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[TheIcelandicManiac]

Shit and corrupted government is shit, hard to belive they wont even be prosecuted for their actions of making all these promises to the banks like saying that the icelandic nation will guarantee that they will pay if the banks hit the shit.

[acker]

I would not quite say that the free market proved to be inadequate to rectify banking shananigins. For every boom there has to be a bust, such as the roaring 20's and the depression. Just because there was a depression means that the free market was in fact doing it's job...

...Both these topics can have books written over them so I wont go into it, but the closest metaphor I can give you is that the US monetary system is like a binge drinker and his hangover the next day.

Err...according to most branches of freshwater economics [University of Chicago School of Economics], yes. According to the majority of saltwater economics [the rest of the world], no. There are slight differences in the axioms both schools use that lead to completely different results. I'm technically saltwater (and, I guess, know much more of the neoclassical synthesis than of monetarist, pure classical, or post-Keynesian economics), but this is extremely complicated. PM for discussion.

However, in short, most economic institutions in charge of economic policy would treat your statement as false, that adjustments to the LM curve can normally both suppress booms and prevent busts, and that the free market is not "doing its job" at the moment for various reasons. China is probably the best example for the moment, but they also use IS policies.

The mega banks and their financial assets are the ones that create the bubbles that lead us straight into the crashes, most recently being the Subprime mortgage bubble that took leman brothers under, and then a decade before that with the .com bubble.

Well, I agree with the intent, but it's more complicated than that. But since this is a statement, I don't think I can convince you otherwise.

Of all the industries that I would like to see regulated, it would be the banking system, the only thing is that we would not even need the regulations if our government had control over the issuance of it's own currency. The US government does not control the issuance of the US dollar because the Federal Reserve is a private bank with shareholders, they can largely do with it whatever they want.

The Fed is technically private, the same way the IRS is technically private. It's also technically a grouping of twelve private banks, not just one big entity. That, in of itself, is not a good reason to state that the government has no control over the production or issuance of currency.

It is at this point that Government and Private corporation is connected at the hip for why we have this problem with our banking system.

The banking system has been exempt from the free market for about the last 100 years, since 1913, therefore I do not think we can properly judge this statement to be accurate.

I believe you said a free market would have let the banks fail. We tried letting the banks fail. It failed globally. I think that's good enough evidence. The duties of the Reserve were fairly different in 1913 than its duties today, and did not attempt or control rushing liquidity to banks in case of financial crisis.

[Unkn0wn]

Well, to be honest, had governments not intervened and guaranteed the people's savings the entire economy would've gone to hell. I mean, how can we trust normal banks any longer when at any given time we the people risk losing all our savings? (Like a lot of people almost did in 2008) If we can't trust banks any more than ultimately our economy is doomed.

That's the shitty part really, we're not regulating banks properly and just let them take major risks with the average joe's saving. And when they fuck up, our governments have no other choice than to bail them out, indebting the country for many years to come. It's fucked up.

[Vermillion_Hawk]

Interesting fact that I found ironic and relevant: the only time the U.S. Government was debt-free was during the presidency of Andrew Jackson, who despised banks and destroyed the First National Bank towards the end of his term.

[Unkn0wn]

There's nothing wrong with debt per sé, the showdown that is happening in Washington today is largely power politics by irresponsible politicians. If they don't sort it out these next few days we'll have the next economic crisis on our hands. (And China is going to be rightfully PISSED lol) Though the Republicans are being incredibly irrational. The US income taxes for the rich have never been this low, not even under Reagan. And I quite honestly applaud Obama for standing ground.

[acker]

Well, to be honest, had governments not intervened and guaranteed the people's savings the entire economy would've gone to hell. I mean, how can we trust normal banks any longer when at any given time we the people risk losing all our savings? (Like a lot of people almost did in 2008) If we can't trust banks any more than ultimately our economy is doomed.

That's the shitty part really, we're not regulating banks properly and just let them take major risks with the average joe's saving. And when they fuck up, our governments have no other choice than to bail them out, indebting the country for many years to come. It's fucked up.

We really need proper regulation, then. Once again, don't vote for the Tea Party

Sweden did something interesting in the nineties where they forcibly nationalized banks in trouble, screwed over the shareholders and purged upper management, and eventually reprivatized the banks. I'm not Swedish and I don't know much more about this than this tidbit, but it seemed to work well. But they have a functioning democracy.

Interesting fact that I found ironic and relevant: the only time the U.S. Government was debt-free was during the presidency of Andrew Jackson, who despised banks and destroyed the First National Bank towards the end of his term.

The next time there was a threat of a banking recession after that in the late eighteen-hundreds, Rockefeller had to personally save the planet because there was no central bank. True story, and I'm only slightly exaggerating about the planet part.

That's why they made a Federal Reserve, because trusting Rockefeller again (especially a dead Rockefeller) didn't seem like a good idea.

[Unkn0wn]

We really need proper regulation, then. Once again, don't vote for the Tea Party

It's no longer a national issue though, if you want to regulate the banking sector properly you simply NEED to regulate it globally. That being said, the US did actually respond firmly with Obama's financial-regulation bill.

That's why they made a Federal Reserve, because trusting Rockefeller again (especially a dead Rockefeller) didn't seem like a good idea.

I still don't understand why the US treasury doesn't just issue its own money.

[acker]

It's no longer a national issue though, if you want to regulate the banking sector properly you simply NEED to regulate it globally. That being said, the US did actually respond firmly with Obama's financial-regulation bill.

True, I guess financial institutions are too international for national regulation. Wonder how this would work...new branch of UN? IMF? World Bank? I can't think of any institution who could do this...

I still don't understand why the US treasury doesn't just issue its own money.

I don't know much about this, but the Treasury prints money and manages government reserves. Which is different from managing the economy as a whole. I'm guessing conflict of interest was an issue, but I wasn't alive back then.

[Unkn0wn]

Nah, it'd have to be done at the G8-G20 level. I guess they'd have create a new insitution, or maybe give regulating power to the Financial Stability Board. They did actually have a sit-down on the financial crisis but nothing ambitious came out of it. (You need a global consensus obviously, and some countries were firmly opposing stricter regulation) Basel III is as good as it gets.

[acker]

Nah, it'd have to be done at the G8-G20 level. I guess they'd have create a new insitution, or maybe give regulating power to the Financial Stability Board. They did actually have a sit-down on the financial crisis but nothing ambitious came out of it. (You need a global consensus obviously, and some countries were firmly opposing stricter regulation) Basel III is as good as it gets.

Basel is kinda informal and doesn't have punitive action attached to it. Don't know about the G8 or G20, though.

We're doomed. Maybe in fifty years we'll seriously start. And then have to worry about interplanetary treaties in a century.

[Unkn0wn]

Quite soon if the US doesn't raise the debt ceiling
DOUBLE DIP HERE WE COME.


And we're doomed by climate change anyway.

[acker]

Quite soon if the US doesn't raise the debt ceiling
DOUBLE DIP HERE WE COME.


And we're doomed by climate change anyway.

Would it be immoral to have children ?

[TheIcelandicManiac]

hopefully

[Groundfire]

Quite soon if the US doesn't raise the debt ceiling
DOUBLE DIP HERE WE COME.

You cant raise the debt ceiling perpetually. Eventually people will just stop accepting US dollars. When that happens you got Weimar Gemrany all over again and you have your depression anyways.

Im wouldnt trust politicians to "fix" the problem by then.

I still don't understand why the US treasury doesn't just issue its own money.

Because that's the Fed's job and it's been like that since 1913. The last president that purposed that the US treasury actually print it's own money, debt free backed by silver, was JFK and we all know what happened to him.

I think it was Executive order 11110, it would've removed the FEDs monopoly to issue the worlds reserve currency.

[Unkn0wn]

You cant raise the debt ceiling perpetually. Eventually people will just stop accepting US dollars. When that happens you got Weimar Gemrany all over again and you have your depression anyways.

Im wouldnt trust politicians to "fix" the problem by then.

No one's asking you to raise it perpetually, you have to raise it and start reducing the deficit obviously. (HINT not waging three different wars at the same time would help) But not raising it now would be a terrible idea. What the Republicans are doing is essentially playing a very high level game of political poker with the US economy 'all-in'. Not that they care, the president would probably get the blame come 2012 anyway.

Also, at the moment the US dollar is still the strongest currency in the world, there's no better alternative so I very much doubt people will start losing trust in the USD any time soon, just look at China who's in a dollar trap and has no way to get out!

[acker]

The rating agencies in charge of the whole market panic thing if the debt ceiling isn't raised have literally said that the country's fiscal situation is not in question. They're considering downgrading because the political system is broken. They outright said it to get Congress to hurry up and do something.

Unfortunately...

[Groundfire]

Like I said unky, I wouldnt trust the politians to fix it by then. Obama also said we'd be gone from Afganistan by now and presence in Iraq drastically reduced.

No one in the upper echelons of the US goverment gives 2 shits about ending any of the wars, and that comes from both parties.

[acker]

Like I said unky, I wouldnt trust the politians to fix it by then. Obama also said we'd be gone from Afganistan by now and presence in Iraq drastically reduced.

The CBO baseline is actually set to balance in the long run. If Congress did nothing but raise the debt ceiling for the next decade, the US budget would balance out as the wars end, healthcare comes online, and the Bush tax cuts expire. Assuming no tragic actions happen in the next decade, of course, like another war. That's why the credit agencies don't think we have long-run fiscal issues.

Of course, the CBO baseline has some elements that should be altered or made up for by cutting spending or increasing revenue, the CLASS Act being the primary offender. But all talks about the deficit should start with the fact that a do-nothing Congress helps more than hurts the deficit. Probably. No prediction is perfect.

[DarkSoldierX]

Like I said unky, I wouldnt trust the politians to fix it by then. Obama also said we'd be gone from Afganistan by now and presence in Iraq drastically reduced.

No one in the upper echelons of the US goverment gives 2 shits about ending any of the wars, and that comes from both parties.

Yep, just a waist of lives and money for alot of lazy shitheads.

Need to get the lazy shitheads here in America to work, and stop worrying about the lazy shitheads across the ocean.

The shitheads over there wont give a damn about doing anything for America. Not to mention they all lack education.(which im not willing to pay for)