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Partying Like It's 1929
nytimes.com — Economist Paul Krugman weighs in on the current financial crisis: "... what we should be asking is: How did we get here?"
quakerorts- 670 diggs
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- quakerorts, on 03/24/2008, -14/+56We deregulate the energy industry and we get the California energy crisis and Enron.
We deregulate the banking industry and we get the current financial crisis.
Our forbears knew what they were doing when they enacted these regulations. The Reagan Republicans were tools of industry when they discarded these vital protections of the people.- Nosnevets02, on 03/24/2008, -19/+9The energy crisis was a result of deregulating the companies? The California lawmakers put a price ceiling on the prices, yet required the companies to provide electricity to everyone no matter how much the market prices were. That doesn't sound like deregulation at all.
Why would a company provide power when they are taking a loss? That is why there were rolling blackouts.
If they would have let it work like a market, when prices rose, a competitor would have come in and provided power at a cheaper rate, injecting competition into the mix and allowing it to work like they intended.- veloscaper, on 03/24/2008, -3/+11Dumbass, the energy companies created rolling blackouts to drive up demand to make more profits. They were free to do so because they were deregulated. Nobody but the customers took a loss to this very day with rates more than 2x what they were, some old ladies lost their lives.
- FatherVic, on 03/24/2008, -6/+2Energy was never de-regulated... only "de-regulated" the way the left wants it. That is... "we hereby de-regulate you, as long as you follow these new guidelines for business". c'mon... who are we fooling here? True de-regulation allows for free and open business practice and competition. Placing a cap on pricing will always result on the cap being the current price. You can't claim to have loosed the bands on energy in California because that is NOT what happened.
- veloscaper, on 03/24/2008, -3/+11Dumbass, the energy companies created rolling blackouts to drive up demand to make more profits. They were free to do so because they were deregulated. Nobody but the customers took a loss to this very day with rates more than 2x what they were, some old ladies lost their lives.
- Nosnevets02, on 03/24/2008, -4/+8^^^^
Not that I'm trying to defend Enron in any way, what they did was highly illegal. However it was not very good foresight on the part of the policy makers. - headnickels, on 03/24/2008, -2/+19um no, there were blackouts because enron deliberately let the powergrids run dry so when prices skyrocketed they could sell electricity at rocket high prices.
- danconia, on 03/24/2008, -3/+8Don't forget who gave them a monopoly on power supply in their area though... yep the government.
Regulation doesn't work well because it opens the industry up to lobbying efforts. Those who should regulate in a way that's best for the people will naturally, and unfortunately, just end up regulating in whatever way gets them the most lobbying money and campaign donations from people working at places like Enron. - oldgal, on 03/24/2008, -0/+2They also shipped power out of the state, up to Canada, and back into the state so they could jack up the prices.
- danconia, on 03/24/2008, -3/+8Don't forget who gave them a monopoly on power supply in their area though... yep the government.
- danconia, on 03/24/2008, -4/+12Yeah and for the record Enron was cooking the books in a way that our government does on a daily basis.
You can't blame this one on the free market, guys. There hadn't been many bad recessions until the Federal Reserve was enacted and started to artificially manipulate the economy. The Fed keeps injecting money to put off the depression but what people don't realize is that every time we put off the recession it will get worse once it does hit.
Recessions are only the market's way of naturally correcting distortions within the economy. They really should not be *feared* because although they aren't very fun they certainly are necessary for prosperity. We can't have our cake and eat it too. The Fed is devaluing the dollar, the world is losing faith in this dollar, and thus it loses even more value. I know people don't want to hear us talk about Ron Paul on here but he really was the one candidate who knew all one could know about the economy. I mean come on he would completely school Bernanke everytime he spoke to him publicly. Strangely enough McCain, the admitted economic dunce, got the damned nomination. Here's to hoping Barack at least knows his stuff! But even if he does I wouldn't put much faith in the government... they know they'll all be fine even if the middle class is completely falling apart.- afruff23, on 03/24/2008, -10/+1Even Ron Paul was a dunce. I mean, how do you expect people benefiting off government programs to understand when he cuts programs? Just imagine the Dept. of Education bureaucrats and secretaries out of a job. They don't understand that they are funded by force and nobody would welcome such reforms.
- danconia, on 03/24/2008, -3/+7He wasn't a dunce, but you're right that any of his reforms would be met with huge resistance. That doesn't mean that we shouldn't try them though... what's the alternative? It's sad because people these days let the government have a monopoly on charity but no one seems to realize that the government's programs don't even come close to working. Poverty was actually steadily declining before LBJ implemented the "Great Society" and since he implemented it we haven't really seen poverty levels go down.
I hope some day we get back to the days of private charity. That way at least organizations would have to perform well in order to get the donations over their rivals. In our current system people just assume the government is fixing the problems and of course the government isn't even coming close.- afruff23, on 03/24/2008, -8/+3So what is Ron Paul going to do once a large percentage of the nation strikes and riots since he put them out of jobs? Say "taxes are bad"? Here in reality, people don't care about that. All they care is that they have a job. Taking it away from them isn't going to make them understand anything.
- BESTenemy, on 03/24/2008, -0/+5@ afruff
The people are putting themselves out of jobs without RP being anywhere near. That's what the depression is. The question is whether the next man in the office is going to take a path to recovery or sell us out completely and irreversibly.
The monetary system is doomed. Having jobs means absolutely nothing if you're making money that cannot buy you anything. It comes down to fundamentals of goods and services exchange. Since the whole system had been structured upon unsound money, fractional reserve banking and private monetary monopoly, no matter what you do to taxes, interest rates or lending policy is going to matter, as you'll be fighting the effects instead of the causes.
As for painful restructuring, it's going to happen whether you like it or not. People are going to loose jobs. The issue is not whether they will or not, but what happens after. - afruff23, on 03/25/2008, -0/+1@BESTenemy
I am on your side, however you are mistaken as to how to achieve our goals. The whole system is based upon violence (e.g. taxes and monopolies). Take away a monopoly and people won't care what you have to say. You have to gradually re-educate people.
- danconia, on 03/24/2008, -3/+7He wasn't a dunce, but you're right that any of his reforms would be met with huge resistance. That doesn't mean that we shouldn't try them though... what's the alternative? It's sad because people these days let the government have a monopoly on charity but no one seems to realize that the government's programs don't even come close to working. Poverty was actually steadily declining before LBJ implemented the "Great Society" and since he implemented it we haven't really seen poverty levels go down.
- netdance, on 03/25/2008, -0/+1Let me get this straight - you think that there weren't many bad recessions until the Fed was created? Really? It was created in response to a series of bank panics and depressions, three in a row if I remember correctly.
We're never going to figure out an answer if we don't start from facts.
- afruff23, on 03/24/2008, -10/+1Even Ron Paul was a dunce. I mean, how do you expect people benefiting off government programs to understand when he cuts programs? Just imagine the Dept. of Education bureaucrats and secretaries out of a job. They don't understand that they are funded by force and nobody would welcome such reforms.
- Berkana, on 03/24/2008, -1/+17It is a bit more complicated than deregulation; deregulating banking works IF banks only lend money they have. Banks don't do that; banks lend more money than they actually have (known as fractional reserve banking), inflating the money supply. But of course, the money the lend out must be paid back with interest, so following the initial boom, as the money supply slowly trickles out of the economy, taking out not only what was put in, but interest as well, the economy goes into a recession. That is the consequence of having a debt based money system. Remeber this?:
http://digg.com/business_finance/Our_Debt_based_Mo ...
The problem isn't just regulation; the problem is that even when regulated, the system of banking we currently use naturally causes a "swinging pendulum," as banks can create money, and subsequently destroy it after the economy has adjusted to having more of it around. (a.k.a. inflation.) The first thing needed to fix this problem is to outlaw the monetization of debt, and to have permanent money that doesn't need to be continually borrowed just to exist, and to enforce that banks only loan out money they actually have. Right now, 95% of our money supply is created by someone borrowing it into existence; unless this stops, we will continue to suffer the same problems.- danconia, on 03/24/2008, -1/+6But do not forget the very important point that a bank that deals in a risky or foolish way will lose the business of many people who are aware of these foolish acts. As things stand right now people just assume the government is keeping an eye on them and when the ***** hits the fans... government bureaucrats are only looking out for themselves.
- Berkana, on 03/24/2008, -0/+4Good point, but what I'm saying is that the entire system itself is risky and foolish; permitting banks to inflate the money supply by monetizing debt and trading these debts on the market (as was done leading up to the mortgage crisis) is folly at its height, but it is perfectly legal, in spite of the suffering it will cause when this whole mess matures. We have no other choice right now because the entire system is corrupted and flawed, so we can't just move as a group to reward another system in competition, because right now there is no competition for our monetary system.
- Tetraca, on 03/24/2008, -1/+2It is not the system that is broken. People are broken: They no longer have any sense of self control with their money. If people were sensible with borrowing, the system would simply force progress for the sake of increasing economic output and could be used as a tool for internationalism.
- Berkana, on 03/26/2008, -0/+1@Tetraca
No, the system is actually broken. The system is broken because all of the money we have in circulation is borrowed, and has to be paid back with more than was borrowed. You don't seem to understand the consequences of this. Please watch the documentary I linked in my first comment for some background. The problem is not "broken people"; the problem is that the system of monetizing debt is intrinsically broken and cannot be fixed; it is destined to collapse.
- Berkana, on 03/24/2008, -0/+4Good point, but what I'm saying is that the entire system itself is risky and foolish; permitting banks to inflate the money supply by monetizing debt and trading these debts on the market (as was done leading up to the mortgage crisis) is folly at its height, but it is perfectly legal, in spite of the suffering it will cause when this whole mess matures. We have no other choice right now because the entire system is corrupted and flawed, so we can't just move as a group to reward another system in competition, because right now there is no competition for our monetary system.
- nycmac247, on 03/24/2008, -0/+1"It is a bit more complicated than deregulation"
So maybe we should reverse child labor laws? How many cycles of deregulation-->total greed-->bust--->gov't bailout do you need?
Or are you somehow identifying with the people getting bailed out and not the people getting screwed?- macman2k, on 03/24/2008, -0/+1You assume that deregulation was *true* deregulation. In reality almost every form of "deregulation" was really just "reregulation" that would privatize the profits and socialize the losses. They called it deregulation to get support from the "republicans" and when it fails they can justify even more socialized control. Regulation outside of enforcing property rights violates the free association in the market place. No industry should be too big to fail. Regulation keeps out startups and concentrates power by allowing big companies to legally outmaneuver smaller companies.
Big companies can only maintain their control via regulations that they write for themselves and enforce on smaller companies.
- macman2k, on 03/24/2008, -0/+1You assume that deregulation was *true* deregulation. In reality almost every form of "deregulation" was really just "reregulation" that would privatize the profits and socialize the losses. They called it deregulation to get support from the "republicans" and when it fails they can justify even more socialized control. Regulation outside of enforcing property rights violates the free association in the market place. No industry should be too big to fail. Regulation keeps out startups and concentrates power by allowing big companies to legally outmaneuver smaller companies.
- BESTenemy, on 03/24/2008, -0/+2You are absolutely correct. The credit expansion due to fractional reserve practice exponential debt growth against non-exponential growth of the collateral. In a society where at least half the jobs are service jobs that don't produce anything that can be treated as a physical asset, the tap runs dry q lot quicker than in a system where people produce goods. However in both cases the result is exactly the same. Saturation of credit causes periodic pendulum asset acquisitions by the manufacturer of the paper currency.
The debt on the FED legal tender is much greater than the entire amount of money in circulation. The only way to repay the debt is with the same money it was issued in. Somehow people don't understand what the trick is. Person A is only able to pay off his debt, if he gathers enough money off person B that happened to borrow even more off the FED.
The system is nearing collapse and the result is nothing short of economic slavery where citizens of this country own nothing but worthless paper and none of real assets the most fundamental of which is land.
- danconia, on 03/24/2008, -1/+6But do not forget the very important point that a bank that deals in a risky or foolish way will lose the business of many people who are aware of these foolish acts. As things stand right now people just assume the government is keeping an eye on them and when the ***** hits the fans... government bureaucrats are only looking out for themselves.
- loki49152, on 03/24/2008, -1/+3If you call mountains of new regulations "deregulation" then I have a double-plusgood bridge to sell you.
- dougs55, on 03/25/2008, -0/+1You forgot the savings and loan crisis of the 1980's. Reagan deregulated S&Ls and a huge government bailout was required.
- Nosnevets02, on 03/24/2008, -19/+9The energy crisis was a result of deregulating the companies? The California lawmakers put a price ceiling on the prices, yet required the companies to provide electricity to everyone no matter how much the market prices were. That doesn't sound like deregulation at all.
- StingingNettle, on 03/24/2008, -3/+18"Normally, banks satisfy both desires: depositors have access to their funds whenever they want, yet most of the money placed in a bank’s care is used to make long-term loans. The reason this works is that withdrawals are usually more or less matched by new deposits, so that a bank only needs a modest cash reserve to make good on its promises."
That was the most kind way to describe fractional reserve banking I have ever seen.- Berkana, on 03/24/2008, -0/+6I think "kind" is too generous; it was simply inaccurate. Banks do not lend out money they have; they lend out entirely new money backed by nothing by the borrower's debt. That's how we as a nation can have a collective debt of $45 trillion. Have you ever thought about how there could be so much money to lend out to begin with?
The background on fractional reserve banking is expounded on in this:
http://digg.com/business_finance/Our_Debt_based_Mo ... - goldisalie, on 03/24/2008, -4/+5Banks lend out entirely new money backed by the asset which it is purchasing and the ability of the borrower to pay it off by using said asset to grow their capital in various ways. Debt kind of, you know...fuels virtually every business investment ever made to keep a cushion under your soft pink and stupidly comfortable ass. The new money that is created does not continue to exist beyond the life of the loan, as the loan is repaid the 'new' money is drawn down until it ceases to exist anymore. All that remains is the value of a newly created asset which has contributed to the growth of the economy, a portion of which is taken by the bank as a nominal fee to cover the extremely important job it has done for the economy. Can you explain to me how you use a finite pool of money to grow a larger economy? The FED and the US government (or any government in any country, since they all use fractional reserve banking...not being diggtards and all) never considers this new money to be real money in the sense that government issued money is. It is simply numbers on a piece of paper, nothing more, nothing less. In reality, all that is happening is that the government allows you, your family and your boss to say create wealth by distributing the cost of that wealth creation into the future, and by wealth I mean assets, so thank the system for the roof over your head mate. If you don't like it, why not try and save up the cash for a new house? See you in 70 years, or longer since you lot have effectively valued your debt higher than your cash for the time being (look into that, banks are paying you to borrow money right now while your savings withers away to nothing).
It is a system that works, and makes perfect sense if you have half a braincell and the sense to find out why it works. The problem you have here is shady loans were dished out to idiots who couldn't see the writing between the lines, in ridiculous volumes. Then these shady loans were re-packaged and marketed with flashy wrapping, whole slabs of collective debt were subdivided into different categories of 'risk', sold on to the highest bidder as simply some sort of investment unto themselves, several times over, and over. Different levels of risk were sold at different levels of return, as you might expect, so many times in such a convoluted way that nobody knew what they were buying... Sooner or later these uneducated idiots who took on stupid loans copped it sweet and started defaulting en masse... hilarity ensues... or rather, a financial collapse of monolithic proportions (from where I sit I find it quite ironic).
I blame the state of your bloody ruinous education system myself, why so many people took on so many bad loans without reading the contracts is completely beyond me, forget the ***** banks and financial institutions, this is the result of mass public stupidity, and getting shady salesmen with shady business practices confused with fractional reserve banking is just more of an example of it. Here, while I'm at it... would you like to buy this snake oil? I think I could make quite a buck.- gradient01, on 03/24/2008, -1/+1Great post man. Is there some sort of online reference, or even a book, that explains how all of this works? I see this sort of attack on fractional reserve banking and the Fed all the time, and it'd be good to have some quick URL that clearly explains how it all works.
- goldisalie, on 03/24/2008, -1/+0Well, wikipedia is a good starting point, it is worth while having a dig through the fractional reserve banking page, as well as the current account deficit stuff and the balance of trade, to at least clear some stuff up. University is another good place if you are interested, have the time and money or I dunno what you guys have over there but we have technical colleges you can do 6 month courses in, if you study see if you can take an economics 101 or something? The library is another good place, although it can be hard to find easy to read material. Reading good newspaper (I mean websites lol) articles on economics is another great way to work it all out. I see all the anti-capitalist stuff as very akin to Christians and Muslims attitude toward science: don't understand it, doesn't seem to fit in with my world view, hate it, it is the enemy.
I dunno I have a couple of friends at university in finance and commerce degrees so just talking to them helps to learn a lot. As far as I saw it, the article in question was right on the money and summed up the issue very succinctly. That is to say the sub prime stuff was just the starting point, which has caused a mass run on financial markets, as the article says. Trying to blame all the financial institutions, especially the banks, for the sub prime crisis is like blaming a hospital or doctor when a bunch of heroin addicts die from being sold drain cleaner...
- goldisalie, on 03/24/2008, -1/+0Well, wikipedia is a good starting point, it is worth while having a dig through the fractional reserve banking page, as well as the current account deficit stuff and the balance of trade, to at least clear some stuff up. University is another good place if you are interested, have the time and money or I dunno what you guys have over there but we have technical colleges you can do 6 month courses in, if you study see if you can take an economics 101 or something? The library is another good place, although it can be hard to find easy to read material. Reading good newspaper (I mean websites lol) articles on economics is another great way to work it all out. I see all the anti-capitalist stuff as very akin to Christians and Muslims attitude toward science: don't understand it, doesn't seem to fit in with my world view, hate it, it is the enemy.
- gradient01, on 03/24/2008, -1/+1Great post man. Is there some sort of online reference, or even a book, that explains how all of this works? I see this sort of attack on fractional reserve banking and the Fed all the time, and it'd be good to have some quick URL that clearly explains how it all works.
- seanpetrash, on 03/25/2008, -0/+3While you seem to be very well informed, you are incorrect. A fiat currency not backed by gold will fail. In fact, do some research and you'll find that all fiat currencies not backed by gold have failed. The reason? Fiat currencies become the property of a government-sponsored central bank. The dictator or party that is in rule inevitably wants more power, which, means more money. If they raise taxes they will be voted (or kicked) out of office by the populace. The same is true if the leaders cut spending from "social programs." So what do they do? They create money out of thin air by way of a fiat currency that has no rules responsibility to the populace at all. Printing money causes inflation. Inflation is the reason people can no longer afford the adjustable rate mortgages that they put their houses under. Legalized counterfeiting. And the fact that you can attribute deregulation to the cause of the Great Depression is beyond me. The Fed was established in 1913. And since then has seen 2 major inflationary recessions and a Great Depression. It has also seen the value of the dollar dwindle down to 4 cents of what it was. And you call that stability? Negative. This is the evaporation of the middle class because guess who repossesses the houses? And it goes all the way to the top. And guess what happens when the big guys default on their loans? The Fed bails them out! Who's going to bail out Joe American that borrowed a little too much with inflation taking care of the rest? Is anyone in here even aware that the dollar lost 1.7% of it's value in a singe day!? I will agree that this is a direct result of foolish ignorance, but I do not and will never see the government as a good thing unless it's ensuring freedom and a free market - NOT REGULATING IT!
- goldisalie, on 03/25/2008, -0/+0Gold? Why gold? What magical property does this particular metal endow upon currency? In truth, history shows that all gold backed currencies have failed, and as a result, nobody uses them. Nobody. This does not mean that a fiat currency necessarily succeeds, it many fail too, this simply demonstrates that more flexibility is required in currency than a commodity can provide. While we are at it... how on earth did we get onto fiat currency, I was talking about fractional reserve banking... might point out that I didn't mention the depression either...
In truth, the USA does not have a true fiat system as I understand it, your currency is backed by federal government bonds, which represent assets. This is just a replacement for gold if you want to call it that, however it is a far more sophisticated one which has inherent flexibility. You are advocating that a dynamic multivariate and entirely random system should be governed by the quantity of a particular mineral dug out of the soil... rather than the perceived worth of that system as represented by market trading.
The number value of the dollar? This is entirely irrelevant, what on earth does it matter? You need to get your head around some basic economic principles. If my dollar is worth less, but I have so many more of them that I actually have more purchasing power, what on earth does it matter? Money is just a number. This is how it works and you cannot argue with me that you are worse off today in terms of real wealth than your forebears before the depression, it is simply not true. Just the fact that you are typing on a computer (purchased with disposable income - don't tell me it is a necessary item) over the internet (more disposable income) in your free time (time you have thanks to relatively much higher wages) proves this.
Inflation is used in our systems (I am Australian) because it works better with the way people like to use their wealth, that is, generally humans prefer to borrow rather than to save. There is no inherent difference in these activities either by the way, other than the time at which they occur relative to any particular financial activity. If you save a portion of your wealth is used on a regular basis until a pool is generated that you go and spend, if you borrow you are simply given that pool of capital and then a portion of your wealth is payed back to the lender at a regular interval. Truth is both activities are necessary for an economy to function, we just tend to favor debt because it is a more stable way to use large quantities of capital. If you run a deflationary system there is constant pressure to push wages down, and your home loan continues to run away from you. Employers cannot afford to let deflation raise the cost of wages constantly so they would constantly be cutting them - politically near impossible. At least with an inflationary system you get to feel good about constant wage rises and don't notice so much as inflation eats them away from under you. The rate of inflation is subtracted from your interest rate on all loans so your loan is actually shrinking compared to your purchasing power, barring interest rates of course.
Finally, and I might start by saying I fundamentally agree with anarchy on an ideological level, there is no such thing as a perfect free market, it just never happens. The whole point of government intervention is to try and guide the market to behave in as free and stable a way as is possible given our limited understanding of complex, nonlinear, random, multivariate (as in hundreds of thousands), dynamical systems. That is the name of the game. Yes corruption occurs, but generally democracy is an effective way of dealing with it, yes mistakes are made, but generally we have achieved a stable and reliable system in ways that have never been achieved before.
Clean up your argument buddy, your heart is in the right place but your head hasn't caught up yet, no doubt one day it will. You sound a lot like I did a few years ago ;)- netdance, on 03/25/2008, -0/+2While I don't disagree with much of what you say, to say that dollars are backed by bonds, and therefore assets, isn't at all accurate. The dollars are backed by bonds, which are denominated in dollars, and therefore have no true asset value. It's a circular system, which is, in effect, a fiat system.
But yeah, precious metal currencies used to fail all the time - primarily when they were debased too much (i.e., treated as fiat currencies). But also when they weren't debased enough, and deflation set in.
- netdance, on 03/25/2008, -0/+2While I don't disagree with much of what you say, to say that dollars are backed by bonds, and therefore assets, isn't at all accurate. The dollars are backed by bonds, which are denominated in dollars, and therefore have no true asset value. It's a circular system, which is, in effect, a fiat system.
- netdance, on 03/25/2008, -0/+1While I don't disagree with much of what you say, to say that dollars are backed by bonds, and therefore assets, isn't at all accurate. The dollars are backed by bonds, which are denominated in dollars, and therefore have no true asset value. It's a circular system, which is, in effect, a fiat system.
But yeah, precious metal currencies used to fail all the time - primarily when they were debased too much (i.e., treated as fiat currencies). But also when they weren't debased enough, and deflation set in.
- Berkana, on 03/24/2008, -0/+6I think "kind" is too generous; it was simply inaccurate. Banks do not lend out money they have; they lend out entirely new money backed by nothing by the borrower's debt. That's how we as a nation can have a collective debt of $45 trillion. Have you ever thought about how there could be so much money to lend out to begin with?
- Napoleone, on 03/24/2008, -13/+20Revisionist drivel.
Bernanke is doing little more than injecting collagen into this market bubble so that it can stretch a little more, but in the end, it will pop. He's doing this with our money and at our near future expense for the sake of preserving the fortunes of already very wealthy people.
Some form of regulation is prudent, so long it not be too constricting or intrusive, and has as its primary goal the curtailing of fraud, but this housing bubble monster is not the creation of any free market. This baby was created by a meddling Fed who keeps feeding the beast our money.
Krugman is disinformationist of the highest order.- afruff23, on 03/24/2008, -5/+3Seriously, it's as if I (the government) fed a dog (the market) some poison (intervention and credit manipulation), got bad results (credit burst), and tried feeding more poison of a slightly different flavor to expect new results!!
This is all related to the monetary manipulation of the Fed. It is not some "free market coincidence"; it is a series of nearby business failures that can be attributed directly to the Fed.
What the market needs to recover is not more regulation, but less regulation. - NSResponder, on 03/24/2008, -0/+3I'll give Krugman the benefit of the doubt, and presume that he actually believes what he's saying. Sadly, most people in this country still believe that the Fed's job is to stabilize the dollar, and they also believe that it was instituted as a remedy for the great depression.
-jcr
- afruff23, on 03/24/2008, -5/+3Seriously, it's as if I (the government) fed a dog (the market) some poison (intervention and credit manipulation), got bad results (credit burst), and tried feeding more poison of a slightly different flavor to expect new results!!
- Trigeno, on 03/24/2008, -0/+7They are acting as though the future long term solutions will not be necessary, and that a mere delaying of the inevitable is the only thing neccessary, long enough for all peices to be in place.
- RegalGSX, on 03/24/2008, -5/+13Forget the economy. We have bigger problems. In 5 billion years the sun is going to explode. Then what?
- DeathJux, on 03/24/2008, -2/+8You think that's bad? I can't even get the ***** lid off this jar of pickles!! WHAT AM I SUPPOSED TO DO NOW?!
- danconia, on 03/24/2008, -1/+5You have no choice, this is the case of an emergency, you need to smash the glass jar.
- kodax, on 03/24/2008, -1/+3Give them a chance. Its too early for the pickles.
- dracostimpy, on 03/24/2008, -0/+1You have no chance to survive make your time.
- danconia, on 03/24/2008, -1/+5You have no choice, this is the case of an emergency, you need to smash the glass jar.
- yarayara, on 03/24/2008, -0/+1lol.... THAT is what I always say... it is the ultimate thing...
the point is, there is no point!!
no point for arts, for history, for science... because we are going no where... lol...
(not even to hell!)- SamuraiGhost, on 03/26/2008, -0/+1We have 5 billion years go get off this rock. I think we will figure out a way...as long as we don't kill ourselves first.
- DeathJux, on 03/24/2008, -2/+8You think that's bad? I can't even get the ***** lid off this jar of pickles!! WHAT AM I SUPPOSED TO DO NOW?!
- headnickels, on 03/24/2008, -1/+9that man has clarified in a few paragraphs what has seemed until now a confusing mess of *****
- j1a1g1, on 03/24/2008, -0/+2well put
- j1a1g1, on 03/24/2008, -0/+2well put
- budgeysmuggler, on 03/24/2008, -5/+6I don't care, I traded all of my American dollars for handful of magical beans. I'm sweet!
- danconia, on 03/24/2008, -0/+7You mean that magician was actually willing to trade the beans for American dollars? Definitely must not have been able to see the future =P
- radu79, on 03/24/2008, -2/+9That's a very simplistic article, and doesn't really describe what the problem is: Lending way too much money by the banks. They were supposed to be able to lend 'only' 10 times the money they have (in cash), but via some 'smart' moves, such as selling debt packages to investors, they bypassed that limit, and we are where we are now.
Of course, there is also the problem of people getting money even though the banks knew they can not pay back, hoping that their homes will magically become more and more expensive.- danconia, on 03/24/2008, -1/+5Yes I think we can all agree that the banks get bailed out only because everyone who is part of the Federal Reserve probably has 90%+ of their friends working in the banking industry and don't want to see them become unemployed or lose their fortune(s). The Fed doesn't give two ***** about the people actually losing their houses over this stuff, and especially not about the middle-aged people whose savings accounts, in $US, are wasting away in front of their eyes.
Now as the cycle continues the banks keep lending out more dangerous/risky loans because they know their buddies at the Fed will just bail them out when they need them to. Considering the dunces we have in the Treasury Department I am NOT expecting a nice ending to this story.
Buy some gold, save while you can, and make good friends with your boss if you want to make it through this recession... things are going to get BAD. - NSResponder, on 03/24/2008, -0/+5" Lending way too much money by the banks. "
More to the point, the problem was the effectively unlimited amount of credit that the fed made available to the banks. If you had someone who would would lend you all you wanted for 3%, and you could lend it out to someone else for 6% and make 3% on money you never had in the first place, that's a racket that most bankers that have ever lived would jump on.
The incentives for the banks were to lend as much as they possibly could, and since they weren't lending any actual savings, there was no market feedback to indicate scarcity of capital. Upshot: malinvestment as houses were built and sold to speculators.
-jcr
- danconia, on 03/24/2008, -1/+5Yes I think we can all agree that the banks get bailed out only because everyone who is part of the Federal Reserve probably has 90%+ of their friends working in the banking industry and don't want to see them become unemployed or lose their fortune(s). The Fed doesn't give two ***** about the people actually losing their houses over this stuff, and especially not about the middle-aged people whose savings accounts, in $US, are wasting away in front of their eyes.
- chkdg8, on 03/24/2008, -0/+9They're burning down the bar and collecting the insurance. That's why the rest of the world is selling off their U.S. assets.
- mal1964, on 03/24/2008, -4/+21999, The year of the party.
- afruff23, on 03/24/2008, -13/+7Are we seriously treating Paul Krugman as credible now? There's so much wrong with his viewpoint. Suffice it to say, Krugman would consider a government which paid people to dig holes one day and fill them the next as good.
Here is just one of many (many) examples of the misinformation that comes from this guy:
http://blog.mises.org/archives/007850.asp- DutchGuilder, on 03/24/2008, -4/+4Krugman has clearly never heard of fractional reserve banking. He says: "Banks exist because they help reconcile the conflicting desires of savers and borrowers. Savers want freedom — access to their money on short notice. Borrowers want commitment: they don’t want to risk facing sudden demands for repayment."
It is scary that Krugman is writing for the NYT yet he doesn't seem to understand that banks don't just loan depositor's money, rather they (the aggregate banking system) create 10 times more new credit money based on what was deposited. Or at least it was only 10 times more, until reserve requirements were reduced from 10% to ... 0%. Now credit money is created when someone borrows a loan - the borrowed loan itself is the deposit, there is no depositor. - afruff23, on 03/24/2008, -4/+6Here's another great example of the Krug-man:
http://krugman.blogs.nytimes.com/2008/02/19/bush-i ...
He commits the classic broken window fallacy time and time again.
http://en.wikipedia.org/wiki/Parable_of_the_broken ...
In this case, the window is your tax money, the window-maker are war industries, and the tailor is the jobs the tax money could have created had it been left in the hands of people. - danconia, on 03/24/2008, -4/+4Yeah this is the problems with public "intellectuals" these days. The American elite keep their power with the help of the government. It is for this reason that you will notice almost all public intellectuals these days support big(ger) government. It is not coincidence, that much we can be sure about. Don't think I ever saw mention of "libertarian", "limited government", or "Austrian School of Economics" in any of the textbooks at my public high school. McGraw-Hill (who is probably the biggest producer of textbooks to be read/used by American children) is on the Council on Foreign Relations too.
To put it simply: they have us by the balls.- afruff23, on 03/24/2008, -2/+3Limited government is a pipe-dream. We had that over 200 years ago and nothing stopped that from becoming the monstrosity it is today. I believe the definition of insanity would be to redo things from the past and expect different results.
- danconia, on 03/31/2008, -0/+1Ah yes I will agree that "limited" government has failed. *No* government is up next at bat though if you ask me.
- afruff23, on 03/24/2008, -2/+3Limited government is a pipe-dream. We had that over 200 years ago and nothing stopped that from becoming the monstrosity it is today. I believe the definition of insanity would be to redo things from the past and expect different results.
- DutchGuilder, on 03/24/2008, -4/+4Krugman has clearly never heard of fractional reserve banking. He says: "Banks exist because they help reconcile the conflicting desires of savers and borrowers. Savers want freedom — access to their money on short notice. Borrowers want commitment: they don’t want to risk facing sudden demands for repayment."
- danconia, on 03/24/2008, -4/+3I know it's going to sound radical or extreme for me to say this but... maybe we should *not* use a national currency. If different organizations/businesses offered "credits" or something like that then the currencies could compete and any organization that wasn't doing things correctly would lose business since the people could withdraw their business from them. With electronic money and bank accounts these days it's an even more plausible possibility. I guess it'd be a little bit like how the planet functions on a large scale, countries have different currencies which compete except we would need businesses to be willing to accept all major currencies issued by the more credible organizations. I'd expect a few organizations to be head and neck above the others but I still don't see much wrong with that as long as the government isn't keeping the small guy from competing with them.
Seriously guys read up on some Austrian School economics. They're pretty sharp guys and are the only school who can claim moral consistency in that they follow the non-aggression principle.- nycmac247, on 03/24/2008, -0/+1Also, maybe we should all have a bar code on our hand and scanners, right?
How about NEIGHBORHOODS print their own money?
How about we buy things LOCALLY made?
How about we build community? (no all caps on that last one, sorry).
We can use the other money only when absolutely needed
- nycmac247, on 03/24/2008, -0/+1Also, maybe we should all have a bar code on our hand and scanners, right?
- WoollyMittens, on 03/24/2008, -2/+8When your country imports more than it exports you will have a trade-deficit and a growing debt. Intellectual property was the only thing of value left and the USA even outsourced that to China and India. There is nothing left to sell, but the whole damn continent of consumers itself... and nobody wants it.
The only thing the US have going for them is enough bombs to scorch the surface of this planet 10 times over.- afruff23, on 03/24/2008, -5/+3That's a good argument for getting rid of the minimum wage, welfare programs, trade barriers, and immigration barriers.
- kingmanic, on 03/24/2008, -0/+8Although the US nuclear arsenal is impressive still and could end civilization as we know it, it would not cover the earth 100%. There is around 5k warheads. about 400 or so ICBM mirvs and a lot of tactical missiles. Right now the US could lightly toast the earth. The 10 times over may have been true in The US arsenals hey day but almost everything in the US has been downsized except your waste lines. Your economy shrunk, your army shrunk, your nuclear arsenal shrunk, your global influence shrunk, your manufacturing industry shrunk, and your reputation has shrunk. It's been going on for some time now.
- rockefeller2, on 03/24/2008, -2/+1"Bring it on!!!!!"
- nycmac247, on 03/24/2008, -0/+1nuclear winter - how's that for coverage?
- cnorris1, on 03/24/2008, -0/+4I hear we are really good at pizza delivery too
- itsthemechanic, on 03/25/2008, -0/+1Not since Domino's nerfed the "30 minutes or it's free" guarantee for liability reasons.
- satori3000, on 03/24/2008, -2/+7Can you imagine what would of happened if Bush's proposed plan to move retirement funds into stock investments? I'm in Canada and all our banks still have fierce regulations in place. I'm now hearing from friends on IRC that Americans are moving their funds to Canadian banks because their money will still be there if the banks fail. As good as that might be for the Canadian Banking system, it would be bad for the world. Don't make a run on your bank unless you think collapsing your bank is a good idea.
- mjw2025, on 03/24/2008, -3/+1What would be a better idea that private investments? The government? Look what the they did with social security.
- Mohonri, on 03/24/2008, -2/+3What's wrong with letting people choose where to invest their retirement savings? Or, from another perspective, why should the government decide for me how to save for retirement? I'd much rather take that 13-ish% of my salary and invest it for retirement MY way. Or, to paraphrase Milton Friedman, "When has any government program performed better than an equivalent private enterprise?"
- yellowsnowcone, on 03/24/2008, -4/+3I love a good financial crisis. The smell of fear in the market. It smells like ... like victory.
- danconia, on 03/24/2008, -1/+3But then what good is our bank not collapsing when our original $10k is now only worth the equivalent of $500? These banks made stupid decisions and the people should not have to sacrifice themselves so that those rich bastards and their friend bureaucrats can keep their money and power.
In all honesty if things really do keep going this way in the long-term then I wouldn't be surprised if the U.S. government coerced Mexico and Canada into joining under one currency so that our neighbors to the North and South would have to absorb some of the financial burden. Our government is douchebaggish like that.
I'm just glad I'm in college for engineering (always great job market) and don't have a wife and kids right now. Almost all of Middle-Class America is going to be hurting really really badly this time around. - absurdist, on 03/24/2008, -2/+5I spend a lot of hours on Digg, due to moving around time zones. It never ceases to amaze/amuse me. What's posted in the middle of the night US time is pretty much guaranteed to gain a reactionary/conservative/republican response, while what's posted in the middle the day US time is pretty much guaranteed a progressive/liberal/democratic response. As a sub-genius, I'm busy picking all your pockets... but any comments?
- MoofTheStoof, on 03/24/2008, -0/+3So we liberal insomniacs are screwed?
- gazoot, on 03/24/2008, -1/+2"The reason this works is that withdrawals are usually more or less matched by new deposits, so that a bank only needs a modest cash reserve to make good on its promises."
Here's a thing this guy doesn't explain: New deposits... money made out of thin air? Not far from it, watch Money as Debt for a very good explanation to our upcoming monetary crisis: http://www.youtube.com/watch?v=cy-fD78zyvI- Mohonri, on 03/24/2008, -1/+1Keep in mind, though, that as debts are paid off, that same money "out of thin air" disappears into thin air.
- JMellissa, on 03/24/2008, -4/+7I agree with the article. Paul Krugman is my favorite columnist and I think he's got it right again.
The one thing that most Americans are completely dedicated to is "having a good time". This leaves us living more
like the Grasshopper instead of the Ant.- nycmac247, on 03/24/2008, -0/+1You are looking at individuals instead of the institutions that love hedge funds.
Just like pollution, the average person has very little to do with any of this.
(including subprime).
We are just a drop in the bucket percentage wise compared to the amount of money that is used for speculation every day on this planet. - afruff23, on 03/24/2008, -0/+1Krugman has absolutely no idea what he is talking about. Or he is intentionally ignorant.
The whole mechanism behind this mess is the Federal Reserve, a Keynesian invention. This sort of monetary manipulation (e.g. ultra-low interest rates) leads to a lot of false speculation (e.g. borrowing more money than they originally planned to borrow since the rate is low and housing prices are rising). When i say false, I do not mean a few businesses but a WHOLE group of people (e.g. mortgage lenders). When the market tries to correct itself (e.g bringing interest rates back to a more reasonable level and a decrease in housing prices), the speculators go bust.
This is not a healthy economic cycle.
- nycmac247, on 03/24/2008, -0/+1You are looking at individuals instead of the institutions that love hedge funds.
- felman87, on 03/24/2008, -3/+31929 was a great year.
- SpaceMonkeyZero, on 03/24/2008, -3/+3Krugman's been crying that the economy is going to fail EVERYDAY since January 2001
- netdance, on 03/25/2008, -0/+1If there's a fire in the kitchen, I know eventually the house will burn down. That doesn't mean I know if it'll take 15 minutes, an hour or even three, but I do know the eventual outcome - unless the firemen get here first.
- netdance, on 03/25/2008, -0/+1If there's a fire in the kitchen, I know eventually the house will burn down. That doesn't mean I know if it'll take 15 minutes, an hour or even three, but I do know the eventual outcome - unless the firemen get here first.
- eclasssystems, on 03/24/2008, -2/+2Letting the days go by, let the water hold me down
Same as it ever was...
This is not my beautiful wife!- rockefeller2, on 03/24/2008, -0/+2Talking Heads?
- bjornski, on 03/24/2008, -0/+1Yup
- rockefeller2, on 03/24/2008, -0/+2Talking Heads?
- Xiney, on 03/24/2008, -2/+8Screw you New York Times, I don't want to log in. Pain in the ass.
- JohnFromChicago, on 03/24/2008, -5/+5Krugman is a moron, and he's shilling for the Fed in this article. This is nothing more than PR damage control and Krugman is their lackey. The Fed is the cause of the problem and damn sure not the source for any solution. It's like having a fox solve our disappearing chicken problem. One day Americans will wake up and realize our democracy is gone. Not slipping away ... completely gone. Sham elections, wars for profit, domestic police state, all financed by the fine folks at the Fed. It's banned int eh Constitution folks, and it's banned for a reason. We need to abolish the Fed to even begin to start dealing with our problems.
- hcharger, on 03/24/2008, -1/+3 Here we have an article that implicates a financial mess, yet in its simple terms we have believers and skeptics, ones who are brainwashed to think the government has everything under control and others who say they don't.
Well, think about it this way. What happens when people go needlessly in debt and a crisis occurs where that debt overwelms their ability to pay them off. Now, along comes a good samaritian that lends him the cash to pay his debt and lo and behold all his cash money are counterfeit bills...worthless.
Think about all the paper money being printed up using future reserves that do not have gold backing today. Think of the cost of the Iraqi war that also uses this same paper greenbacks to finance the effort.
Think about all the people who are so convinced that this will pass after the government does a little restructuring. Paul Krugman is correct, we have been partying like its 1929 and he furthers his comment by explaining that our day today is 1930.
When the banking insitutions finally realized the state of affairs that faced them, it already was too late to counteract any corrections. Hold on to your practicality skills folks, history is once again going to repeat itself, this time with a vengence that may be impossible to reverse.
And of course truth not being a popular message these days, the government will do its best con job to reassure you all is well, just as God shut the door of the ark before the rains came. - Look4Truth, on 03/24/2008, -0/+3I hope you all are preparing for what's coming, it's going to get ugly.
- godseyeview, on 03/24/2008, -1/+3I posted this before . I'll post it again. Learn the truth about banking and power. This lays out exactly what we are doing and heading into.
http://video.google.com/videoplay?docid=4675077383 ...
http://video.google.com/videoplay?docid=-443054337 ... - ericdano, on 03/24/2008, -0/+3Eh, he's wrong.
- whizler, on 03/24/2008, -1/+3Paul Krugman is about as expert in economics as the Pope is about sex.
- Duodecimal, on 03/24/2008, -1/+3'Economist Paul Krugman weighs in on the current financial crisis: "... what we should be asking is: How did we get here?"'
By listening to economists like you, asshole. - spaceman77, on 03/24/2008, -0/+2Kinda makes me wonder if Greenspan saw it coming.
- afruff23, on 03/24/2008, -0/+1Greenspan is a walking contradiction. He once wrote a book on why the gold standard is good and was close friends with Ayn Rand. Later, he became Fed chairman and created the very problems he wrote about in his book.
It's as if a pacifist voluntarily joined the army to kill people.
- afruff23, on 03/24/2008, -0/+1Greenspan is a walking contradiction. He once wrote a book on why the gold standard is good and was close friends with Ayn Rand. Later, he became Fed chairman and created the very problems he wrote about in his book.
- thecoolestguy, on 03/24/2008, -0/+10We get here because PEOPLE DON'T LISTEN. The journalists and pundits DON'T LISTEN to the experts, and keep regurgitating the garbage the lobby-owned politicians spew.
You can't spend the Social Security Trust money on programs other than Social Security, yet that is exactly what politicians have been doing for the last 3 decades (Ron Paul tried to stop that by introducing a bill that would prevent the money in the Social Security Trust from being spent on any thing except Social Security, but of course Congress ignored it).
You can't expand medicare when it's already unsustainable as it currently is. The prescription drug bill was described as "probably the most fiscally irresponsible piece of legislation since the 1960's" by the Comptroller General of the United States.
http://www.youtube.com/watch?v=KGpY2hw7ao8
Since Nixon took the US off of the gold standard in 1971, it gave the federal reserve free reign to inflate the money supply as much as it wanted. It doesn't work!
--------------
In the 34 years before Nixon closed the gold window, the money supply in the U.S. grew less than two fold. In the 34 years after Nixon’s action, the money supply expanded 13 fold. T
-----------------------
The United States has never been so regulated as it is now. The tax code is complex now that it requires 66,000 pages to describe it all. The tax code is so difficult to navigate, that the paper work required to file taxes incurs a cost of $275 billion a year. That's 2% of GDP, used up just for compliance
You can't tax and spend your way to prosperity. Freedom, which means minimal government is the only way.
You can't manage the banking industry through a centralized top down command structure headed by the Federal Reserve. It doesn't work. The Fed will inevitably fail. Centralized control of any facet of the economy doesn't work, the Soviet economy proved that. - thecoolestguy, on 03/24/2008, -1/+1I get so angry at the irresponsible idiocy that Krugman writes. For example:
----
Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant — not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades.
Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control.
--------------
Don't morons like Krugman realize that they're advocating a system of centralized government management of the economy? The banking industry is just like every other industry. If you have government manage it through the federal reserve (which is actually privately owned, but is given a government-backed monopoly over currency creation), instead of letting the free market manage it, it will fail. That is what is happening. How can one man, Beranke, be smart enough to manage a $200 billion a year industry? Bernanke is being given a job that the top capitalist in the world should have. - IdevInull, on 03/24/2008, -0/+1"Economist Paul Krugman weighs in on the current financial crisis: "... what we should be asking is: How did we get here?""
Greed. - thecoolestguy, on 03/24/2008, -1/+1I sometimes wonder if charlatan propagandists like Krugman are actually communists plotting to destroy the economy:
http://republicanrenaissance.blogspot.com/
What's funny about all this, in a most tragic, ironic way, is that the old goals of the communists are finally coming close to fruition. In 1938 J.B. Matthews wrote an autobiography he called Odyssey of a Fellow Traveler, in which he reported on his comrades' new strategy after their grandiose dreams of proletarian revolution in America had dissolved. The capitalist system of production, they perceived, might be sabotaged indirectly by method of
--------------------------
placing upon that system burdens of restrictive legislation and enervating taxation. These ends would, it is hoped, be achieved by the slogans of social security, unprecedented sums for relief of every sort, until the collapse of the currency and the drain upon production induced a major crisis in the working of the economy. Meanwhile vast political power would be built upon these governmental hand-outs - a veritable monster of politics insatiable in its appetite for compensation without toil. Not only upon the economy's currency but upon every other front of the capitalist system, this incessant sabotage would do its work until finally the system would require a receiver.
---------------------------- hc22, on 03/24/2008, -1/+1Man, you need to get back on your rocker.
- thecoolestguy, on 03/25/2008, -0/+1You should read 'the creature of jekyll island' and stop drinking the fed cool-aid.
- thecoolestguy, on 03/24/2008, -0/+1Who do you think is getting all the hundreds of billions of dollars that the federal reserve is pumping out? The big banks. They made hundreds of billions of dollars in the last 6 years with their high risk speculating and fractional reserve lending, and then, when the inevitable downturn comes, they get corporate welfare from the federal reserve (which is actually privately owned).
The system is totally and entirely *****, and Ron Paul is the only one talking about it.
Do any of the Democrats even know what the Federal Reserve is?
Why is the Federal Reserve privately owned? Who is Bernanke? Why does he get to control a $200 billion + a year industry? Since when does the United States believe in giving one man control over a facet of the economy through government appointment? I thought business men and women who create their own business were supposed to control the economy, not government managers. Since when did the United States become the USSR?
***** you Krugman. - hc22, on 03/24/2008, -1/+1@the coolestguy:
Just doubled a $100 investment in Bear Sterns stock which I bought last week at $4.57, now up to $10/share. So the chance is there to make money if you know the system.
A system is a system, most grow more by circumstance than any actual planning. The Federal Reserve was first proposed back around the time Andrew Jackson was President, he opposed it. Alexander Hamilton was in favor.
It is not a conspiracy, it is not a conceived plot by big business to defraud you and I. It is a financial system which has evolved mainly due to the Depression of 1932, WWII, the rise of Communism, and the price of oil. Most people did not even think of the Federal Reserve until Greenspan was on the cover of major magazines and newspapers. Do you really think a ring of conspirators would let Greenspan publicize their secret banking system-and bring it ot the attention of the public? It seems to me they would have kept it quiet if they were using it to "cheat" us out of our money.
thecoolestguy is too paranoid. Ron Paul has no idea of what he is talking about- he reminds me of William Jennings Bryan- a populist who appealed to the fringe groups.- seanpetrash, on 03/25/2008, -0/+3Maybe you should watch the internet movie "Freedom to Fascism." I'll give you props on being someone that can work a screwed system. But all fiat currencies not backed by gold eventually fail. Do some more research.
- thecoolestguy, on 03/25/2008, -0/+2You can make money on a declining system, but the pie is getting smaller, and fewer people are going to make money than in a growing economy.
- thecoolestguy, on 03/25/2008, -0/+2---It is not a conspiracy, it is not a conceived plot by big business to defraud you and I.---
Nonsense, it is a conspiracy. The Federal Reserve was conceived by major bankers at jekyll island. This is a matter of historical fact. For some reason you can accept that powerful interests getting rich off the military-industrial complex, yet cannot fathom how banking interests can get rich off the government-federal reserve complex.
- clayasaurus, on 03/24/2008, -0/+1Hrm.. let's see.. maybe it's because the Federal Reserve Corporation has total control of our currency, and uses inflation to steal from us.
- drexl, on 03/24/2008, -0/+1To answer the question, "How did we get here?" I refer you to some Talking Heads lyrics:
And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right?...Am I wrong?
And you may tell yourself
MY GOD!...WHAT HAVE I DONE?
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/in the silent water
Under the rocks and stones/there is water underground.- razorsharpwit, on 03/28/2008, -0/+1"Things fall apart -it's scientific"
- bluecollarfin, on 03/24/2008, -0/+1It's a classic example of a house of cards. Our financial system is being artificially propped up with cheap liquidity and easy bailouts. They can only go so far though before deflation really catches up. At that point, there's nothing the Fed can do to save the system.
- hawkeye17, on 03/24/2008, -1/+2One word....Euro's.
- seanpetrash, on 03/25/2008, -0/+6While you seem to be very well informed, you are incorrect. A fiat currency not backed by gold will fail. In fact, do some research and you'll find that all fiat currencies not backed by gold have failed. The reason? Fiat currencies become the property of a government-sponsored central bank. The dictator or party that is in rule inevitably wants more power, which, means more money. If they raise taxes they will be voted (or kicked) out of office by the populace. The same is true if the leaders cut spending from "social programs." So what do they do? They create money out of thin air by way of a fiat currency that has no rules responsibility to the populace at all. Printing money causes inflation. Inflation is the reason people can no longer afford the adjustable rate mortgages that they put their houses under. Legalized counterfeiting. And the fact that you can attribute deregulation to the cause of the Great Depression is beyond me. The Fed was established in 1913. And since then has seen 2 major inflationary recessions and a Great Depression. It has also seen the value of the dollar dwindle down to 4 cents of what it was. And you call that stability? Negative. This is the evaporation of the middle class because guess who repossesses the houses? And it goes all the way to the top. And guess what happens when the big guys default on their loans? The Fed bails them out! Who's going to bail out Joe American that borrowed a little too much with inflation taking care of the rest? Is anyone in here even aware that the dollar lost 1.7% of it's value in a singe day!? I will agree that this is a direct result of foolish ignorance, but I do not and will never see the government as a good thing unless it's ensuring freedom and a free market - NOT REGULATING IT!
- thecoolestguy, on 03/25/2008, -1/+1***** you Krugman.
- razorsharpwit, on 03/28/2008, -0/+1This guy wants to blame everything but the obvious.
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