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Explain to me...

UnStupendousMan
Posts: 3,475
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2/11/2012 8:51:59 PM
Posted: 4 years ago
...why government regulation caused the Great Depression and/or great recession. Or otherwise. I don't want links or a huge amount of jargon. Other than that (and a certain decency) you have free reign to explain how the system collapsed.
darkkermit
Posts: 11,204
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2/11/2012 8:58:18 PM
Posted: 4 years ago
One theory states that the Federal Reserve System created the Great Depression. Before the Federal Reserve System, banks were responsible for making sure they had enough liquid assets in case there was a bank run. The Federal Reserve System was designed to provided a safety check, in case a bank run occurred. A "lender of last resort". However, this caused banks to act more reckless and created a moral hazard, thus creating the Great Depression.
Open borders debate:
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FREEDO
Posts: 21,057
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2/11/2012 9:01:41 PM
Posted: 4 years ago
Obviously, depressions would never occur if there were property, which is protected by the government.
GRAND POOBAH OF DDO

fnord
FREEDO
Posts: 21,057
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2/11/2012 9:02:02 PM
Posted: 4 years ago
At 2/11/2012 9:01:41 PM, FREEDO wrote:
Obviously, depressions would never occur if there were no property, which is protected by the government.
GRAND POOBAH OF DDO

fnord
darkkermit
Posts: 11,204
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2/11/2012 9:12:11 PM
Posted: 4 years ago
At 2/11/2012 9:02:02 PM, FREEDO wrote:
At 2/11/2012 9:01:41 PM, FREEDO wrote:
Obviously, depressions would never occur if there were no property, which is protected by the government.

how do you figure?
Open borders debate:
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FREEDO
Posts: 21,057
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2/11/2012 10:10:23 PM
Posted: 4 years ago
At 2/11/2012 9:12:11 PM, darkkermit wrote:
At 2/11/2012 9:02:02 PM, FREEDO wrote:
At 2/11/2012 9:01:41 PM, FREEDO wrote:
Obviously, depressions would never occur if there were no property, which is protected by the government.

how do you figure?

The whole illusion of economic change is a product of property rights. Have you ever stopped to contemplate the lack of physical cause for economic output to suddenly stop. All of the same resources still exist. It's the same world with the same infrastructure that has been developed over years. No mass catastrophe required. People just suddenly decide to stop producing, stop consuming and put each other out of jobs, simply based on self-manifested incentives in a chaotic chain reaction of choice.
GRAND POOBAH OF DDO

fnord
Reasoning
Posts: 4,456
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2/11/2012 10:25:55 PM
Posted: 4 years ago
Here you go: http://www.debate.org...
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Spawktalk
Posts: 10
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2/12/2012 2:02:14 AM
Posted: 4 years ago
Reasoning has linked a post I wrote on the matter. In short, the government caused the great depression by fueling a speculative bubble, and then keeping wages high, raising taxes, cutting the money supply, scaring investors, and raising tarrifs when it burst.
MyVoiceInYourHead
Posts: 260
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2/12/2012 4:36:45 AM
Posted: 4 years ago
At 2/11/2012 8:51:59 PM, UnStupendousMan wrote:
...why government regulation caused the Great Depression and/or great recession. Or otherwise. I don't want links or a huge amount of jargon. Other than that (and a certain decency) you have free reign to explain how the system collapsed.

Fractional Reserve Banking has boom and bust built into it because it is inherently unstable.

FRB has the following features:

1. It is counterfeiting because it increases the money supply without adding value.
2. It is inflationary.
3. It makes the economy walk a precarious knife-edge between boom and bust.
4. It enables the securitisation of toxic assets and derivatives trading.
5. It benefits the banks more than it benefits society because it promotes wealth extraction, implicit taxpayer subsidy and bailouts.
6. Banking is the only industry allowed to operate on a fractional reserve principle. Any other industry would be declared insolvent and would have to be wound down.

Our money supply has been privatised by stealth. Our nation's money no longer belongs to us. We have a rent-a-currency. Banks are charging us lots of money for us to use their numbers on a computer. My numbers are just as good as their numbers. Why am I forced into using their numbers? I didn't vote for this.

We need to return the creation of money to democratic power. This sounds a bit communist but it really is not.
Starcraftzzz
Posts: 487
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2/13/2012 4:45:29 PM
Posted: 4 years ago
At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:

Fractional Reserve Banking has boom and bust built into it because it is inherently unstable.
Before fractional reserve banking more banks failed there were more bank runs, longer/larger recessions and less growth.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
1. It is counterfeiting because it increases the money supply without adding value.
Yes it doesn't create value, but it prevents depressions meaning it prevents the destruction of value
At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
2. It is inflationary.
3. It makes the economy walk a precarious knife-edge between boom and bust.
Before FRB there was much larger fluctuations in inflation And larger recessions and less growth.
You're whole post is based on you having incorrect views on history and economics
MyVoiceInYourHead
Posts: 260
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2/13/2012 5:48:16 PM
Posted: 4 years ago
At 2/13/2012 4:45:29 PM, Starcraftzzz wrote:
At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:

Fractional Reserve Banking has boom and bust built into it because it is inherently unstable.
Before fractional reserve banking more banks failed there were more bank runs, longer/larger recessions and less growth.

Banks have been using FRB since money was invented. I'd love to see your evidence about more bank runs, longer/larger recessions and less growth and tie that in with supposedly no FRB. Do you actually understand what a bank run means?

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
1. It is counterfeiting because it increases the money supply without adding value.
Yes it doesn't create value, but it prevents depressions meaning it prevents the destruction of value

Prevents the destruction of value? Like the 2008 crash you mean? Tell that to the Eurozone. Or unemployed Americans.

It may increase the time between crashes but it amplifies them when they occur. This is because the banks have over-extended themselves. Another name for it is leverage. It means supplementing genuine investment with more debt. All FRB does is kick the can down an ever narrowing road. It's a system that has instability built into it. It benefits the financial sector. When it all goes tits up, ordinary people have to pick up the tab.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
2. It is inflationary.
3. It makes the economy walk a precarious knife-edge between boom and bust.
Before FRB there was much larger fluctuations in inflation And larger recessions and less growth.
You're whole post is based on you having incorrect views on history and economics

Au contraire. Your entire post demonstrates that it is you who has a feeble grasp of economics and history.
Starcraftzzz
Posts: 487
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2/13/2012 6:48:54 PM
Posted: 4 years ago
At 2/13/2012 5:48:16 PM, MyVoiceInYourHead wrote:
At 2/13/2012 4:45:29 PM, Starcraftzzz wrote:
At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:

Fractional Reserve Banking has boom and bust built into it because it is inherently unstable.
Before fractional reserve banking more banks failed there were more bank runs, longer/larger recessions and less growth.

Banks have been using FRB since money was invented. I'd love to see your evidence about more bank runs, longer/larger recessions and less growth and tie that in with supposedly no FRB. Do you actually understand what a bank run means?
http://www.angrybearblog.com...


At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
1. It is counterfeiting because it increases the money supply without adding value.
Yes it doesn't create value, but it prevents depressions meaning it prevents the destruction of value

Prevents the destruction of value? Like the 2008 crash you mean? Tell that to the Eurozone. Or unemployed Americans.
Precisely before the FED etc etc crashes like the one that occurred in 2008 resulted in a depression where the economy contracted for around 5 years. In fact 2008 was a large crash then previous crashes yet the economy suffered the least in the 2008 crash.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
It may increase the time between crashes but it amplifies them when they occur. This is because the banks have over-extended themselves. Another name for it is leverage. It means supplementing genuine investment with more debt. All FRB does is kick the can down an ever narrowing road. It's a system that has instability built into it. It benefits the financial sector. When it all goes tits up, ordinary people have to pick up the tab.
Do you realize what you are saying? You're telling us that increases in debt are bad for the economy even if that new debt results in the economy producing 10 times more than it did before. The only reason the economy went south during 2008 was because we removed government from banking and the private sector invested all the money into unproductive means.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
2. It is inflationary.
3. It makes the economy walk a precarious knife-edge between boom and bust.
Before FRB there was much larger fluctuations in inflation and larger recessions and less growth.
http://butnowyouknow.net...
http://en.wikipedia.org...
MyVoiceInYourHead
Posts: 260
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2/14/2012 3:11:16 PM
Posted: 4 years ago
At 2/13/2012 6:48:54 PM, Starcraftzzz wrote:
At 2/13/2012 5:48:16 PM, MyVoiceInYourHead wrote:
At 2/13/2012 4:45:29 PM, Starcraftzzz wrote:
At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:

Fractional Reserve Banking has boom and bust built into it because it is inherently unstable.
Before fractional reserve banking more banks failed there were more bank runs, longer/larger recessions and less growth.

Banks have been using FRB since money was invented. I'd love to see your evidence about more bank runs, longer/larger recessions and less growth and tie that in with supposedly no FRB. Do you actually understand what a bank run means?
http://www.angrybearblog.com...


At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
1. It is counterfeiting because it increases the money supply without adding value.
Yes it doesn't create value, but it prevents depressions meaning it prevents the destruction of value

Prevents the destruction of value? Like the 2008 crash you mean? Tell that to the Eurozone. Or unemployed Americans.
Precisely before the FED etc etc crashes like the one that occurred in 2008 resulted in a depression where the economy contracted for around 5 years. In fact 2008 was a large crash then previous crashes yet the economy suffered the least in the 2008 crash.

I don't really understand what you mean here. Maybe it's this site - it randonly misses off words from my posts? How do you know the economy has suffered less this time round. We're still reeling from the effects of it.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
It may increase the time between crashes but it amplifies them when they occur. This is because the banks have over-extended themselves. Another name for it is leverage. It means supplementing genuine investment with more debt. All FRB does is kick the can down an ever narrowing road. It's a system that has instability built into it. It benefits the financial sector. When it all goes tits up, ordinary people have to pick up the tab.
Do you realize what you are saying? You're telling us that increases in debt are bad for the economy even if that new debt results in the economy producing 10 times more than it did before. The only reason the economy went south during 2008 was because we removed government from banking and the private sector invested all the money into unproductive means.

Debt is a claim on future human labour. Excessive debt (like we have now) is an unreasonable claim on that labour. It's based on expected future income which will not materialise any time soon. 97% of UK money is debt-based numbers on a computer. Nearly half of this - the demand deposits - are unnecessary and dishonest in the way they have been created. There are multiple legitimae claims for the same money! We need less loans and more debt-free money in the real economy to stimulate demand.

I agree with your last comment about private banks having carte blanche to do what they wanted to the detriment of the wider economy. 8% of bank investment in the UK went on businesses. 92% went on speculation and property bubbles.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
2. It is inflationary.
3. It makes the economy walk a precarious knife-edge between boom and bust.
Before FRB there was much larger fluctuations in inflation and larger recessions and less growth.
http://butnowyouknow.net...
http://en.wikipedia.org...

It's difficult to deduce anything from the inflation graph. There were wilder swings in inflation 200 years ago. Is the area under the graph more relevant than the temporary swings, I don't know? It's not comparing like with like anyway. Nowadays we understand the economy better than we did 200 years ago and for the last 20 years we have had computer technology controlling everything.

The problem from my point of view is that our entire money supply is based on commercially-issued loans. We are at the mercy of the mood of the banking sector. If they don't lend, there is no money!
Starcraftzzz
Posts: 487
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2/14/2012 9:35:40 PM
Posted: 4 years ago
At 2/14/2012 3:11:16 PM, MyVoiceInYourHead wrote:
At 2/13/2012 6:48:54 PM, Starcraftzzz wrote:
At 2/13/2012 5:48:16 PM, MyVoiceInYourHead wrote:
At 2/13/2012 4:45:29 PM, Starcraftzzz wrote:
At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:

Fractional Reserve Banking has boom and bust built into it because it is inherently unstable.
Before fractional reserve banking more banks failed there were more bank runs, longer/larger recessions and less growth.

Banks have been using FRB since money was invented. I'd love to see your evidence about more bank runs, longer/larger recessions and less growth and tie that in with supposedly no FRB. Do you actually understand what a bank run means?
http://www.angrybearblog.com...


At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
1. It is counterfeiting because it increases the money supply without adding value.
Yes it doesn't create value, but it prevents depressions meaning it prevents the destruction of value

Prevents the destruction of value? Like the 2008 crash you mean? Tell that to the Eurozone. Or unemployed Americans.
Precisely before the FED etc etc crashes like the one that occurred in 2008 resulted in a depression where the economy contracted for around 5 years. In fact 2008 was a large crash then previous crashes yet the economy suffered the least in the 2008 crash.

I don't really understand what you mean here. Maybe it's this site - it randonly misses off words from my posts? How do you know the economy has suffered less this time round. We're still reeling from the effects of it.

At this point in time in the great depression and other recessions caused by banking crisis the economy was still losing jobs and shrinking, currently the economy is adding jobs and expanding.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
It may increase the time between crashes but it amplifies them when they occur. This is because the banks have over-extended themselves. Another name for it is leverage. It means supplementing genuine investment with more debt. All FRB does is kick the can down an ever narrowing road. It's a system that has instability built into it. It benefits the financial sector. When it all goes tits up, ordinary people have to pick up the tab.
Do you realize what you are saying? You're telling us that increases in debt are bad for the economy even if that new debt results in the economy producing 10 times more than it did before. The only reason the economy went south during 2008 was because we removed government from banking and the private sector invested all the money into unproductive means.

Debt is a claim on future human labour. Excessive debt (like we have now) is an unreasonable claim on that labour. It's based on expected future income which will not materialise any time soon. 97% of UK money is debt-based numbers on a computer. Nearly half of this - the demand deposits - are unnecessary and dishonest in the way they have been created. There are multiple legitimae claims for the same money! We need less loans and more debt-free money in the real economy to stimulate demand.
I agree banks and rating agencies made loans and were dishonest about their riskiness; and they should be reigned in through regulation.
I also agree that less debt created demand would be a good thing, and the best way to do that would be to increase wages of people making like 60,000 or less or to reform the tax code to put more a tax burden on the very rich.

I agree with your last comment about private banks having carte blanche to do what they wanted to the detriment of the wider economy. 8% of bank investment in the UK went on businesses. 92% went on speculation and property bubbles.

At 2/12/2012 4:36:45 AM, MyVoiceInYourHead wrote:
2. It is inflationary.
3. It makes the economy walk a precarious knife-edge between boom and bust.
Before FRB there was much larger fluctuations in inflation and larger recessions and less growth.
http://butnowyouknow.net...
http://en.wikipedia.org...

It's difficult to deduce anything from the inflation graph. There were wilder swings in inflation 200 years ago. Is the area under the graph more relevant than the temporary swings, I don't know? It's not comparing like with like anyway. Nowadays we understand the economy better than we did 200 years ago and for the last 20 years we have had computer technology controlling everything.

The problem from my point of view is that our entire money supply is based on commercially-issued loans. We are at the mercy of the mood of the banking sector. If they don't lend, there is no money!