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 gingerosity
Joined: 12/10/2011
Msg: 130
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Banks and the financial systemPage 7 of 7    (1, 2, 3, 4, 5, 6, 7)
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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Banks and the financial system
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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Banks and the financial system
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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Banks and the financial system
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
Msg: 135
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Banks and the financial system
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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Banks and the financial system
Posted: 11/4/2016 8:00:10 AM
What, no women?
ED BEAR
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