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...the value of all money (to include gold and silver coins) is an arbitrary convention. Money was invented (originally in the form of electrum coinage) to make the value of labor more liquid than it was in a barter economy, thus removing economic friction and allowing the more efficient capture and exchange of that value.
...The value of an ounce of gold is no more or less imaginary than the value of a piece of paper currency. People just like shiny stuff.
Can't believe I'm saying this, but I totally agree with you on this.
This country is being propped up with ALL borrowed money.. 16 trillion dollars and evenually we will have to have much higher taxes to pay for it all or go belly up.. We cannot sustain this much longer. Something will happen as the can is kicked down the road to mask the mess this country is really in. The rich don't have that kind of money to pay 16 trillion so we will all suffer the consequences in the future.
Sorry, Even Greenspan has had to admit that he screwed up but in the end it's all a moot argument. The Fed is a quasi federal program so yes, in the end it is the government that is at fault.
To argue though, if the Greenspan's and Bernanke's were unable to see the obvious massive fraud the banks were committing one has to question why we even bother. And no, the end of Glass-Steagall did not make the fraud legal.
It was the fault of deregulation; which was fostered by the repeal of the provisions of Glass-Steagall that prohibited banking entities from making a market in their own securities; and then amending the bankruptcy laws to immunize derivative financil transactions. It was the emasculation of the FDIC, FSLIC, HUD and FTC which caused the failure in regulating the banks and mortgage lenders, and the SEC to exercise proper oversight of the sale of mortgage-backed securities. (And yes, you're right, even Alan Greenspan was forced to admit that he was wrong in thinking that the market could be left to its own devices.) And, it will happen again because the Congress lacks the political will to establish regulatory control over financial markets. Dodd-Frank - which the banking lobby is working night and day to have Congress repeal - is not the answer. Regulation must be measured, but effective; and not so heavy-handed as to stifle economic growth. To work, there must at least be a level playing field, which requires more transparency that will promote value over speculation. Also, there needs to be accountability: if there are no penalties for failure - if executives are rewarded for running their companies aground - there is no incentive to exercise restraint over irresponsible action.
It was the fault of deregulation. The FDIC, FSLIC, HUD and FTC failed in regulating the banks and mortgage lenders, and the SEC had failed to exercise proper oversight of the sale of mortgage-backed securities. (And yes, you're right, even Alan Greenspan was forced to admit that he was wrong in thinking that the market could be left to its own devices.) And, it will happen again because the Congress lacks the political will to establish regulatory control over financial markets. Dodd-Frank - which the banking lobby is working night and day to have Congress repeal - is not the answer. Regulation must be measured, but effective; and not so heavy-handed as to stifle economic growth. To work, there must at least be a level playing field, which requires more transparency that will promote value over speculation. Also, there needs to be accountability: if there are no penalties for failure - if executives are rewarded for running their companies aground - there is no incentive to exercise restraint over irresponsible action.
Yes, you are right. The problem with banking and the financial markets is basically a lack of transparency. The banking lobby got Congress to repeal the provisions of the Glass-Steagall Act so as to allow for trading in financial derivatives; and then lobbied Congress to enact "safe harbor" provisions for derivative contracts in bankruptcy proceedings, which was codified in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This deregulated bank trading in securitized morgages and repurchase agreements, and effectively shifted the risk of loss on the government for the subprime loan debacle, which precipitated a cascade of bank failures, the stock market crash, the bailout at taxpayer expense, and the now longest recession since the Great Depression.
What is needed is to curb undisclosed speculation on the financial markets and provide more transparency to commercial transactions. The problem with regulating banking and the stock market can be easily solved with a single piece of legislation. Congress should repeal the "safe harbor" provisions of title 11 that exempt financial derivative contracts from bankruptcy. Derivatives are really secret liens that conceal leveraged borrowing carried “off balance sheet” - this was the lesson learned from the Lehman Brothers bankruptcy, and why AIG was “too big to fail” necessitating the government “bail-out.” (Even to this day, the government does not know where the TARP funds were spent; or how much was lost by JP Morgan Chase.) Without that exemption for “anonymous creditors,” the derivative counterparties will be forced to disclose their contracts in order to preserve the priority of their security interest.
You spewed all that crap and now it smells like baby **** in here...
Yeah... it's pretty clear that the extent of your understanding bears a resemblance to a full diaper.
Quote:
Originally Posted by Earlyretired
FDIC, why do we need them???
The same reason we need auto insurance comapnies, and home insurance companies, and health insurance companies, and life insurance companies.
**** happens.
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