. To that last bit, include "preventing the creation of mega banks." Canada and Oz have similar principles in banking. It was not through having more free market principles or whatever you are espousing here.

Demi:

Looking into fractional reserve banking just a little bit here-- I see that money is "created" not when a loan is issued, but when that money is redeposited into another bank (or the same one, even). It is then counted as assets twice-- once in two banks or twice in one bank. I see how that is created in one sense (counted twice) but not created in the central bank sense. Even 100% reserve banking does this, though, just not with its demand deposits (checking account $).

Perhaps this is what you have been trying to say all along, but it just didn't make much sense the way you were explaining it-- "loans creating money and paying back loans 'un creating' money."
 IgorFrankensteen
Joined: 6/29/2009
Msg: 117
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History
Banks and the financial system
Posted: 3/19/2014 2:31:17 PM
gingerosity:


The argument is well made, but the objection to this kind of argument isusually that it doesn't count the good effects of free markets that we don't currently see, only the bad effects that we would see. The net effect is what we need to know. How many people die of starvation becuase the cost of food is too high, perhaps because of regulations, tariffs, etc? What is the nutritional content of the foods that people can afford, and what diseases are therefore more abundant? How many deaths do the food regulations actually prevent?


Doesn't count the good effects? Net effect? I take it you support the idea that "if some people die, but some get rich, everything balances out." I can'tr read "net effect" any other way, since it has never been shown that requiring food processors to sell clean food, caused starvation and death.

I disagree 100% with your reasoning in this response. My point is, that if someone insists on and gets a 100% "free market," we already know from prior experience that we WILL see deaths.

You are suggesting that people who choose to have regulation and other government-organized ways of doing things, will either choose on purpose to let people starve, or that the act of making sure that food is not poisonous REQUIRES that starving people be ignored. That is abject nonsense. You also imply that nutritional content of food will be NEGATIVELY impacted by requiring that it not be poisonous, and that food industries follow best practices and so forth. There is NO EVIDENCE WHATSOEVER that this has EVER happened.

So: lack of proper regulation HAS resulted in horrible conditions; regulation has NOT resulted in the things you describe.

Where is this "net effect" you refer to so vaguely?
 Demigod1979
Joined: 12/4/2011
Msg: 118
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History
Banks and the financial system
Posted: 3/19/2014 5:37:28 PM

I've never heard anyone use an argument from stability or mention Nash equilibria when discussing these things. It is always about what effects do we observe in the real world.

Stability is a big part in any debate about competing economic theories (a system that isn't stable obviously isn't worth anything). I mean, the entire point of having an entity like the Federal Reserve is to maintain stable prices. And if you haven't heard about the Nash equilibrium then you have some homework to do ;)


What evidence have you used to come to that conclusion? We've just been discussing how the 20th and 21st century examples such as depressions and financial crises occurred within regulated systems, so in my view are not particularly valid data to use for examining free market behaviours.

And the fact that the two greatest financial disasters happened during a time of lax government regulations doesn't suggest something? The fact that the financial inventions that almost brought the system down in 2008 were deliberately non-regulated derivatives?


You're also assuming that economic crashes are bad. I may agree with you, but our methods may differ. What criteria are you measuring? Inequality, unhappiness... what? We can't just assume these things if we're going to do this properly.

What criteria? Well, just the fact that the Great Depression led to millions of people being thrown into abject poverty (and may have also been one of the triggers for World War II, which led to the deaths of millions of people). The Great Recession of recent times also led to millions of people losing their jobs (could have been much worse, and thankfully wasn't). Frankly, I don't see any positives here, do you?


Looking into fractional reserve banking just a little bit here-- I see that money is "created" not when a loan is issued, but when that money is redeposited into another bank (or the same one, even). It is then counted as assets twice-- once in two banks or twice in one bank. I see how that is created in one sense (counted twice) but not created in the central bank sense. Even 100% reserve banking does this, though, just not with its demand deposits (checking account $).

It's certainly true that when you deposit into a bank, you are left with an IOU. However, since the money supply increases by the exact amount of a loan when it is issued, it is also accurate to say that issuing loans creates money (as the Wiki article explains, when a bank makes a $80 loan from $100 [$20 as reserve], a new $100 IOU is created, and the total money supply is now $180). And yes, only commercial banks duplicate deposits like this (central banks do not do this).
 flyguy51
Joined: 8/11/2005
Msg: 119
Banks and the financial system
Posted: 3/19/2014 6:38:29 PM
And the fact that the two greatest financial disasters happened during a time of lax government regulations doesn't suggest something? The fact that the financial inventions that almost brought the system down in 2008 were deliberately non-regulated derivatives?

One thing I have sadly come to learn in these sorts of things is that loyal proponents of pure, free market economics (not saying gingerosity fits this description... yet, at least) have almost limitless space with which to move the goalposts. The free market would work if... if government would get out of the way... if the government didn't bail anyone out, if countries didn't bail each other out, if this country didn't use fiat money, if no country used fiat money, if there were only 100% reserve banking, if the Fed didn't set interest rates, if the Fed were externally audited, if the Fed were abolished, if people didn't vote in regulations and social safety nets at the first sign of trouble... the list of excuses is almost endless why we don't have THE "one true" market system. It exists only in the imagination.

It's certainly true that when you deposit into a bank, you are left with an IOU. However, since the money supply increases by the exact amount of a loan when it is issued, it is also accurate to say that issuing loans creates money (as the Wiki article explains, when a bank makes a $80 loan from $100 [$20 as reserve], a new $100 IOU is created, and the total money supply is now $180). And yes, only commercial banks duplicate deposits like this (central banks do not do this).

I think it was the phrasing you used that caused my confusion. Judging from the posts here, I wasn't the only one. A better way to put it is that when one gets a loan, both the borrower and the lender can claim to possess the amount in question-- it is counted twice at that moment. If that money is redeposited, then it is counted as actual assets twice as well. But as far as money creation, that is the Fed. And currency (paper and coins) creation is the Treasury. These are important distinctions to make for the sake of clarity.

So, what do you suggest as a better way, then?
 drinkthesunwithmyface
Joined: 3/27/2012
Msg: 120
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History
Banks and the financial system
Posted: 3/20/2014 3:38:20 AM
I used to have a perhaps naive idea that there should be the following rules about two particular things, and that this would go well towards making the system work better - 1) You cannot have a business larger than a certain size. For example, either no chains, or a very low limit on such. Of course, this might present the problem of several businesses still being owned or run by one party unofficially and illegally; 2) Money is not sold. In other words, if someone loans someone else money, the loan is paid back according to whatever otherwise practical arrangements, but with no interest. If it costs someone anything to loan, then they just don't loan. And of course if you don't repay a loan, there are simple strict consequences and solutions. And, whenever credit is extended, this can be a slightly different dynamic, but still with likewise simple and strict consequences and solutions.

These two things certainly conjure up many thoughts and ideas about why or how it wouldn't work, but also why and how it could be made to work...tweaking everything else accounting for these...and going down those roads might be fun and educational.
 gingerosity
Joined: 12/10/2011
Msg: 121
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Banks and the financial system
Posted: 3/20/2014 4:02:39 AM
Igor

Doesn't count the good effects? Net effect? I take it you support the idea that "if some people die, but some get rich, everything balances out." I can'tr read "net effect" any other way, since it has never been shown that requiring food processors to sell clean food, caused starvation and death.

You know that I support a method, not a conclusion. I am interested in discussing ideas and learning, not in waving a flag for a team. I said "the objection is usually"... not "my objection is usually". Here is evidence to support my claim that this is the usual objection. https://www.youtube.com/watch?v=EU_4vanP04I

I disagree 100% with your reasoning in this response. My point is, that if someone insists on and gets a 100% "free market," we already know from prior experience that we WILL see deaths.

'Knowing from prior experience' isn't evidence.

You are suggesting that people who choose to have regulation and other government-organized ways of doing things, will either choose on purpose to let people starve, or that the act of making sure that food is not poisonous REQUIRES that starving people be ignored. That is abject nonsense. You also imply that nutritional content of food will be NEGATIVELY impacted by requiring that it not be poisonous, and that food industries follow best practices and so forth. There is NO EVIDENCE WHATSOEVER that this has EVER happened.

On purpose or not is irrelevant. Actions have consequences. On "net effect", I was asking whether you'd considered all of the consequences. Have you? Have the regulations actually decreased food related deaths since they came in? For each bad food product that is blocked by the regulations, how many good ones are also blocked? What effects would those no-shows have had on health & nutrition, food prices, employment, environment...? How many lives would have been saved if the money that had been spent on food regulations was put into something else? Give me but a glimpse of the rigour of your analysis and I will agree wholeheartedly that your conclusion is well supported by the evidence.

ps. did you agree with the idea that we need to look at more than just mortality, and if so, what else do you want to measure? Usually the argument is about whether equality of opportunity (your opponenets) and equality of results (your compadres) is more important.

Demi

Stability is a big part in any debate about competing economic theories (a system that isn't stable obviously isn't worth anything).

Why not? And what do you mean by stable? What frequency and amplitude of fluctuation in the key varibales is acceptable? What are the key variables? We have to know what we're aiming for before we work out how to get there.

And the fact that the two greatest financial disasters happened during a time of lax government regulations doesn't suggest something? The fact that the financial inventions that almost brought the system down in 2008 were deliberately non-regulated derivatives?

Perhaps there is a correlation between lax government regulations and financial disasters. Is it a causal correlation? Is there a trend demonstrating that as government regulations become less lax, financial disasters become less frequent and/or severe? It may well be the case. I don't accept it as a given until I've seen the evidence. Especially not when I know that there were government regulations in place such as limited liability and tax incentives favouring high debt that were probably not stabilizing influences.

What criteria? Well, just the fact that the Great Depression led to millions of people being thrown into abject poverty (and may have also been one of the triggers for World War II, which led to the deaths of millions of people). The Great Recession of recent times also led to millions of people losing their jobs (could have been much worse, and thankfully wasn't). Frankly, I don't see any positives here, do you?

Poverty>millions, unemployment>millions and war>millions. That is good, but is there anything else to add to the list before we use it? My intent is to say that any system that increases the frequency and/or severity of Poverty>millions, unemployment>millions, war>millions is not preferable to systems which decrease those things, since you appear to hold the crises as the key to determining preferential systems. Would you agree with that? If so, then it should be relatively simple to narrow down which systems are preferable according to your selection criteria.

Flyguy

One thing I have sadly come to learn in these sorts of things is that loyal proponents of pure, free market economics (not saying gingerosity fits this description... yet, at least) have almost limitless space with which to move the goalposts.

The free marketeers I have taken the time to listen to refer to the most free markets for which they have evidence. Friedman refers to Britain and Japan in the mid 19th century and Hong Kong in the 20th century as his most free markets, certainly as far as duties, tariffs and trade regulations. I haven't verified his claims that these are the most valid examples. If you go back a few posts of mine, I confess that it seems to be quite difficult to get data on free markets from which we may draw valid conclusions. As Demi suggests we can get some local information on the regulation vs disasters curve, though even this is invalid for extrapolation beyond the extent of the data range. It may well be that there is an increase in disasters as regulation decreases, which then decreases again with even less regulation.

I'm frankly surprised that anyone has firm opinions on such a complicated subject when there is so much that needs to be taken into account to come to any balanced and objective conclusions. My comment earlier about being spared the politics of the GFC was becuase I think you guys have probably been copping a lot of crap and I can sympathise. Just don't fall into the trap that becuase hitler was a vegetarian, therefore vegetarianism is bad. If you have interesting stuff to share I'd like to see it.

https://www.youtube.com/watch?v=bJ8Kq1wucsk
For example, this Ted talk is very good on how we rationalise advantage. There is a decent socialist argument that could be made with it, even though the conclusion is hinting at a free market solution.
 IgorFrankensteen
Joined: 6/29/2009
Msg: 122
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History
Banks and the financial system
Posted: 3/20/2014 5:03:58 AM

Have the regulations actually decreased food related deaths since they came in?


Yes.


You know that I support a method, not a conclusion.


I have no idea what this means. It seems to mean something along the lines of "I support a way of doing things, and take zero responsibility for what happens to others as a result."


I said "the objection is usually"... not "my objection is usually". Here is evidence to support my claim that this is the usual objection.


You presented things as though it IS your objection. If it is not, then say what YOUR objection is.


'Knowing from prior experience' isn't evidence.


No, that is the very essence of "evidence."


For each bad food product that is blocked by the regulations, how many good ones are also blocked?


No one anywhere that I have heard of has ever presented any examples of such. Can you name any, or are you making up a mystery food to try to deflect attention away from the poisonous stuff? Unless you are going to claim that somehow poisonous food, and food prepared for market in filthy conditions has been shown to enhance public health.


On purpose or not is irrelevant. Actions have consequences. On "net effect", I was asking whether you'd considered all of the consequences. Have you?


Yes, I have. That is precisely what I said. I studied actual history, so I KNOW about the way life was before we set up safety procedures, and established health requirements for producers. I also know recent history, wherein every day that it is found that producers somewhere in the world are NOT required to make health and safety a priority, that they discard those values in favor of profits.

It is you, you seem to want to avoid connecting consequences with "methods."


The free marketeers I have taken the time to listen to refer to the most free markets for which they have evidence. Friedman refers to Britain and Japan in the mid 19th century and Hong Kong in the 20th century as his most free markets, certainly as far as duties, tariffs and trade regulations.


Those examples are not "free market" systems. Those are "free trade" systems, which are almost entirely different. And when "free trade" people talk, they also tend to ignore the overall situation they propose, and focus entirely on the tiny aspect of final cost of goods.

Yes, it is true, that if a producer can make his stuff in the cheapest way possible, without regard to his workers health, the cleanliness of his facilities, the damage done to his neighbors by his resource extraction methods, the quality of his resources, the quality of the goods produced, and so on, the final selling price CAN certainly be reduced. As with the "free market" fanatics, most of the modern "free trade" fanatics, want us to take advantage of the lack of attention to health and morality in overseas countries, in order for the rest of us to have cheaper stuff to buy, and higher profits for them to import.. and they want to deflect the fact that real damage is being done to humanity, by pretending that because it was done by the foreigners they hired, instead of directly by themselves, that therefore they aren't responsible for any of the messes.

On a side note, just as not ALL regulations are done correctly or for the right reasons, not all tariffs and other trade regulations are done for the best of reasons. But the fact that the very same kind of people who want to sell us poisoned food and defective death trap cars, manufactured by slave labor overseas, ALSO want to use government to keep their competition from offering something better than they do, and undercut their business...doesn't mean that the entire idea of regulations is wrong.

We used to have a poster here who did take responsibility for supporting Free Markets. I questioned him carefully, trying to find out what he really believed, because I had never run into anyone who ACTUALLY wanted "free markets" at all: just lots of people who wanted to do something in particular that current regs stopped them from doing, and so they wanted to overturn EVERYTHING in a fit of laziness and personal greed. I have never yet run across even a single "free market" proponent who DIDN'T assume that everyone who is currently "playing nice" would continue to do so without the presence of legal requirements to do so, and this guy proved to be no different. Shortly before he moved on (hopefully because he found a mate), he admitted that what it all really boiled down to, was that he personally wanted to conduct a loan business in a different country, and that country had regulations requiring him to do more work, and take more responsibility for his actions than his home country did, which meant limiting his profits too much. He really DID like regulated markets, he just wanted them to be regulated in a way that catered to his own profits.
 gingerosity
Joined: 12/10/2011
Msg: 123
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History
Banks and the financial system
Posted: 3/20/2014 7:18:52 AM
Drink:

1) You cannot have a business larger than a certain size. For example, either no chains, or a very low limit on such. Of course, this might present the problem of several businesses still being owned or run by one party unofficially and illegally;

Not-quite-free-marketeers would agree with the aim, but point out that big business and big government tend to go together. It is the regulatory environment that promotes the big corporations. I don't know what data they have, but I thought it was an interesting hypothesis.

2) Money is not sold. In other words, if someone loans someone else money, the loan is paid back according to whatever otherwise practical arrangements, but with no interest.

Don't the muslims do that? Should be plenty of data around to see if it is a good idea. I suspect it would be harder to get loans, but that might not be a bad thing. It should also increase other investments if no interest is obtained by leaving money in a bank account.

And of course if you don't repay a loan, there are simple strict consequences and solutions. And, whenever credit is extended, this can be a slightly different dynamic, but still with likewise simple and strict consequences and solutions.

Yep, definitely has a Saudi feel. When credit is extended... why would people bother to extend credit? What's in it for them? Is it a government plan or are we relying on some kind of community spirit/proven oil reserves?

Me: I support a method, not a conclusion.
Igor:

I have no idea what this means. It seems to mean something along the lines of "I support a way of doing things, and take zero responsibility for what happens to others as a result."

I was talking about the scientific method. You're making factual claims and wondering why I'm asking for evidence before I believe you.

You presented things as though it IS your objection. If it is not, then say what YOUR objection is.

I don't have an objection. I'm just learning stuff by discussing ideas and getting other people's perspectives. Isn't that the point of a forum?

Me: 'Knowing from prior experience' isn't evidence.

No, that is the very essence of "evidence."

Ok smarty. I meant [the claim of] 'knowing from prior experience' isn't evidence. You still haven't provided a single data point to support your claims. No references, nothing. Just 'believe me because I say it is so'.

Me: For each bad food product that is blocked by the regulations, how many good ones are also blocked?

No one anywhere that I have heard of has ever presented any examples of such. Can you name any, or are you making up a mystery food to try to deflect attention away from the poisonous stuff? Unless you are going to claim that somehow poisonous food, and food prepared for market in filthy conditions has been shown to enhance public health.

How could I name one if they were prevented from ever making it to market? That's the point, we never know about them. That Friedman video I linked to in my last reply to you did go into examples of this exact question with the drug regulations. What I'm talking about is the false positives. Things which are fine but which are blocked anyway, either directly because of excess caution in setting or interpreting safety thresholds, or indirectly by the effort and expense for (small) businesses to go through registration processes.

I studied actual history, so I KNOW about the way life was before we set up safety procedures, and established health requirements for producers. I also know recent history, wherein every day that it is found that producers somewhere in the world are NOT required to make health and safety a priority, that they discard those values in favor of profits.

Yes, that is what you said. But I asked for evidence, not opinion or anecdote.

Those examples are not "free market" systems. Those are "free trade" systems, which are almost entirely different. And when "free trade" people talk, they also tend to ignore the overall situation they propose, and focus entirely on the tiny aspect of final cost of goods.

Fair enough, but I didn't say they were free market systems. I said Friedman used them as the nearest thing to free markets which we had data on, and that I hadn't verified that. Do you know of any more complete examples of free market systems we can examine?

As with the "free market" fanatics, most of the modern "free trade" fanatics, want us to take advantage of the lack of attention to health and morality in overseas countries, in order for the rest of us to have cheaper stuff to buy, and higher profits for them to import.. and they want to deflect the fact that real damage is being done to humanity, by pretending that because it was done by the foreigners they hired, instead of directly by themselves, that therefore they aren't responsible for any of the messes.

How much of that is the responsibility of the consumer though? We buy fair trade and boycott offending companies, not becuase we're forced to but because we have decent ethical and social values. The internet and social media are powerful tools for this kind of sharing of information. Look at the recent backlash against particular companies in the garment industry for exploiting bangladeshi workers. There are market forces that go beyond mere dollars.

On a side note, just as not ALL regulations are done correctly or for the right reasons, not all tariffs and other trade regulations are done for the best of reasons. But the fact that the very same kind of people who want to sell us poisoned food and defective death trap cars, manufactured by slave labor overseas, ALSO want to use government to keep their competition from offering something better than they do, and undercut their business...doesn't mean that the entire idea of regulations is wrong.

That seems like a sensible sentiment to me. The question arises then, what are the types of regulations that are both required and are likely to acheive their stated objectives? I think we need to know exactly where market failure occurs - is it only in third-party effects such as pollution as Friedman believes? Or do we need it to provide information that we otherwise would not be able to obtain? To mandate safety requirements, to test efficacy, to impose tariffs, restrictions on competition, price controls... where can we draw the lines between which we must test individual propositions on a case-by-case cost-benefit basis?

I have never yet run across even a single "free market" proponent who DIDN'T assume that everyone who is currently "playing nice" would continue to do so without the presence of legal requirements to do so, and this guy proved to be no different.

That's just silly, of course there would be more people who don't play nice. I would have thought they would argue that even though there are more people who don't play nice, those people have significantly less or no ability to use monolithic power of government for their own nefarious purposes.

He really DID like regulated markets, he just wanted them to be regulated in a way that catered to his own profits.

And that is the big problem if you want an objection from me (objection with society). It is quite sickening to see in the friedman discussions when industry, politicians, academics and unions admit that no matter whatever happens to anyone else, the most important thing is to make sure they are protected.
 IgorFrankensteen
Joined: 6/29/2009
Msg: 124
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History
Banks and the financial system
Posted: 3/20/2014 5:01:21 PM
Okay, since you aren't presenting any of your own opinions, and are just doing research, I will leave you to do that on your own.

Look up the history of any of your favorite government regulations, and you will find that they were all created in response to some situation where private industries did SOMETHING that upset voters enough that legislators were pushed to act (or they saw vote-profits in acting, at least). In a few occasions, you will find that especially wealthy and or powerful people, managed to arrange for some regulations to be put into place, to restrain their competition.

I suggest you start your personal research by reading about the reason why the Meat Packing industries were subjected to strong Health regulations back in the early 20th century. It's easy enough to read about, and will serve as a straightforward example that you called for.

As for your imagining that regulations MUST have resulted in something wonderful being prevented, I will leave you to that as well. Trying to prove to someone that something DIDN'T happen, isn't logically possible, since it requires that ALL of what happened be certified as whatever it was, and further show proof that what DIDN'T happen, WOULD have happened, had it not been for some specific preventive. It's a game some people play to pretend to win arguments, when all they are doing is saying "yeah, but what if? Aha!"
 Demigod1979
Joined: 12/4/2011
Msg: 125
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Posted: 3/20/2014 7:35:43 PM

Why not? And what do you mean by stable? What frequency and amplitude of fluctuation in the key varibales is acceptable? What are the key variables? We have to know what we're aiming for before we work out how to get there.

Stable, as in a system that does not result in economic crashes. For the US, that would be the Great Depression and the Great Recession, both of which exceed the technical definition of a recession by significant margins.


Perhaps there is a correlation between lax government regulations and financial disasters. Is it a causal correlation? Is there a trend demonstrating that as government regulations become less lax, financial disasters become less frequent and/or severe? It may well be the case. I don't accept it as a given until I've seen the evidence. Especially not when I know that there were government regulations in place such as limited liability and tax incentives favouring high debt that were probably not stabilizing influences.

Evidence? The very fact that the entire financial system was almost destroyed by unregulated financial instruments is proof positive that lax regulations are (one of the) causes of financial crisis (you'd have to be willfully blind not to see it!). There is no other explanation for the monumental financial crisis that unfolded in 2008 (if you were in the market like I was, then you'd know that it was an extraordinary event... WHEN DO YOU EVER SEE THE YIELD ON A T-BILL GO NEGATIVE???). No amount of cheap credit would have caused such a crisis, with banks writing off several billion dollars every quarter! Of course cheap credit from low interest rates might have added fuel to get the credit bubble going, but that decision was also made by a private bank, the Federal Reserve.


Poverty>millions, unemployment>millions and war>millions. That is good, but is there anything else to add to the list before we use it? My intent is to say that any system that increases the frequency and/or severity of Poverty>millions, unemployment>millions, war>millions is not preferable to systems which decrease those things, since you appear to hold the crises as the key to determining preferential systems. Would you agree with that? If so, then it should be relatively simple to narrow down which systems are preferable according to your selection criteria.

You asked for criteria that would make an economic crisis a bad thing, and I gave it to you (I actually found it funny that you would ask for such a thing - it's like asking what 1 + 1 is :p). Economic crises, like the one causing the Great Depression, did all of these things, and no one in their right mind would consider it anything other than bad. Like I said before, lax government regulations can be one of the causes of this, which means that strong government regulations are needed to keep the market stable (private-sector bankers alone cannot be trusted to keep the economy stable).
 drinkthesunwithmyface
Joined: 3/27/2012
Msg: 126
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Posted: 3/21/2014 2:42:15 AM
gingerosity:

It is the regulatory environment that promotes the big corporations. I don't know what data they have, but I thought it was an interesting hypothesis

Please explain this further?


Money is not sold. In other words, if someone loans someone else money, the loan is paid back according to whatever otherwise practical arrangements, but with no interest.
...It should also increase other investments if no interest is obtained by leaving money in a bank account.

Please explain this part further also?


And of course if you don't repay a loan, there are simple strict consequences and solutions. And, whenever credit is extended, this can be a slightly different dynamic, but still with likewise simple and strict consequences and solutions
When credit is extended... why would people bother to extend credit? What's in it for them? Is it a government plan or are we relying on some kind of community spirit/proven oil reserves

Well, it does immediately show the conundrums. But yes, more of the community-spirit thing would be encouraged, I believe. If it's an integral part of how everything is done, it's that way for everyone. A bit of the tit-for-tat would come into play. Different motivations would manifest. Helping to help, instead of just direct immediate monetary gain...in the ecosystem of things working like that, you'd be encouraged to extend credit for fear of it not being extended to yourself, and in order to just do more business. Also, how someone's reliability for repayment or honoring of credit, or their risk factor, would be formulated slightly differently and approached with a slightly different attitude (?). But also, I think that all of this would discourage the phenomena of people planning for and relying so much on credit and loan. They'd get back to knowing how to save for a car, instead of paying for it after getting it, and stop perpetually living beyond their means so much. The family-and-friends unit might be encouraged more - this would be the source from which many would get loans or credit if such a dynamic were part of how it all worked. Another way to think about what I'm pondering here is just that basically people are much less living in debt and "beholden to another" for everything that they have and get in some ways - don't know if that'd be good or bad though. People, and economy, would still be inter-dependent, but just in different ways...better or worse ways? Of course, one of the things that makes this idea seem impractical is that there would still very often be definate needs to have credit extended in major ways...you can't save ahead of time for everything. And not everyone will have family and friends for this if this would become the major source in such an system. Credit and loans are what makes things work. But I've always wondered if there isn't a different way that it can be done - some of the things that come into play when you sell money itself - pay money for money - are what causes problems. Or maybe they don't?

Proven oil reserves - explain more?
 IgorFrankensteen
Joined: 6/29/2009
Msg: 127
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Posted: 3/22/2014 6:18:48 AM

Perhaps there is a correlation between lax government regulations and financial disasters. Is it a causal correlation?


Yes, and sort of. When previous mistakes are repeated, it is due to a period of LAX regulation. When new mistakes are made, it is due to the need for NEW regulation. There have been so far, no examples of the relaxation of regulations which were put in place to correct problems, resulting in overall improvement. There have only been cases where it was later discovered that the initial regulations written to deal with a real problem, weren't written well enough, and had to be adjusted.



Is there a trend demonstrating that as government regulations become less lax, financial disasters become less frequent and/or severe?


Yes, of course. Again, I wont teach you the entire History of the United States, or of the world. If you aren't willing to work to educate yourself about it on your own, then you are lying about being " interested in discussing ideas and learning, not in waving a flag for a team."



It may well be the case. I don't accept it as a given until I've seen the evidence.


So far, you haven't been willing to look at and see any, so I don't expect to see any change in your opinions any time soon.



Especially not when I know that there were government regulations in place such as limited liability and tax incentives favouring high debt that were probably not stabilizing influences.



No one has claimed that every time the government acts, it is for the best for everyone. The things you cite as problems, such as the limited liability, and the problems I have mentioned, such as the ability of criminals to let their Corporation take the fall when they act unconscionably, are indeed due to the fact that sometimes the government comes to be under the control of people who are trying to make things EASIER for the criminals. We've been going through a bit of that for the last forty years, with the "deregulation" games, and the "anti-regulation" games, which indeed led directly to the mess we are in.
 gingerosity
Joined: 12/10/2011
Msg: 128
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Posted: 3/22/2014 10:47:20 PM

As for your imagining that regulations MUST have resulted in something wonderful being prevented, I will leave you to that as well.

MUST? We were talking about calculating the possible effects of alternative actions and I gave a partial list of questions that might need to be considered in the analysis. The very reasonable question “how many good ones are blocked?” is entirely different to the assertion that “regulations MUST have resulted in something wonderful being prevented”.

I suggest you start your personal research by reading about the reason why the Meat Packing industries were subjected to strong Health regulations back in the early 20th century. It's easy enough to read about, and will serve as a straightforward example that you called for.

Very well, since you don’t want to share any of your data or analysis that led to your conclusion I shall have to have a look at it myself.

From https://en.wikipedia.org/wiki/Upton_Sinclair and http://www.thefullwiki.org/The_Jungle

- Publication of Upton Sinclair’s book The Jungle in 1905/6, major public reaction.
- Domestic and foreign purchases of American meat fell by half.
- Major meat packers lobbied the Federal Government to pass legislation paying for additional inspection and certification of meat packaged in the United States.
- Pure Food and Drug Act 1906 and Meat Inspection Act 1906 passed
- Sinclair rejected the legislation as an unjustified boon to large meat packers partially because the U.S., rather than the packers, was to bear the costs of inspection at $30,000,000 a year.

So the free market brought the information to light (in the form of an investigative journalist), and the free market was punishing the offenders (in the form of a loss of half of their revenue). There was a massive incentive for the industry to pay whatever it took to prove they were clean, but the government kindly took up the bill for them and they all lived happily ever after.

Trying to prove to someone that something DIDN'T happen, isn't logically possible, since it requires that ALL of what happened be certified as whatever it was, and further show proof that what DIDN'T happen, WOULD have happened, had it not been for some specific preventive. It's a game some people play to pretend to win arguments, when all they are doing is saying "yeah, but what if? Aha!"

You are the one who has come to a conclusion about the necessity of the regulations, so the burden of proof was yours.

You declined to explain your reasoning or provide any evidence, so I can only assume that your assumption was that the situation after the publication of The Jungle would have continued as before publication of The Jungle in the event of no regulations being passed. We know that meat sales halved immediately, so that assumption is demonstrably false.

You are correct that we cannot know with historical certainty what would have happened in the absence of regulations, so any conclusion for or against them must be explicit in disclosing the data used, the methods of analysis and inherent uncertainties the prediction is based upon. That information is what my line of questioning has been trying to uncover. I will do a very quick demonstration of what I was expecting.

Disclaimer: What you see below is for demonstration purposes only, using whatever data I just found quickly on the internet. I make no conclusions, and no claims about the validity of the data or methods of analysis.

I will postulate that there were three scenarios that were feasible in the post-Jungle period.

Scenario 1: Government pays to prove safety (what actually happened)
Saved big business the costs of proving that they had cleaned up their act. The old “privatize the profit, socialize the cost” trick. Meat sales return to normal and consumption per person rises by 66% over the next century. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3045642/figure/F2/

Scenario 2: All of Industry pays to prove safety
Costs are borne by the offenders collectively, whether by force or voluntarily. It is likely that meat consumption per person would not grow quite as quickly as scenario 1 due to the cost of certification being added on to the cost of meat.

Scenario 3: Some of Industry pays to prove safety
Costs are borne by the offenders individually voluntarily. Some get certified and some dont, with those who pay for certification able to command higher prices. It is likely that total meat consumption would not have grown as much as in Scenario 1 or 2 because the public would not trust the industry as a whole.

In previous posts, I asked whether you’d condidered all the possible consequences of the scenarios and you said you had. For this back-of-the-envelope calculation, I will look only at some possible effects on mortality from the projected rate of meat consumption.
According to this source there were 5200 deaths from foodborne illnesses per year in relatively recent times, which is around 0.002% of the population. http://wwwnc.cdc.gov/eid/article/5/5/99-0502-f1.htm

Let us assume that the rate would be double that at 10400 in scenario 3. If we were trying to do this properly we’d dig up the pre-1905 data and use that as the unregulated death rate, and possibly check that rate against other developed countries that regulated later.

So far, we have 5200 deaths against scenario 3 and in favour of scenario 1 (I'm ignoring scenario 2 becuase it's somewhere in between).

But meat consumption is not as high in scenario 3, because of ongoing issues (piles of dead people). Let us assume under scenario 3 that the rate would now be the same 150g/person/day that it was a century ago, rather than the 250g/person/day that is has become under scenario 1.

What effect do different levels of meat consumption have on mortality? This gives a good overview but unfortunately no simple figure to plug into a calculation. http://www.journals.elsevierhealth.com/periodicals/yjada/article/S0002-8223(03)00294-3/fulltext#section24

Page 75 of this reference gives the total mortality per 100,000 people aged 30-70 in the US as 460, which when multiplied by 300 million gives 1.38 million deaths per year. http://apps.who.int/iris/bitstream/10665/81965/1/9789241564588_eng.pdf

I found some simple figures to use based on red meat here http://archinte.jamanetwork.com/article.aspx?articleid=1134845

“We also estimated that 9.3% of deaths in men and 7.6% in women in these cohorts could be prevented at the end of follow-up if all the individuals consumed fewer than 0.5 servings per day (approximately 42 g/d) of red meat.”

So we’re assuming an average drop of 250g to 150g of all meat consumption in our scenario. The above isn’t a very good match to what we’re proposing to do, but to slap this together quickly lets just assume an 8% reduction of mortality from long-term effects of meat consumption and see what we get. There is a historical study here on cancer rates that might have helped but it’s not free to access. https://www.ncbi.nlm.nih.gov/pubmed/12784323

8% of 1.38 million is 110,000 deaths from long term meat consumption to go into the ledger for scenario 1. So at the end of this little exercise, we have the following results:

Scenario 1 deaths: 5,200+110,000 = 115,200
Scenario 3 deaths: 10,400
Net effect of regulations: 115,200 - 10,400 = 104,800 additional deaths per year.

Now don’t make me repeat my disclaimer, please. I am fully aware of all the dodgy data, omissions and assumptions. I haven’t included anything like environmental effects or anything else. Someone could write a thesis on this stuff and still not cover it all. That was my whole point! I wanted to see what data and methods YOU had used in coming to YOUR rock solid conclusion.

Here is a WHO study examining the additional deaths caused by agricultural subsidies in the EU which shows how you can do this kind of analysis more rigorously if you actually care about prolonging lives. http://www.who.int/bulletin/volumes/86/7/08-053728/en/

Drink,Demi, I’ll come back to reply to your stuff later.
 IgorFrankensteen
Joined: 6/29/2009
Msg: 129
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History
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Posted: 3/23/2014 1:38:09 PM

So the free market brought the information to light (in the form of an investigative journalist), and the free market was punishing the offenders (in the form of a loss of half of their revenue). There was a massive incentive for the industry to pay whatever it took to prove they were clean, but the government kindly took up the bill for them and they all lived happily ever after.


For someone who professes to be "just investigating and learning," you manage to remain solidly on ONE side at all times.

Here, you have chosen to believe the version of history as told by the public relations side of the existing industries. They LOVE to pretend that they would have cleaned up their act out of sheer love for people, but they never manage to actually do so until the government regs go into effect.

Seriously, you attribute the existence of government regs to private industry requests for them? And somehow, that therefore government doesn't have to regulate?


In previous posts, I asked whether you’d condidered all the possible consequences of the scenarios and you said you had.


No I didn't.


You are the one who has come to a conclusion about the necessity of the regulations, so the burden of proof was yours.


Only from the point of view of someone pretending to be unbiased, but actually already thinks regulation ISN'T necessary, and who tries to prove this by describing a version of history where private industry inexplicably DEMANDS government regulations, even though they could just as well have established private standards agreement systems (which SOME industries have done, to great success).


MUST? We were talking about calculating the possible effects of alternative actions and I gave a partial list of questions that might need to be considered in the analysis. The very reasonable question “how many good ones are blocked?” is entirely different to the assertion that “regulations MUST have resulted in something wonderful being prevented”.


No, YOU were talking about calculating how many of your (I say imaginary) "good ones" have been blocked. That as yet unsupported claim, hanging in the midst of your assertion that regulations prevent as much good as bad, DOES mean that you have claimed that you HAVE calculated that regulations MUST have prevented good stuff.

If you want to play the "burden of proof" card, you first have to admit that you are indeed taking sides, and arguing seriously. You have repeatedly denied this, so you have no standing to call for anyone else to do what you wont do. Show examples of regulations preventing as much good, as they do prevent bad.

I can point out occasional instances myself where regulations got in the way of positive advances. This fits with MY assertion that though the idea of regulation itself isn't "bad," that since the people writing and enforcing them are flawed (no, sorry, no perfect beings in Congress either), that there will be times when they are done incorrectly, and need to be repaired. But that doesn't help your claim that regulation itself causes as much bad as good.


Now don’t make me repeat my disclaimer, please.


Oh, I wont. I just ALSO wont let you hide behind it, while demanding that everyone else behave as though the same rules don't apply equally.
 gingerosity
Joined: 12/10/2011
Msg: 130
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Posted: 3/24/2014 6:00:52 AM
Demi

Stable, as in a system that does not result in economic crashes. For the US, that would be the Great Depression and the Great Recession, both of which exceed the technical definition of a recession by significant margins.

Right, but I just wanted to get more specific about what we are aiming for.

Evidence? The very fact that the entire financial system was almost destroyed by unregulated financial instruments is proof positive that lax regulations are (one of the) causes of financial crisis (you'd have to be willfully blind not to see it!).

I don't get it. What is an unregulated financial instrument? A ponzi scheme? A con? A spin on the roulette?? If people knew the risks, had a gamble and lost, then why is that bad and what has it got to do with regulations? What was it about the system that encouraged such gambling? Have the tax breaks that encourage investing with debt been removed? If it was a scam then that is obviously bad, but what is it about the system that encourages people to behave like that? Have the culpable executives gone to jail and the shareholders had their assets seized to pay back those who were duped? Why not?

that decision was also made by a private bank, the Federal Reserve.

'Private' bank seems to be a bit of an oversimplification from what I've read. It looks a bit more complicated than that.
http://www.slate.com/articles/news_and_politics/explainer/2008/09/is_the_fed_private_or_public.html

You asked for criteria that would make an economic crisis a bad thing, and I gave it to you

Yes - we need to keep the rates of poverty, unemployment and war as low as possible. Got it. Do you have historical data on those things we can use or am I going to have to go scrounging?

(I actually found it funny that you would ask for such a thing - it's like asking what 1 + 1 is :p)

I find it funny that you find it funny. Ask 10 different people to define the ideal economic system and you'll get 20 different answers. It's no good going to all the effort to test the criteria I think are important if you then say you don't think those things are important. It's like when you see people arguing until blue in the face and then realising that it was just different definitions that was the issue.

Economic crises, like the one causing the Great Depression, did all of these things, and no one in their right mind would consider it anything other than bad. Like I said before, lax government regulations can be one of the causes of this, which means that strong government regulations are needed to keep the market stable (private-sector bankers alone cannot be trusted to keep the economy stable).

Well 'strong government regulations are needed to keep the market stable' is certainly a popular hypothesis that I'd like to investigate further. We have our 3 key indicators and we know that low and stable is what we want to see. Now we just need data on all 3 over a range of regulatory systems to find the optimal strength of regulations for which we have data. I'll wait and see if you've got anything first.
 gingerosity
Joined: 12/10/2011
Msg: 131
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Posted: 3/25/2014 5:59:48 AM
Drink

Please explain this further?

There are a two points I've heard from free-market people that I can think of right now that are relevant, and like I said I don't know what data is used to support them.

The first is that monopolies are only sustainable with government favour, through tariffs and that sort of thing. The second is that the more regulations there are, the more it favours the big businesses that have the resources to pay for the licences and registrations as well as the teams of regulatory officers and lawyers. The little guys don't have the resources to jump through all the hoops so they're forced out of the market.

I had a quick look for those arguments in the Friedman series I watched recently, but could only find the first one mentioned a couple of times. The second one is in that 10 hours somewhere too. I'm sure he even uses a phrase like 'big government causes big business causes big labour' at some point.
36:00 https://www.youtube.com/watch?v=D3N2sNnGwa4&list=PL0364ACCE6C7E9D8E
38:00, 46:00 https://www.youtube.com/watch?v=PJWLt1TmAy4&list=PL0364ACCE6C7E9D8E

Please explain this part further also?

You have money. Leaving it in the bank gives you 0% interest. Investing in a business, real estate, shares... give you x%. Where is the capital going to go? It's not going to stay in the bank account.

Helping to help, instead of just direct immediate monetary gain...in the ecosystem of things working like that, you'd be encouraged to extend credit for fear of it not being extended to yourself, and in order to just do more business.

Or even just out of altuistic motivations. There are things like charity bank accounts where the interest goes to a charity, or zero interest micro-loans given by people in developed countries to those in developing countries to start a business. The Ted talk I linked to a few posts ago touches on this kind of the thing at the end of it. Greedy rich people just need to be reminded about the plight of poor people, after which they're just as willing to give as the rest of us (apparently).

Credit and loans are what makes things work. But I've always wondered if there isn't a different way that it can be done - some of the things that come into play when you sell money itself - pay money for money - are what causes problems. Or maybe they don't?

Like I said, there should be plenty of data available from the muslim world to find out. Riba is haraam under sharia.

Proven oil reserves - explain more?

Well that is how the Saudis do it. Did you know that saudi residents pay no income tax? The monarchy is so rich that it wouldn't know what to do with tax money, other than building some more prototype space elevators. http://www.kingdom.com.sa/building-a-landmark-jeddah-tower-the-worlds-tallest-building
I'm sure 0% loans would be easy for them to manage.
 IgorFrankensteen
Joined: 6/29/2009
Msg: 132
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Posted: 3/25/2014 3:20:38 PM

The first is that monopolies are only sustainable with government favour, through tariffs and that sort of thing. The second is that the more regulations there are, the more it favours the big businesses that have the resources to pay for the licences and registrations as well as the teams of regulatory officers and lawyers. The little guys don't have the resources to jump through all the hoops so they're forced out of the market.


The first part of that is usually true, to an extent. Monopolies use government resources to enforce their monopolies pretty often. It is sometimes true as well that they have the government apply regulations to situations, specifically in order to allow them to maintain that monopoly. Tariffs sometimes exist to help monopolies, but not most of the time. Most of the time, they are designed to limit the ability of foreign businesses or governments from competing against domestic ones. Sometimes this is because the foreign governments or businesses are cheaper because they've been at it longer, or have access to cheaper resources, and sometimes it's because they are cheating in some way. Such as purposely under-pricing their goods sent to another country, and even taking a loss on them as a way to drive that nation's domestic suppliers out of business.

The thing is, nothing about regulations or tariffs or any of the rest of is is simple, cut and dry "it's always good or it's always bad" kinds of things.

The second part, when referred to by many and perhaps most "free market" advocates, is essentially a lie. Yes, there are certainly instances where the "ante" to get into a given business is so high, that small players can't get in the door. But as with all the rest of this, it's not a simple situation, even in those specific cases, that the regulations are there either with the intent to prevent small businesses from competing, nor are they often the primary reason why start-ups have problems.

Most specifically, what the "free market" advocates often either purposely hide, or are simply flat out ignorant about, is that a GREAT deal of regulations have been put in place to prevent existing businesses from being able to manipulate the markets in order to keep competition out. Again, a study of History, even the direct observation of modern situations, will allow you to learn how UNREGULATED people can, and do try to use the lack of regulation to cheat other entrepreneurs from joining "battle."

One relatively recent example, was when Microsoft tried repeatedly to use it's head start in the PC Operating System market, to prevent anyone else from selling ANY competing product. What they did was, they declared that since most people would want to install Windows on any PC, that therefore every business who wanted to be able to sell PC's with Windows installed at competitive prices, would have to pay Microsoft as though they sold EVERY machine with windows installed, whether they did so or not. They further made a rule that no one who had a contract to sell Windows to end users could do so, if they so much as advertised the fact that other Operating Systems EXISTED.

That is the sort of restraint of trade which happens when there is NO regulation of business practices. Lack of regulation UNQUESTIONABLY favors the already huge and rich, over the start-ups. This should be obvious even without study, since most people experienced as children, that when there is no good parent around, that the biggest kids get away with murder.

Again, if you read the history behind LOTS of regulatory actions, you will gradually find out something closer to the truth.

I suggest you put some time in to reading, preferably from multiple sources which you are careful to make certain aren't all linked together (i.e. ALSO go to a public Library and read, so that you aren't being misled by the ability of people to manipulate the appearance of the internet itself in their favor), about the reasons why we have lots of ANTI-TRUST laws and related regulations in this country. It isn't because someone wanted to sabotage creativity and good business practices, I can assure you.
 drinkthesunwithmyface
Joined: 3/27/2012
Msg: 133
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Posted: 3/25/2014 5:13:34 PM
gingerosity - Thanks. For the discussion ("teaching"), and patience with my ignorance. Actually, I like to hear other's thoughts in here on something even if I know something about it. But anyway it's nicer and more productive when a conversation has your type of tone.
 JustDukky
Joined: 7/8/2004
Msg: 134
Banks and the financial system
Posted: 11/23/2015 5:12:46 PM
This is a good looking thread!

I haven't yet had a chance to read thru it all, but I'd like to see you guys explore the idea and implications of a demand-driven, free market, global, Bitcoin economy. IMO it could spell the end of the global private central banking system and the beginning of a self-regulating and prosperous global economy.
 gingerosity
Joined: 12/10/2011
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Posted: 11/24/2015 3:23:16 AM

I'd like to see you guys explore the idea and implications of a demand-driven, free market, global, Bitcoin economy.

What do you mean by "demand-driven", and how would you reconcile that with the freedom to advertise? The only effective method I'm aware of for counteracting persuasion is education and the practice of critical thinking. Is there a certain level of global education that is a necessary pre-requisite for the proposed economy to exist?

Bitcoin is just a medium of exchange, not an economy. Where it exists other media can also exist, and the more there are the less value any particular one will retain. For example, I learned about the new bitwalking (BW) dollar a couple of days ago... http://www.bbc.com/news/technology-34872563

IMO it could spell the end of the global private central banking system and the beginning of a self-regulating and prosperous global economy.

Maybe, or it could just lead to early speculators losing their investment when the next fad comes along. http://xkcd.com/1570/

IMO it's more likely that they will continue to operate alongside the state-sanctioned currencies and there won't be much structural change in developed countries for a long time. Africa may lead the way with such ideas, since they have less to lose and more to gain. I read an article a while ago about local currencies being common in favelas, which seems to support the intuitive correlation between experimentation and disenfranchisement.
 JustDukky
Joined: 7/8/2004
Msg: 136
Banks and the financial system
Posted: 11/24/2015 6:00:01 PM
As you are probably aware, most nations are debt slaves to the central banking system run by the BIS (the central banker's central bank) and the so-called creation of money is really the creation of debt by fraud. The existing system is run top down (by controlling the “money” supply. The existing system demands perpetual growth in order to have a “stable” economy. Countries like Greece stand as a good example of economic robbery by the banks. So who really creates money? The people create wealth with their production. Ideally the wealth creators need money (a medium of exchange) to meet their needs as consumers. The goods and services they require are provided by various suppliers who provide the consumers/workers with a medium of exchange.

The Bitcoin has created a global grassroots economy that is independent of central banks, nations and taxation (i.e. income tax). Bitcoins are a measure of wealth, so in that sense, the Bitcoin is real money. Wealth is not measured by the Bitcoin; it is only worth whatever the market figures its worth. It is quite possible to have a glut or shortage of Bitcoins, just as it is possible to horde, dump, or otherwise speculate on them, causing a temporary inflation or deflation, but the amount of wealth the Bitcoins in circulation represents doesn't change. In fairly short order, supply and demand equal each other and meet at the equilibrium price for various goods or services.

I can already envision a future where states will no longer have to exact tribute from a nation's people to try to pay down the debt to a private central bank. I see such institutions as private central banks eventually fading into oblivion (possibly after a civil war or insurrection owing to draconian measures employed to keep the people subservient to the state and paying bank tribute (income tax).) The powers that be are already living in fear of currencies like the Bitcoin and seek to legislate it out of existence using some excuse or other, but the simple truth is, such currencies will never go away. It would take a despotic ruler like Joseph Stalin to even stand a chance of wiping such a currency out in a given country.

You are quite correct that the Bitcoin (or currencies like it) will continue to exist alongside other currencies for some time to come, but its acceptance grows by the day and its future looks very bright.

Africa could have been a great model of a prosperous economy. Libya under khadafy had its own central bank (not beholden to the BIS) with a large gold reserve. He wanted to unite Africa under the gold Dinar. Unfortunately for Libya, word must have come down from the BIS that Khadafy and his central bank with all its gold had to “go.” You probably know the rest. Still, there is much hope for Africa, if we can just get the “developed” countries and their corporations to quit muscling in.
 JustDukky
Joined: 7/8/2004
Msg: 137
Banks and the financial system
Posted: 9/18/2016 11:02:00 PM
What is really needed is a complete collapse of the western financial system (banks & corporations), and and a financial anarchy of private, bankless currency, thus allowing for local and global trade between men.
 Ed Bear
Joined: 5/19/2007
Msg: 138
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History
Banks and the financial system
Posted: 11/4/2016 8:00:10 AM
What, no women?
ED BEAR
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