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Financial crisis ! whats your opinion and why :)

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    (Original post by py0alb)
    Conservative in this context meaning "preferring to avoid destroying civilisation".
    Then why don't you come up with an alternative? It's all well and good insulting someone else's view points but when you aren't offering anything in return or explaining your distaste for the proposal then it does not carry much weight.
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    (Original post by py0alb)
    Do you know what a "bank" is?
    Do you know how a full reserve bank works?
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    (Original post by Tateco)
    Then why don't you come up with an alternative? It's all well and good insulting someone else's view points but when you aren't offering anything in return or explaining your distaste for the proposal then it does not carry much weight.
    alternative to destroying civilisation?

    how about not destroying civilisation?

    Just think about the proposal for a minute. That should be sufficient time for you to see its serious flaws.

    I put my money in the bank.
    The bank puts it in a box and charge me for the cost of storage.
    Why would I do that?
    I put my money under my mattress instead.

    Meanwhile, a new factory goes unbuilt because no-one can borrow any money to build it. Eventually all the factories fall down and we starve to death.


    Of course what would actually happen is that Tony Soprano would step in. He'd rob my house and lend the money to the factory owner at 10 points.
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    (Original post by Classical Liberal)
    Do you know how a full reserve bank works?
    Yes, I read the stupid wikipedia page. Given that M1 = PC + R/a, in this case a = 1.

    The effect on the money supply and public liquidity would be catastrophic.
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    (Original post by py0alb)
    alternative to destroying civilisation?

    how about not destroying civilisation?

    Just think about the proposal for a minute. That should be sufficient time for you to see its serious flaws.

    I put my money in the bank.
    The bank puts it in a box and charge me for the cost of storage.
    Why would I do that?
    I put my money under my mattress instead.

    Meanwhile, a new factory goes unbuilt because no-one can borrow any money to build it. Eventually all the factories fall down and we starve to death.


    Of course what would actually happen is that Tony Soprano would step in. He'd rob my house and lend the money to the factory owner at 10 points.
    Right then, you have discredited yourself. Well done sir.
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    (Original post by Classical Liberal)
    Right then, you have discredited yourself. Well done sir.
    Nice argument :rolleyes:
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    Remind everyone again CL how much economics you have studied?
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    (Original post by Classical Liberal)
    Then we use these things called benefits. Where the unproductive can benefit from the efforts of productive people.

    The point is that our society is so dammed productive that we can support children so they need not work and they can spend their time in education. That is absolutely remarkable when you consider that throughout most of history children have had to work just to keep themselves alive. Most people today are so ungrateful. We live in the most prosperous time of mankind and yet Marxists and Socialists keep on going like whinny spoilt little brats.
    Ok, you addressed one point. Now address the other. What are you going to do about the people who make their kids work because they don't care about their eductaion etc and just want some cheap labor/extra cash?

    Oh, sorry - a simple bit of legislation to stop child labor is whining. Sorry children! You are spoled by having a right to education, get to work! Ungrateful little brats!
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    (Original post by py0alb)
    Nice argument :rolleyes:
    You put the money in the bank for a year. You get x interest on that money. The bank account matures and you can get your money back plus x. You cannot take your money out when you please. You can only get your money back once the account matures. Unlike the demand deposit accounts we have to today where you are legally entitled to take the money out willy nilly.

    The banks in this system cannot create new money. They just transfer money from savers to investors. Only the government can create new money under this system.
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    (Original post by Classical Liberal)
    You put the money in the bank for a year. You get x interest on that money. The bank account matures and you can get your money back plus x. You cannot take your money out when you please. You can only get your money back once the account matures. Unlike the demand deposit accounts we have to today where you are legally entitled to take the money out willy nilly.

    The banks in this system cannot create new money. They just transfer money from savers to investors. Only the government can create new money under this system.
    lol, as if there is any demand for that. People just wouldn't put their money in the bank, and the system would collapse. Again: I'm sure we've been over this.
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    (Original post by Hanvyj)
    Ok, you addressed one point. Now address the other. What are you going to do about the people who make their kids work because they don't care about their eductaion etc and just want some cheap labor/extra cash?
    For the most part, nothing. I don't think the state is entitled to tell parents what to do with regards to raising children.

    Most parents care far more about their children than the government does. Of all the things even the humblest parents are concerned about, it is education that is usually top of the list. Parents know what is better for their children than government officials.
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    (Original post by Classical Liberal)
    For the most part, nothing. I don't think the state is entitled to tell parents what to do with regards to raising children.

    Most parents care far more about their children than the government does. Of all the things even the humblest parents are concerned about, it is education that is usually top of the list. Parents know what is better for their children than government officials.
    Yes, that’s why (according to some studies) 9% of children have suffered some form of neglect...

    Jeez, you live in some sugar coated world if you think all parents care about their kids... God knows what the statistics on sexual abuse is, but for children they are most likely to be sexually abused by their family members - often parents. Just because your parents cared about you doesn't mean others care about their children, sure the majority do - but hundreds of thousands of kids are neglected and even abused by parents.

    Removing this as a criminal act is basically saying "sure, go beat your kids"... nice message to send out to people.


    God you are naive


    PS: Also, if you are removing legislation I assume you are removing minimum wage. Employers will take advantage of this and you will end up with people getting paid f all, thus needing to send their children to work etc. Unless of course they claim benefits, which would then cost the governemtn billions more etc etc
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    The cause of the crisis was extreme levels of moral hazard within the entire financial industry, which was allowed to proliferate by sloppy and inadequate legislation by a set of governments firmly in the thrawl/pocket of the industry.

    The financial markets are so far away from the capitalist model of perfect competition its untrue. We don't need more or less regulation per se, we just need better legislation aimed at creating a more transparent banking process. Completely destroying the whole liquidity system is not the answer. You don't fix a car by removing all the oil.

    That in combination with an incomplete housing market was the main problem. This needs addressing as well.
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    (Original post by Hanvyj)
    God you are naive
    That's what paying too close attention to the textbooks does to you.
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    (Original post by py0alb)
    lol, as if there is any demand for that. People just wouldn't put their money in the bank, and the system would collapse. Again: I'm sure we've been over this.
    Then why do private equity firms exist?
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    (Original post by Classical Liberal)
    Then why do private equity firms exist?
    There's obviously some demand. Hence the reason people keep some money in ISAs etc. But the majority of the money in the banks is in direct access accounts. You'd completely destroy the economy if you just abolished them for some stupid ideological reason based on a badly flawed understanding of basic economics.
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    (Original post by Hanvyj)
    Yes, that’s why (according to some studies) 9% of children have suffered some form of neglect...

    Jeez, you live in some sugar coated world if you think all parents care about their kids... God knows what the statistics on sexual abuse is, but for children they are most likely to be sexually abused by their family members - often parents. Just because your parents cared about you doesn't mean others care about their children, sure the majority do - but hundreds of thousands of kids are neglected and even abused by parents.

    Removing this as a criminal act is basically saying "sure, go beat your kids"... nice message to send out to people.
    Well done on straw-manning the argument.

    Anyway, if we take your line of logic seriously all children should be taken away from their parents and put under the care of benevolent government, just in case the child's parents would do a bad job.


    PS: Also, if you are removing legislation I assume you are removing minimum wage. Employers will take advantage of this and you will end up with people getting paid f all, thus needing to send their children to work etc. Unless of course they claim benefits, which would then cost the governemtn billions more etc etc
    Why do I get paid more than the NMW? If we take your logic seriously, that unless there is government interference wages will fall, how come everybody around me gets paid more than the NMW?

    It is because wages are a price. And prices are subject the competitive forces. And as long as there is competition amongst employers for labour, then labour will be protected from exploitation. It is not government that should or does protect the worker. It is that market and the ability to work elsewhere that protects the worker.

    "In competition, individual ambition serves the common good" - Adam Smith
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    (Original post by py0alb)
    There's obviously some demand. Hence the reason people keep some money in ISAs etc. But the majority of the money in the banks is in direct access accounts. You'd completely destroy the economy if you just abolished them for some stupid ideological reason based on a badly flawed understanding of basic economics.
    Ofcourse they are, because they are a gravy train.

    If you can just go and exploit the yield curve then of course you are going to do that. IF you can get 5 year money at an instantaneous interest rate paid to savers then that is a brilliant deal if you are a bank.

    Full reserve would make the economy more stable because peoples savings would be directly linked to investment. That is the time preferences of savers would be directly coordinated with the investors.

    10 year money would have a higher interest rate than 1 month money. The differential would act as an automatic signal to investors as to what kind of projects, in terms of time, to invest into. It would force the economy into a savings and production set up, rather than a debt based consumption set up.
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    (Original post by Classical Liberal)
    Ofcourse they are, because they are a gravy train.

    If you can just go and exploit the yield curve then of course you are going to do that. IF you can get 5 year money at an instantaneous interest rate paid to savers then that is a brilliant deal if you are a bank.

    Full reserve would make the economy more stable because peoples savings would be directly linked to investment. That is the time preferences of savers would be directly coordinated with the investors.

    10 year money would have a higher interest rate than 1 month money. The differential would act as an automatic signal to investors as to what kind of projects, in terms of time, to invest into.

    Let me get this straight. You are advocating that 10 year loans should have a higher interest rate than 1 month loans, and you think this would stabilise the economy.
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    (Original post by Classical Liberal)
    We have regulations, indeed most of them are counter productive, but nobody argues that labour markets would collapse without regulations or we would have no food without regulations. Which is what people argue with regard to banking. Without state intervention the banking system we have today, would cease to exist.

    Regulations on food do not make food better for consumers, they actively make it worse. Food suppliers have a strong incentive to make sure the food they supply is safe and of a high quality without government influence. People would soon stop shopping at Tesco and go somewhere else if the Tesco food was dangerous. Particularly today with the power of the internet allowing consumers to share information with each other instantly across the world.

    Child labour laws are again counter productive for the most part. The reason children do not work in the UK is because we are so productive that one parent can support a child. In the past this was simply impossible. We have got rid of child labour not because of laws but because of increases in the productivity of adults.




    A system that relies on regulations just to keep going, not to improve market conditions, is a bad system. It will sooner or later fail.



    As you are so well informed and know all about these things, would you mind telling me where most money comes from?


    There is nothing more permanent than a temporary government program. If your argument is that things change, and therefore we need government to be dynamic and adjust, then you have another thing coming.

    And I do come up with practical measures. I actually have some policy proposals. All you can do is refer vaguely to some kind of regulation of a system you do not understand. But hey....... that is the hubris of ignorance.

    Umm do you actually understand the origin of regulation because what you said is in effect contradictory. Regulation in the labour industry actually stopped it from collapsing!!!!

    Without the regulation the labour market would have eventually collapsed due to the destruction of the future productive potential of children so yes the labour market cannot run without regulation. So your point that a system that needs regulation is a bad system is moot.

    Also another market example is intellectual property without regulation that system could not exist. Are you also saying that it is a bad system and shouldn't exist. Regulation underpins capitalism without it capitalism would spiral out of control and simply not be able to exist.

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