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The best explanation. Thank you. I wonder if there's a better way to do this though. Maybe letting lenders fail, arresting bankers for not pricing risks in loa
by NTDF9 8y ago
The best explanation. Thank you.
I wonder if there's a better way to do this though. Maybe letting lenders fail, arresting bankers for not pricing risks in loans and setting an example is a better way to set up the money supply?
The busts are only painful if they affect non-speculators. Speculators (lenders and borrowers) should handle their own risk?
I'm sure it's not easy but the current system really really favors the rich with resources at the expense of retail retirement stock holders.
- twblalock 8y ago> Maybe letting lenders fail, arresting bankers for not pricing risks in loans and setting an example is a better way to set up the money supply? I'm not in favor of arresting people who did not break any laws, and it's not illegal to misjudge risk when making loans.
- repolfx 8y agoYou don't ban making loans! You ban fractional reserve banking - the act of issuing currency not backed 1:1 by central bank money. All it takes to stop boom/bust is full reserve banking and abolition of central bankers. Very simple, technically. After that to get yield on savings, people must invest in funds and be exposed to their relative lack of liquidity. Good bankers can keep things relatively liquid anyway, at least when times are stable, but you'd still have to wait to get your money back if you wanted out of investment funds. The underlying mechanics of finance are exposed: loans still occur, but investors see that their money is gone from their current accounts until the fund reaches maturity. Now, will the citizens or politicians tolerate the long sucking sound as all the unstable credit is withdrawn from the economy? No, probably not. It's politically hard, not technically hard.