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Free Markets are Not Perfect

twocupcakes
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12/28/2014 9:01:34 AM
Posted: 1 year ago
I don't understand the obsession with free markets in the USA. Free Markets are by no means perfect. There are plenty of instances where lack of government intervention causes things to be less efficient or not fair.

I think there are many people in the USA who blindly want to eliminate government regulation without thinking it through. For example, bank regulation and stimulus spending are good reasons for government intervention. There are also others.

Do you think that there are instances where government intervention works and what are they?
TryingToBeOpenMinded
Posts: 201
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12/28/2014 9:39:43 AM
Posted: 1 year ago
At 12/28/2014 9:01:34 AM, twocupcakes wrote:
I don't understand the obsession with free markets in the USA. Free Markets are by no means perfect. There are plenty of instances where lack of government intervention causes things to be less efficient or not fair.

I think there are many people in the USA who blindly want to eliminate government regulation without thinking it through. For example, bank regulation and stimulus spending are good reasons for government intervention. There are also others.

Do y ou think that there are instances where government intervention works and what are they?

People think this way because Americans have been brainwashed by our politicians, especially during the start of the cold war. Communism was evil while free markets represented good.

But every intro economics books explains the limitations of free markets. Examples are numerous. For example. There are utilities in which there are increasing marginal rates of return so having one company provide all services is a good things. So government needs to step in and regulate. Or free markets might lead to aggregation of power to a few or a single provider. This leads to a monopoly. Or free markets leads to cheating and lying of the products specs so regulation is necessary. The examples are so numerous. Our free markets are not very free at all. . Just like our free speech isn't that free or we really can't do anything we want with our property that we think we can.

To answer your question, my st people think markets are free because they are pretty uneducated. They were too lazy to pay attention in class or they don't bother to read. Then they listen to the propaganda spewed by politicians or stupid media.
16kadams
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12/28/2014 2:50:19 PM
Posted: 1 year ago
At 12/28/2014 9:01:34 AM, twocupcakes wrote:
I don't understand the obsession with free markets in the USA. Free Markets are by no means perfect. There are plenty of instances where lack of government intervention causes things to be less efficient or not fair.

I think there are many people in the USA who blindly want to eliminate government regulation without thinking it through. For example, bank regulation and stimulus spending are good reasons for government intervention. There are also others.

Do you think that there are instances where government intervention works and what are they?

A basic safety net, for example, would help the market work. And some environmental regulations would (in the long term) would be beneficial.
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"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
Wylted
Posts: 21,167
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12/28/2014 3:53:25 PM
Posted: 1 year ago
At 12/28/2014 9:01:34 AM, twocupcakes wrote:
I don't understand the obsession with free markets in the USA. Free Markets are by no means perfect. There are plenty of instances where lack of government intervention causes things to be less efficient or not fair.

I think there are many people in the USA who blindly want to eliminate government regulation without thinking it through. For example, bank regulation and stimulus spending are good reasons for government intervention. There are also others.

Do you think that there are instances where government intervention works and what are they?

I'dnlike to see an instance of government intervention working without causing more problems as well.

I've thought it through. Bank regulation is bad. Before banks were heavily regulated 80% of banking was done with small hometown banks but the large banks pushed regulation through and their plan was successful, they killed a ton of small businesses turning a bunch of potential bank owners into wage slaves and now over 80% of banking is done through big banks.

I disagree with stimulus spending being good as well. It from my eyes just seemed like a huge payoff to the people that got Obama elected. Just like forcing people to buy health insurance was a payoff to the insurance companies that financed his campaign.

The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?

Well the big businesses gained by eliminating competition and it's exactly why they continue to spend huge sums to buy politicians. The unfortunate side effect of such things is that it eliminates competition in the market place and creates more wage slaves.
Greyparrot
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12/28/2014 5:48:37 PM
Posted: 1 year ago
People should use the free market to build a consensus for energy change. Take all the energy production regulation away, and see if people will stop building coal plants.

Anything else reeks of a benevolent dictatorship.

Markets free to do things like shale oil exploration forces OPEC to compete and drop the energy prices for everyone. (even if no shale oil actually is ever produced)
Skynet
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12/28/2014 9:56:39 PM
Posted: 1 year ago
At 12/28/2014 9:01:34 AM, twocupcakes wrote:
I don't understand the obsession with free markets in the USA. Free Markets are by no means perfect. There are plenty of instances where lack of government intervention causes things to be less efficient or not fair.

I think there are many people in the USA who blindly want to eliminate government regulation without thinking it through. For example, bank regulation and stimulus spending are good reasons for government intervention. There are also others.

Do you think that there are instances where government intervention works and what are they?

In WWII, the Japanese told all sorts of horror stories about US Marines because they were the opponent, and many Americans believed false things about Japanese.
I think this is the case here, sometimes on both sides.
I don't know anyone who thinks that the Free Market is perfect, even those who support it. We (those who support it) are aware of things like corrections, etc. It wouldn't need correction if it were perfect.

What we do think is that the Free Market is better than what it's most common foe is, Socialism/heavy regulation. That's because the things that make the Free Market not perfect are the same things that make government not perfect: Humans. With a free market, the bad humans/companies/policies are more easily eliminated by natural market forces than bad humans/policies are eliminated from the government. If you are in the market, and you make bad decisions, eventually, you'll run out of money and be at the bottom. (unless you have a friend in government, or are otherwise corrupt) In government, you keep getting money, even if you're bad because you have police/military protection and power over people's lives.

Government interference in the markets is necessary when people steal or are dishonest, or violate rights. The same limited role government should play everywhere.

So no, I'm not against regulation, I just want it limited to it's proper place.

As someone else already pointed out, regulation is often used to make life difficult for small competitors so only the big ones with office buildings full of lawyers and accountants can survive the regulations.
One perk to being a dad is you get to watch cartoons again without explaining yourself.
twocupcakes
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12/29/2014 8:10:47 PM
Posted: 1 year ago

I'dnlike to see an instance of government intervention working without causing more problems as well.

I've thought it through. Bank regulation is bad. Before banks were heavily regulated 80% of banking was done with small hometown banks but the large banks pushed regulation through and their plan was successful, they killed a ton of small businesses turning a bunch of potential bank owners into wage slaves and now over 80% of banking is done through big banks.

Bank regulation is a good example useful govt regulation. Before Banks were heavily regulated (with deposit insurance) there were bank runs all the time and people lost money.

Small Banks killed themselves as when Reagan allowed for some de-regulation a bunch of small banks went bust as they lent out to much money and were not paid back.

Banks are different than most businesses as it is in the interest of the Bank owner to lend out as much money as possible in hopes of getting paid back. But if not, the depositors or society (with deposit insurance) suffers.

I disagree that Big Banks should be bailed out though. But I think there should be tougher regulation on Big Banks.

I disagree with stimulus spending being good as well. It from my eyes just seemed like a huge payoff to the people that got Obama elected. Just like forcing people to buy health insurance was a payoff to the insurance companies that financed his campaign.

In a recession stimulus spending makes sense to decrease unemployment. A bunch of people are unemployed because a bunch of bankers took too many risks and through the economy into recession. Stimulus spending fixes the problem.

Most modern countries adopt a socialized health care system and have better ranked healthcare than the USA.

The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?

Well the big businesses gained by eliminating competition and it's exactly why they continue to spend huge sums to buy politicians. The unfortunate side effect of such things is that it eliminates competition in the market place and creates more wage slaves.

There is many regulation that help Small Businesses. Walmart can lower prices to force all small businesses in the area out of business. Laws that split up companies from becoming monopolies help small businesses.
twocupcakes
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12/29/2014 8:11:43 PM
Posted: 1 year ago
At 12/28/2014 9:56:39 PM, Skynet wrote:
At 12/28/2014 9:01:34 AM, twocupcakes wrote:
I don't understand the obsession with free markets in the USA. Free Markets are by no means perfect. There are plenty of instances where lack of government intervention causes things to be less efficient or not fair.

I think there are many people in the USA who blindly want to eliminate government regulation without thinking it through. For example, bank regulation and stimulus spending are good reasons for government intervention. There are also others.

Do you think that there are instances where government intervention works and what are they?

In WWII, the Japanese told all sorts of horror stories about US Marines because they were the opponent, and many Americans believed false things about Japanese.
I think this is the case here, sometimes on both sides.
I don't know anyone who thinks that the Free Market is perfect, even those who support it. We (those who support it) are aware of things like corrections, etc. It wouldn't need correction if it were perfect.

What we do think is that the Free Market is better than what it's most common foe is, Socialism/heavy regulation. That's because the things that make the Free Market not perfect are the same things that make government not perfect: Humans. With a free market, the bad humans/companies/policies are more easily eliminated by natural market forces than bad humans/policies are eliminated from the government. If you are in the market, and you make bad decisions, eventually, you'll run out of money and be at the bottom. (unless you have a friend in government, or are otherwise corrupt) In government, you keep getting money, even if you're bad because you have police/military protection and power over people's lives.

Government interference in the markets is necessary when people steal or are dishonest, or violate rights. The same limited role government should play everywhere.

So no, I'm not against regulation, I just want it limited to it's proper place.

As someone else already pointed out, regulation is often used to make life difficult for small competitors so only the big ones with office buildings full of lawyers and accountants can survive the regulations.

There is also many regulations that help small businesses.
Wylted
Posts: 21,167
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12/29/2014 8:28:09 PM
Posted: 1 year ago
At 12/29/2014 8:10:47 PM, twocupcakes wrote:

I'dnlike to see an instance of government intervention working without causing more problems as well.

I've thought it through. Bank regulation is bad. Before banks were heavily regulated 80% of banking was done with small hometown banks but the large banks pushed regulation through and their plan was successful, they killed a ton of small businesses turning a bunch of potential bank owners into wage slaves and now over 80% of banking is done through big banks.

Bank regulation is a good example useful govt regulation. Before Banks were heavily regulated (with deposit insurance) there were bank runs all the time and people lost money.

Small Banks killed themselves as when Reagan allowed for some de-regulation a bunch of small banks went bust as they lent out to much money and were not paid back.

Banks are different than most businesses as it is in the interest of the Bank owner to lend out as much money as possible in hopes of getting paid back. But if not, the depositors or society (with deposit insurance) suffers.

Wouldn't it be equally as effective to just outlaw fractional reserve banking. Then you could have mom and pop banks, less wage slaves and big banks with significantly less influence over the political system to pay off politicians and literally be handed large sums of money.

I disagree that Big Banks should be bailed out though. But I think there should be tougher regulation on Big Banks.


I disagree with stimulus spending being good as well. It from my eyes just seemed like a huge payoff to the people that got Obama elected. Just like forcing people to buy health insurance was a payoff to the insurance companies that financed his campaign.

In a recession stimulus spending makes sense to decrease unemployment. A bunch of people are unemployed because a bunch of bankers took too many risks and through the economy into recession. Stimulus spending fixes the problem.

It's a temporary fix but aren't recessions just a natural part of an economy and going deeper into dept just artificially creates a new problem down the road?

Most modern countries adopt a socialized health care system and have better ranked healthcare than the USA.

I'd think 3rd world countries are more likely not to have socialized healthcare and that all first world countries have at least a little bit of socialized healthcare. These are things I think would pollute the stats. I've also seen some of these places "ranked higher" than America. I don't know how they're doing these rankings but Canadians seem to prefer our healthcare system when they use it. Since ours is progressively starting to look more like theirs, I'm sure that will change, though.



The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?

Well the big businesses gained by eliminating competition and it's exactly why they continue to spend huge sums to buy politicians. The unfortunate side effect of such things is that it eliminates competition in the market place and creates more wage slaves.

There is many regulation that help Small Businesses. Walmart can lower prices to force all small businesses in the area out of business. Laws that split up companies from becoming monopolies help small businesses.

The fact is, monopolies couldn't exist under a true free market. The reason they do exist is because as they grow they can buy political influence and write up regulations that kill small businesses. Since a free market isn't regulated, they can't offer politicians money for anything.

Big banks didn't have such a strangle hold on the market when they weren't regulated neither did the handful of food companies before the FDA. I know that certain regulations can help small businesses but the fact is there would be more competition in the market, without any regulation what so ever.
Wylted
Posts: 21,167
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12/29/2014 8:53:44 PM
Posted: 1 year ago
At 12/29/2014 8:10:47 PM, twocupcakes wrote:

I'dnlike to see an instance of government intervention working without causing more problems as well.

I've thought it through. Bank regulation is bad. Before banks were heavily regulated 80% of banking was done with small hometown banks but the large banks pushed regulation through and their plan was successful, they killed a ton of small businesses turning a bunch of potential bank owners into wage slaves and now over 80% of banking is done through big banks.

Bank regulation is a good example useful govt regulation. Before Banks were heavily regulated (with deposit insurance) there were bank runs all the time and people lost money.

Small Banks killed themselves as when Reagan allowed for some de-regulation a bunch of small banks went bust as they lent out to much money and were not paid back.

Banks are different than most businesses as it is in the interest of the Bank owner to lend out as much money as possible in hopes of getting paid back. But if not, the depositors or society (with deposit insurance) suffers.

I disagree that Big Banks should be bailed out though. But I think there should be tougher regulation on Big Banks.


I disagree with stimulus spending being good as well. It from my eyes just seemed like a huge payoff to the people that got Obama elected. Just like forcing people to buy health insurance was a payoff to the insurance companies that financed his campaign.

In a recession stimulus spending makes sense to decrease unemployment. A bunch of people are unemployed because a bunch of bankers took too many risks and through the economy into recession. Stimulus spending fixes the problem.

Most modern countries adopt a socialized health care system and have better ranked healthcare than the USA.


The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?

Well the big businesses gained by eliminating competition and it's exactly why they continue to spend huge sums to buy politicians. The unfortunate side effect of such things is that it eliminates competition in the market place and creates more wage slaves.

There is many regulation that help Small Businesses. Walmart can lower prices to force all small businesses in the area out of business. Laws that split up companies from becoming monopolies help small businesses.

I'm not the most knowledgeable person in the world on these subjects. I was just curious how you'd respond to my objections
Greyparrot
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12/29/2014 9:01:02 PM
Posted: 1 year ago
At 12/29/2014 8:28:09 PM, Wylted wrote:

I've thought it through. Bank regulation is bad. Before banks were heavily regulated 80% of banking was done with small hometown banks but the large banks pushed regulation through and their plan was successful, they killed a ton of small businesses turning a bunch of potential bank owners into wage slaves and now over 80% of banking is done through big banks.

I know that I will get some pushback from DDO about FDIC protecting the depositors and ordinary people from bank failures. The point I would like to make is that if depositors are fully insured by the taxpayers and banks are fully insured by the taxpayers, what incentive is there for prudent behavior of either party?

If your money is insured to $250,000, would you exercise any due diligence on the financial institution you put your money in? Of course not. Why should you? It just doesn"t matter what the balance sheet looks like.

Deposit insurance started in 1934 for $2,500 per account and now has grown to $250,000 per account. "Deposit insurance has taken deep root in the American banking system as an effective way to prevent runs by bank depositors, [but] it distorts incentives in the banking system and may not, on balance, help consumers," according to Hester Peirce of the Mercatus Center.

President Franklin Roosevelt and his Treasury secretary at the time both opposed federal deposit insurance because there was a fear that it would dull banks" risk management. Furthermore, deposit insurance decreases depositors" incentive to monitor banks because if something goes wrong the federal government will make good on the bank"s obligations should the bank fail to do so.

It is easy to see that deposit insurance changes the behavior of both parties. If you did not have FDIC insurance on your deposits you would make sure the bank is sound with proper business practices and use more than one institution to prevent concentration of household assets. Since the bank has no accountability to the account holders it can also engage in activity that will potentially bring in the most revenue instead of doing what it needs to do to protect the assets of the depositors.

Title III also expands the base for deposit insurance. It is now based on total consolidated assets minus tangible equity. This change effectively shifts more of the assessment burden from community banks to the larger institutions. This shift will further embolden these larger banks to demand a government bailout in the future, based on the fact that they have borne more of the Deposit Insurance Fund (DIF) assessment burden.

These changes are happening at a time when the DIF is already under great stress. By increasing the deposit insurance, Dodd-Frank has further entrenched the government, instead of the market, as the primary monitor of banks. Once again, the nanny state is looking out for you and if something goes wrong it will certainly kiss it and make it feel better while someone else pays for it.

Long story short, bank runs can be a very good thing.
twocupcakes
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12/30/2014 10:46:05 AM
Posted: 1 year ago

Wouldn't it be equally as effective to just outlaw fractional reserve banking. Then you could have mom and pop banks, less wage slaves and big banks with significantly less influence over the political system to pay off politicians and literally be handed large sums of money.

If fractional reserve banking was outlawed (so banks had to keep equal deposits for all the money they lend out) the amount of money in the economy would decrease by a lot. This would send the economy into a huge recession and many people would lose jobs.

Also since banks would have to have equal deposits for all the money they lend out, banks would need a huge amount of money to start a bank and these banks would be much less profitable. Mom and Pops would not be able to lend out there depositors money and will only be able to lend out money they own. They pretty much will be storing everybodies money for free. Why would anyone want to open a bank if there was no fractional reserve banking?


It's a temporary fix but aren't recessions just a natural part of an economy and going deeper into dept just artificially creates a new problem down the road?

I'd say small variances are part of the natural economy. But when the unemployment rate spikes by over 4% in a couple of months, I'd say that is not a result of the economy becoming less efficient. It is a result of people panicking, less money in the economy and people not spending. To get the economy going stimulus is needed. This will get people spending again and the economy back on track.

Stimulus spending can not fix an economy that lacks a competitive advantage. But, it can fix a depressed economy (when people stop spending/lending, which makes other people afraid to spend/lend)


I'd think 3rd world countries are more likely not to have socialized healthcare and that all first world countries have at least a little bit of socialized healthcare. These are things I think would pollute the stats. I've also seen some of these places "ranked higher" than America. I don't know how they're doing these rankings but Canadians seem to prefer our healthcare system when they use it. Since ours is progressively starting to look more like theirs, I'm sure that will change, though.

Rich Canadians prefer USA Healthcare since they do not care about the money spent. But most modern countries spend less per person on healthcare, have healthier people and longer lives.

The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?



The fact is, monopolies couldn't exist under a true free market. The reason they do exist is because as they grow they can buy political influence and write up regulations that kill small businesses. Since a free market isn't regulated, they can't offer politicians money for anything.

Big banks didn't have such a strangle hold on the market when they weren't regulated neither did the handful of food companies before the FDA. I know that certain regulations can help small businesses but the fact is there would be more competition in the market, without any regulation what so ever.

The USA government has broken up many monopolies. Once a company gets big enough they can use their scale to make it tough/impossible for small companies to compete with them. If the government does not act these monopolies can control everything.

I disagree with big companies lobbying and influencing congress, but the government also acts to help small business and control big companies that get out of control.
TryingToBeOpenMinded
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12/30/2014 11:50:34 AM
Posted: 1 year ago
At 12/29/2014 9:01:02 PM, Greyparrot wrote:
At 12/29/2014 8:28:09 PM, Wylted wrote:

I've thought it through. Bank regulation is bad. Before banks were heavily regulated 80% of banking was done with small hometown banks but the large banks pushed regulation through and their plan was successful, they killed a ton of small businesses turning a bunch of potential bank owners into wage slaves and now over 80% of banking is done through big banks.


You've got it backwards. Not sure you realize but the elimination of bank regulation led to the creation of big banks, not the other way around. The Glass-Steagall prevented commercial banks and investment banks from combining but without it, they started combining into huge monsters.

After decades of doing what it was supposed to do, we got rid of Glass Steagal and the same exact thing happened as it did in 1930. Commercial banks normally use the deposits to make non-risky cash lines to businesses and to make mortgage loans to homeowners. It's very non-speculative. and, it's A LOT of money. The Glass-Steagall prevents the bank from using this money for stocks and other speculative investments. But, banks due to greed lobbied to get rid of this law. So, banks used our deposits for risky derivatives and securities and lost billions!! It's sad but we made the same exact mistake in 1930.

You can't risk what is the lifeblood of our economy to risky investments. We need this law.

I know that I will get some pushback from DDO about FDIC protecting the depositors and ordinary people from bank failures. The point I would like to make is that if depositors are fully insured by the taxpayers and banks are fully insured by the taxpayers, what incentive is there for prudent behavior of either party?

If your money is insured to $250,000, would you exercise any due diligence on the financial institution you put your money in? Of course not. Why should you? It just doesn"t matter what the balance sheet looks like.


You are citing the problems with ALL insurance. That's the nature of insurance. When you're insured, you're less likely to be careful since you're not on the hook. That goes for health insurance, car insurance, mortgage insurance, etc. But, just because it has this shortcoming, we shouldn't get rid of all insurance. it has it's purpose.

Deposit insurance started in 1934 for $2,500 per account and now has grown to $250,000 per account. "Deposit insurance has taken deep root in the American banking system as an effective way to prevent runs by bank depositors, [but] it distorts incentives in the banking system and may not, on balance, help consumers," according to Hester Peirce of the Mercatus Center.

President Franklin Roosevelt and his Treasury secretary at the time both opposed federal deposit insurance because there was a fear that it would dull banks" risk management. Furthermore, deposit insurance decreases depositors" incentive to monitor banks because if something goes wrong the federal government will make good on the bank"s obligations should the bank fail to do so.

It is easy to see that deposit insurance changes the behavior of both parties. If you did not have FDIC insurance on your deposits you would make sure the bank is sound with proper business practices and use more than one institution to prevent concentration of household assets. Since the bank has no accountability to the account holders it can also engage in activity that will potentially bring in the most revenue instead of doing what it needs to do to protect the assets of the depositors.

Title III also expands the base for deposit insurance. It is now based on total consolidated assets minus tangible equity. This change effectively shifts more of the assessment burden from community banks to the larger institutions. This shift will further embolden these larger banks to demand a government bailout in the future, based on the fact that they have borne more of the Deposit Insurance Fund (DIF) assessment burden.


That's not the argument that banks use to get bailed out. Their argument is that since they are so large, if they go bankrupt, the entire economy is going to tank because lending cash to businesses is the lifeblood to the economy. Unfortunately, this is a valid argument. If a bank like Chase goes under, it would really wreck our economy. It supplies so much money to so many companies. The best way to prevent this from happening is to break up the big banks into smaller ones. The problem in breaking up big banks is how are we going to justify this? Antitrust laws were used to break up something like AT&T but what law can we use to break up a bank like Chase? More importantly, no politician is motivated enough right now to take this herculean task. It'll probably take one politician's lifetime to do this. Doesn't sound very exciting.

This same problem exists with our automobile industry. They are too big to fail. If they go bankrupt, literally hundred of thousands of people will get affected. But, every recession, the car companies aren't profitable enough and they need a bail out. And, every recession, the government bails them out because the loss of all those jobs will make a bad situations much worse. But, now that the economy is ok, no politician has the motivation to take apart the car companies.

These changes are happening at a time when the DIF is already under great stress. By increasing the deposit insurance, Dodd-Frank has further entrenched the government, instead of the market, as the primary monitor of banks. Once again, the nanny state is looking out for you and if something goes wrong it will certainly kiss it and make it feel better while someone else pays for it.

Long story short, bank runs can be a very good thing.

I don't know how the market is going to effectively monitor banks. Do you think that people like you and me can evaluate the soundness of each bank's loan portfolio? I don't think this is very realistic. I do think that the market is good at certain things but having every day people evaluate complicated systems is not it.
Wylted
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12/30/2014 12:27:07 PM
Posted: 1 year ago
At 12/30/2014 10:46:05 AM, twocupcakes wrote:

Wouldn't it be equally as effective to just outlaw fractional reserve banking. Then you could have mom and pop banks, less wage slaves and big banks with significantly less influence over the political system to pay off politicians and literally be handed large sums of money.

If fractional reserve banking was outlawed (so banks had to keep equal deposits for all the money they lend out) the amount of money in the economy would decrease by a lot. This would send the economy into a huge recession and many people would lose jobs.

Also since banks would have to have equal deposits for all the money they lend out, banks would need a huge amount of money to start a bank and these banks would be much less profitable. Mom and Pops would not be able to lend out there depositors money and will only be able to lend out money they own. They pretty much will be storing everybodies money for free. Why would anyone want to open a bank if there was no fractional reserve banking?



It's a temporary fix but aren't recessions just a natural part of an economy and going deeper into dept just artificially creates a new problem down the road?

I'd say small variances are part of the natural economy. But when the unemployment rate spikes by over 4% in a couple of months, I'd say that is not a result of the economy becoming less efficient. It is a result of people panicking, less money in the economy and people not spending. To get the economy going stimulus is needed. This will get people spending again and the economy back on track.

Stimulus spending can not fix an economy that lacks a competitive advantage. But, it can fix a depressed economy (when people stop spending/lending, which makes other people afraid to spend/lend)



I'd think 3rd world countries are more likely not to have socialized healthcare and that all first world countries have at least a little bit of socialized healthcare. These are things I think would pollute the stats. I've also seen some of these places "ranked higher" than America. I don't know how they're doing these rankings but Canadians seem to prefer our healthcare system when they use it. Since ours is progressively starting to look more like theirs, I'm sure that will change, though.

Rich Canadians prefer USA Healthcare since they do not care about the money spent. But most modern countries spend less per person on healthcare, have healthier people and longer lives.

The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?



The fact is, monopolies couldn't exist under a true free market. The reason they do exist is because as they grow they can buy political influence and write up regulations that kill small businesses. Since a free market isn't regulated, they can't offer politicians money for anything.

Big banks didn't have such a strangle hold on the market when they weren't regulated neither did the handful of food companies before the FDA. I know that certain regulations can help small businesses but the fact is there would be more competition in the market, without any regulation what so ever.

The USA government has broken up many monopolies. Once a company gets big enough they can use their scale to make it tough/impossible for small companies to compete with them. If the government does not act these monopolies can control everything.

I disagree with big companies lobbying and influencing congress, but the government also acts to help small business and control big companies that get out of control.

Saying these monopolies wouldn't exist if regulators didn't make the price of doing business extremely high (because they're owned by big business). The whole reason they create these policies is to kill small business, which in turn creates businesses that are monopolies such as utility companies.

Go back to societies that didn't have so much beaurAcracy. Did the places with very little business regulation such as Ancient Rome or the Wild West have monopolies.
Wocambs
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12/30/2014 12:59:33 PM
Posted: 1 year ago
Free markets aren't perfect, and the reason why is very simple. People interacting on the basis of relatively short-term personal profit is clearly a terrible idea if we want an efficient economy. No one demands more benevolence from 'human nature' than the capitalist, who wishes that society was constructed in such a way as to incentivise whatever selfish and idiotic behaviour that makes a profit, and yet expects everything to work out well.
twocupcakes
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12/30/2014 3:36:54 PM
Posted: 1 year ago

I know that I will get some pushback from DDO about FDIC protecting the depositors and ordinary people from bank failures. The point I would like to make is that if depositors are fully insured by the taxpayers and banks are fully insured by the taxpayers, what incentive is there for prudent behavior of either party?

I think the bank owners (shareholders) and employees should be punished severely when deposit insurance is used. But, even very conservative people see the need for deposit insurance.

The government can impose risk requirements of banks.

If your money is insured to $250,000, would you exercise any due diligence on the financial institution you put your money in? Of course not. Why should you? It just doesn"t matter what the balance sheet looks like.

The average family should know that there money in the Bank is safe and will not vanish overnight. Not everybody has the expertise to analyse a bank to see if they are making risky decisions. Most people do not want to be checking the bank everyday to see make sure there money is safe. The amount of stress knowing all your money could vanish is too much. Plus it would be devastating and extremely unfair when good honest families lose everything because of a bank run.

Even good banks are hurt by bank runs. Bank runs start at bad banks than grow. So even people who have the expertise and execute due diligence can lose everything.

Deposit insurance started in 1934 for $2,500 per account and now has grown to $250,000 per account. "Deposit insurance has taken deep root in the American banking system as an effective way to prevent runs by bank depositors, [but] it distorts incentives in the banking system and may not, on balance, help consumers," according to Hester Peirce of the Mercatus Center.

There were plenty of Bank Runs before deposit insurance and the recent recession would have been worse the the great depression if there was no deposit insurance.

President Franklin Roosevelt and his Treasury secretary at the time both opposed federal deposit insurance because there was a fear that it would dull banks" risk management. Furthermore, deposit insurance decreases depositors" incentive to monitor banks because if something goes wrong the federal government will make good on the bank"s obligations should the bank fail to do so.

If depositors monitoring banks worked as a system there would not have been a great depression.

It is easy to see that deposit insurance changes the behavior of both parties. If you did not have FDIC insurance on your deposits you would make sure the bank is sound with proper business practices and use more than one institution to prevent concentration of household assets. Since the bank has no accountability to the account holders it can also engage in activity that will potentially bring in the most revenue instead of doing what it needs to do to protect the assets of the depositors.

Even with deposit insurance it is not the banks money, it is the depositors. The bank still has incentive to lend too much. The only difference is that depositors do not have incentive to monitor the institution. But, if this were the case most reasonable people would either hoard money under their mattress and give it too banks. Or, the would have an account in a country that has deposit insurance. This would decrease the money supply in the USA and throw it into a recession.

.
Title III also expands the base for deposit insurance. It is now based on total consolidated assets minus tangible equity. This change effectively shifts more of the assessment burden from community banks to the larger institutions. This shift will further embolden these larger banks to demand a government bailout in the future, based on the fact that they have borne more of the Deposit Insurance Fund (DIF) assessment burden.

These changes are happening at a time when the DIF is already under great stress. By increasing the deposit insurance, Dodd-Frank has further entrenched the government, instead of the market, as the primary monitor of banks. Once again, the nanny state is looking out for you and if something goes wrong it will certainly kiss it and make it feel better while someone else pays for it.

Long story short, bank runs can be a very good thing.

I don't really understand this explanation Title III.But, I think I have said enough to show that bank runs without insurance are an awful thing. Unless you think that a family and good honest people losing all their money at no fault of thier own is a good thing.
twocupcakes
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12/30/2014 3:44:35 PM
Posted: 1 year ago
At 12/30/2014 12:27:07 PM, Wylted wrote:
At 12/30/2014 10:46:05 AM, twocupcakes wrote:

Wouldn't it be equally as effective to just outlaw fractional reserve banking. Then you could have mom and pop banks, less wage slaves and big banks with significantly less influence over the political system to pay off politicians and literally be handed large sums of money.

If fractional reserve banking was outlawed (so banks had to keep equal deposits for all the money they lend out) the amount of money in the economy would decrease by a lot. This would send the economy into a huge recession and many people would lose jobs.

Also since banks would have to have equal deposits for all the money they lend out, banks would need a huge amount of money to start a bank and these banks would be much less profitable. Mom and Pops would not be able to lend out there depositors money and will only be able to lend out money they own. They pretty much will be storing everybodies money for free. Why would anyone want to open a bank if there was no fractional reserve banking?



It's a temporary fix but aren't recessions just a natural part of an economy and going deeper into dept just artificially creates a new problem down the road?

I'd say small variances are part of the natural economy. But when the unemployment rate spikes by over 4% in a couple of months, I'd say that is not a result of the economy becoming less efficient. It is a result of people panicking, less money in the economy and people not spending. To get the economy going stimulus is needed. This will get people spending again and the economy back on track.

Stimulus spending can not fix an economy that lacks a competitive advantage. But, it can fix a depressed economy (when people stop spending/lending, which makes other people afraid to spend/lend)



I'd think 3rd world countries are more likely not to have socialized healthcare and that all first world countries have at least a little bit of socialized healthcare. These are things I think would pollute the stats. I've also seen some of these places "ranked higher" than America. I don't know how they're doing these rankings but Canadians seem to prefer our healthcare system when they use it. Since ours is progressively starting to look more like theirs, I'm sure that will change, though.

Rich Canadians prefer USA Healthcare since they do not care about the money spent. But most modern countries spend less per person on healthcare, have healthier people and longer lives.

The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?



The fact is, monopolies couldn't exist under a true free market. The reason they do exist is because as they grow they can buy political influence and write up regulations that kill small businesses. Since a free market isn't regulated, they can't offer politicians money for anything.

Big banks didn't have such a strangle hold on the market when they weren't regulated neither did the handful of food companies before the FDA. I know that certain regulations can help small businesses but the fact is there would be more competition in the market, without any regulation what so ever.

The USA government has broken up many monopolies. Once a company gets big enough they can use their scale to make it tough/impossible for small companies to compete with them. If the government does not act these monopolies can control everything.

I disagree with big companies lobbying and influencing congress, but the government also acts to help small business and control big companies that get out of control.

Saying these monopolies wouldn't exist if regulators didn't make the price of doing business extremely high (because they're owned by big business). The whole reason they create these policies is to kill small business, which in turn creates businesses that are monopolies such as utility companies.

Utilities are monopolies because it makes sense and is the most efficient. It would not be efficient to have many companies building power lines ect.

Go back to societies that didn't have so much beaurAcracy. Did the places with very little business regulation such as Ancient Rome or the Wild West have monopolies.

I don't know much about the history, but regardless there are monoploies now.

I know the Sherman Anti-Trust act was passed in 1890. So, it seems there were Monopolies in the Wild Wild West or they would not have to pass the law.
Wylted
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12/30/2014 3:46:28 PM
Posted: 1 year ago
At 12/30/2014 3:44:35 PM, twocupcakes wrote:
At 12/30/2014 12:27:07 PM, Wylted wrote:
At 12/30/2014 10:46:05 AM, twocupcakes wrote:

Wouldn't it be equally as effective to just outlaw fractional reserve banking. Then you could have mom and pop banks, less wage slaves and big banks with significantly less influence over the political system to pay off politicians and literally be handed large sums of money.

If fractional reserve banking was outlawed (so banks had to keep equal deposits for all the money they lend out) the amount of money in the economy would decrease by a lot. This would send the economy into a huge recession and many people would lose jobs.

Also since banks would have to have equal deposits for all the money they lend out, banks would need a huge amount of money to start a bank and these banks would be much less profitable. Mom and Pops would not be able to lend out there depositors money and will only be able to lend out money they own. They pretty much will be storing everybodies money for free. Why would anyone want to open a bank if there was no fractional reserve banking?



It's a temporary fix but aren't recessions just a natural part of an economy and going deeper into dept just artificially creates a new problem down the road?

I'd say small variances are part of the natural economy. But when the unemployment rate spikes by over 4% in a couple of months, I'd say that is not a result of the economy becoming less efficient. It is a result of people panicking, less money in the economy and people not spending. To get the economy going stimulus is needed. This will get people spending again and the economy back on track.

Stimulus spending can not fix an economy that lacks a competitive advantage. But, it can fix a depressed economy (when people stop spending/lending, which makes other people afraid to spend/lend)



I'd think 3rd world countries are more likely not to have socialized healthcare and that all first world countries have at least a little bit of socialized healthcare. These are things I think would pollute the stats. I've also seen some of these places "ranked higher" than America. I don't know how they're doing these rankings but Canadians seem to prefer our healthcare system when they use it. Since ours is progressively starting to look more like theirs, I'm sure that will change, though.

Rich Canadians prefer USA Healthcare since they do not care about the money spent. But most modern countries spend less per person on healthcare, have healthier people and longer lives.

The fact is, regulation kills small businesses and we must ask ourselves who stands to gain?



The fact is, monopolies couldn't exist under a true free market. The reason they do exist is because as they grow they can buy political influence and write up regulations that kill small businesses. Since a free market isn't regulated, they can't offer politicians money for anything.

Big banks didn't have such a strangle hold on the market when they weren't regulated neither did the handful of food companies before the FDA. I know that certain regulations can help small businesses but the fact is there would be more competition in the market, without any regulation what so ever.

The USA government has broken up many monopolies. Once a company gets big enough they can use their scale to make it tough/impossible for small companies to compete with them. If the government does not act these monopolies can control everything.

I disagree with big companies lobbying and influencing congress, but the government also acts to help small business and control big companies that get out of control.

Saying these monopolies wouldn't exist if regulators didn't make the price of doing business extremely high (because they're owned by big business). The whole reason they create these policies is to kill small business, which in turn creates businesses that are monopolies such as utility companies.

Utilities are monopolies because it makes sense and is the most efficient. It would not be efficient to have many companies building power lines

Sorry are you for companies having a monopoly or not?

Go back to societies that didn't have so much beaurAcracy. Did the places with very little business regulation such as Ancient Rome or the Wild West have monopolies.

I don't know much about the history, but regardless there are monoploies now.

I know the Sherman Anti-Trust act was passed in 1890. So, it seems there were Monopolies in the Wild Wild West or they would not have to pass the law.
twocupcakes
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12/30/2014 3:47:39 PM
Posted: 1 year ago


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.
Wylted
Posts: 21,167
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12/30/2014 3:49:41 PM
Posted: 1 year ago
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.
twocupcakes
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12/30/2014 3:51:35 PM
Posted: 1 year ago
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.
Wylted
Posts: 21,167
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12/30/2014 3:52:49 PM
Posted: 1 year ago
At 12/30/2014 3:51:35 PM, twocupcakes wrote:
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.

Sorry it's okay for one company to have absolute power over whether people in a single city can have drinking water or electricity ?
twocupcakes
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12/30/2014 3:54:55 PM
Posted: 1 year ago
At 12/30/2014 3:52:49 PM, Wylted wrote:
At 12/30/2014 3:51:35 PM, twocupcakes wrote:
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.

Sorry it's okay for one company to have absolute power over whether people in a single city can have drinking water or electricity ?

Yes, but the companie does not have absolute power as it is regulated by the government.
Wylted
Posts: 21,167
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12/30/2014 3:56:45 PM
Posted: 1 year ago
At 12/30/2014 3:54:55 PM, twocupcakes wrote:
At 12/30/2014 3:52:49 PM, Wylted wrote:
At 12/30/2014 3:51:35 PM, twocupcakes wrote:
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.

Sorry it's okay for one company to have absolute power over whether people in a single city can have drinking water or electricity ?

Yes, but the companie does not have absolute power as it is regulated by the government.

Do you think the government has a good history of being uncorrupt? That businesses do, particularly monopolies?
twocupcakes
Posts: 2,748
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12/30/2014 3:59:39 PM
Posted: 1 year ago
At 12/30/2014 3:56:45 PM, Wylted wrote:
At 12/30/2014 3:54:55 PM, twocupcakes wrote:
At 12/30/2014 3:52:49 PM, Wylted wrote:
At 12/30/2014 3:51:35 PM, twocupcakes wrote:
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.

Sorry it's okay for one company to have absolute power over whether people in a single city can have drinking water or electricity ?

Yes, but the companie does not have absolute power as it is regulated by the government.

Do you think the government has a good history of being uncorrupt? That businesses do, particularly monopolies?

The government can be corrupt at times. However, I think government regulation is the best option. Often governmetn regulation stops corruption
Wylted
Posts: 21,167
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12/30/2014 4:04:39 PM
Posted: 1 year ago
At 12/30/2014 3:59:39 PM, twocupcakes wrote:
At 12/30/2014 3:56:45 PM, Wylted wrote:
At 12/30/2014 3:54:55 PM, twocupcakes wrote:
At 12/30/2014 3:52:49 PM, Wylted wrote:
At 12/30/2014 3:51:35 PM, twocupcakes wrote:
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.

Sorry it's okay for one company to have absolute power over whether people in a single city can have drinking water or electricity ?

Yes, but the companie does not have absolute power as it is regulated by the government.

Do you think the government has a good history of being uncorrupt? That businesses do, particularly monopolies?

The government can be corrupt at times. However, I think government regulation is the best option. Often governmetn regulation stops corruption

I think more often than not it is the result of or cause of corruption. Regulating industry is probably a payoff to big businesses that elected them to gain market share. I don't think there is any doubt of the corruption rampant in the police military or intelligence agencies.

Why not just have more competition so I can choose wind energy if I've done my research and think that is better. Why not choose from multiple services so I can pick the company which is least corrupt.

This doesn't require multiple power lines. Companies can't rent already in place infrastructure from each other.
twocupcakes
Posts: 2,748
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12/30/2014 4:13:31 PM
Posted: 1 year ago
At 12/30/2014 4:04:39 PM, Wylted wrote:
At 12/30/2014 3:59:39 PM, twocupcakes wrote:
At 12/30/2014 3:56:45 PM, Wylted wrote:
At 12/30/2014 3:54:55 PM, twocupcakes wrote:
At 12/30/2014 3:52:49 PM, Wylted wrote:
At 12/30/2014 3:51:35 PM, twocupcakes wrote:
At 12/30/2014 3:49:41 PM, Wylted wrote:
At 12/30/2014 3:47:39 PM, twocupcakes wrote:


Sorry are you for companies having a monopoly or not?

i am against Monopolies in instances where it is unfair and anti-competitive.

It's anti competitive in every instance. Unfair is a matter of opinion but it typically is unfair.

Well. in the case of Utilities it seems fair to have a Monopoly.

Sorry it's okay for one company to have absolute power over whether people in a single city can have drinking water or electricity ?

Yes, but the companie does not have absolute power as it is regulated by the government.

Do you think the government has a good history of being uncorrupt? That businesses do, particularly monopolies?

The government can be corrupt at times. However, I think government regulation is the best option. Often governmetn regulation stops corruption

I think more often than not it is the result of or cause of corruption. Regulating industry is probably a payoff to big businesses that elected them to gain market share. I don't think there is any doubt of the corruption rampant in the police military or intelligence agencies.

Why not just have more competition so I can choose wind energy if I've done my research and think that is better. Why not choose from multiple services so I can pick the company which is least corrupt.

This doesn't require multiple power lines. Companies can't rent already in place infrastructure from each other.

If you like you can build a wind mill and have wind electricity. It does not really make sense to have like 6 power companies each with their own infrastructure and power lines.