Bank Bailouts, A Question for people who know about Banking and Economics?
Instead of giving Banks massive bailouts numbering in the tens of trillions of dollers, would it have been possible for the US Government as well as other Governments to nationalise the entire Banking System making it an instrument of national government, then pouring those trillions into massive infastructure projects for instance creating ultra-modern transport systems and clean energy?. A bit like FDRs new Deal but on a much larger scale.
The banking system is partly nationalised already, and it’s that part that’s causing the problems. Nationalising can’t fix the problem. If it could, we could just nationalise everything and hey presto: the best possible society. Economically speaking, the idea has been disproved in theory and practice over and over again.
In a market unhampered by government interventions, banks that made loans unbacked by money on deposit (fractional reserve banking), would suffer losses and go broke. They would be replaced by banks who didn’t do it.
The only reason FRB is able to exist, is because government grants the banks the special privilege of making loans unbacked by money. This enables the banks to make profits out of thin air. (The government cartelises the banks for the purpose.) It works by diluting the supply of money with the newly issued money. Everyone pays who uses money – in other words, everyone, – at the rate of inflation. The effect is to siphon money out of your pocket, and channel it to the big banks, who in turn channel it to the big corporations.
Why does the government do this? Because they get a cut of the loot, in the form of many benefits; and for this reason governments are addicted to inflationary finance, like a drug. Firstly it enables the government to print money out of thin air, which it does by issuing treasury bonds (IOUs), which it sells to the banks. These are the "assets" which back the banks newly issued loans, instead of gold. Secondly, it enables the government to channel money to its pet favourites such as the military-industrial complex, or non-creditworthy borrowers (think housing bubble and bust). Thirdly, most people don’t understand what’s going on, and they blame the inflation – the increase in the money supply and increase of prices – on unions, or capitalists, or banks, or anything but what is causing it – government. Fourthly, inflation is a favourite way that governments fund wars, because if they did it by taxation, people would recognise and resent it. It also causes enormous economic and social problems, including economic recessions and depressions, and all the following bankruptices, unemployment and hardship, and then government rushes in, all innocent-like, pretending to be our salvation, with more forced redistributions paid for by inflating the money supply, for example, the bank bailouts.
So no, nationalisation is not the solution, because all it means that government will inflate the currency through a government bank, rather than through a government-licensed bank.
And instead of pouring trillions into banks *or* more government interventions, the solution is to STOP DOING WHAT’S CAUSING THE PROBLEM IN THE FIRST PLACE. If government wasn’t taking those trillions, people are perfectly capable of funding "ultra-modern transport systems and clean energy" all by themselves, if that’s what they want. And if they want something else that they consider more valuable, then that’s as it should be too. Government is not capable of improving on that, because government is made up of these same people. The idea that government can do it better is simply wrong, and ALWAYS ignores the conflict of interest as between government and the people.
If what you were saying were correct, socialism would be possible. No need for private property, or freedom, just have a great big government Department of Everything, and we’d have a great modern society. Sorry, but it’s mistaken.
The solution is simple: the laws against fraud must apply to banking and to government, as much as they apply in all other areas of business, and this means abolishing the Fed which is nothing but institutionalised fraud and is the source of the entire problem. That’s why Ron Paul is saying the Fed should be abolished, and the opposition by Republicans and Democrats only shows either
a) their dishonesty, or
c) their economically ignorant belief in a Santa Claus government that can create net real wealth for society by printing pieces of paper. It can’t.
The banking system is partly nationalised already, and it’s that part that’s causing the problems. Nationalising can’t fix the problem. If it could, we could just nationalise everything and hey presto: the best possible society. Economically speaking, the idea has been disproved in theory and practice over and over again.
In a market unhampered by government interventions, banks that made loans unbacked by money on deposit (fractional reserve banking), would suffer losses and go broke. They would be replaced by banks who didn’t do it.
The only reason FRB is able to exist, is because government grants the banks the special privilege of making loans unbacked by money. This enables the banks to make profits out of thin air. (The government cartelises the banks for the purpose.) It works by diluting the supply of money with the newly issued money. Everyone pays who uses money – in other words, everyone, – at the rate of inflation. The effect is to siphon money out of your pocket, and channel it to the big banks, who in turn channel it to the big corporations.
Why does the government do this? Because they get a cut of the loot, in the form of many benefits; and for this reason governments are addicted to inflationary finance, like a drug. Firstly it enables the government to print money out of thin air, which it does by issuing treasury bonds (IOUs), which it sells to the banks. These are the "assets" which back the banks newly issued loans, instead of gold. Secondly, it enables the government to channel money to its pet favourites such as the military-industrial complex, or non-creditworthy borrowers (think housing bubble and bust). Thirdly, most people don’t understand what’s going on, and they blame the inflation – the increase in the money supply and increase of prices – on unions, or capitalists, or banks, or anything but what is causing it – government. Fourthly, inflation is a favourite way that governments fund wars, because if they did it by taxation, people would recognise and resent it. It also causes enormous economic and social problems, including economic recessions and depressions, and all the following bankruptices, unemployment and hardship, and then government rushes in, all innocent-like, pretending to be our salvation, with more forced redistributions paid for by inflating the money supply, for example, the bank bailouts.
So no, nationalisation is not the solution, because all it means that government will inflate the currency through a government bank, rather than through a government-licensed bank.
And instead of pouring trillions into banks *or* more government interventions, the solution is to STOP DOING WHAT’S CAUSING THE PROBLEM IN THE FIRST PLACE. If government wasn’t taking those trillions, people are perfectly capable of funding "ultra-modern transport systems and clean energy" all by themselves, if that’s what they want. And if they want something else that they consider more valuable, then that’s as it should be too. Government is not capable of improving on that, because government is made up of these same people. The idea that government can do it better is simply wrong, and ALWAYS ignores the conflict of interest as between government and the people.
If what you were saying were correct, socialism would be possible. No need for private property, or freedom, just have a great big government Department of Everything, and we’d have a great modern society. Sorry, but it’s mistaken.
The solution is simple: the laws against fraud must apply to banking and to government, as much as they apply in all other areas of business, and this means abolishing the Fed which is nothing but institutionalised fraud and is the source of the entire problem. That’s why Ron Paul is saying the Fed should be abolished, and the opposition by Republicans and Democrats only shows either
a) their dishonesty, or
c) their economically ignorant belief in a Santa Claus government that can create net real wealth for society by printing pieces of paper. It can’t.
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