9 ms·

I'm a taxpayer and have no idea how to assess the risk held by a bank haha.

pgayed 6y ago
Then you shouldn't entrust your money to that business. The problem is the false sense of safety implied by regulatory control. Rather than inducing market incentives for transparency and increasing consumer intelligence over time, regulatory bodies want you to “just let us handle the tough stuff.”
CryptoPunk 6y ago
But you have a way to assess the effectiveness of politicians at appointing the heads of regulatory agencies? Consumers know more about the TV they're going to buy than the bank they're going to deposit with, and that's due to the moral hazard created by taxpayer subsidized risk management by regulatory agencies and deposit insurance. The FDIC's risk socialization function increases systemic risk: https://www.nber.org/papers/w22223 https://www.nber.org/papers/w22223
- pgayed 6y ago
  Thank you. I am getting destroyed in this thread. I thought this was hacker news. I don't understand the level of confidence being accorded here to centralizing bodies.
  - CryptoPunk 6y ago
    To the layman, theories on the efficacy of free markets sounds like a type of fundemantalism, and economists who promulgate it are suspected of being coopted to promote the interests of a corporate elite. Anti-free-market-ism is the anti-vaxxerism of the intelligentsia. To this group, anti-free-market-ism is seen as a form of contrarianism, that open-minded/free-spirited people engage in.
    - sgt101 6y ago
      "Anti-free-market-ism is the anti-vaxxerism of the intelligentsia." It isn't - the fact is that the "free market" is in fact a market shackled to whoever has the capital to manipulate it. That's seen in every market in history sooner or later. The time and extent of capital dominance is determined by regulation - the more regulation, the later and less rigged in favour of the richest participant the market is. These are just facts - free markets aren't free, they aren't efficient and they aren't good. Unfortunately the known alternative is a fudge.
      - deleted 6y ago
        [deleted]
      - CryptoPunk 6y ago
        >>These are just facts It's no such thing. It's quackery rejected by experts.
        sgt101 6y ago
        You can see it; under stress markets fail to clear because the actors stop acting rationally. This leaves market participants holding assets that in theory they should have been able to offload. This is because free market theory depends on rational actors working without friction and with perfect information. In reality the actors are irrational, the process has friction and information is horded and distributed unequally with noise.
        CryptoPunk 6y ago
        Rational actors make money from the irrational behavior of others, leading to the most rational acquiring more capital at the expense of the less rational over time, and therefore capital in general being governed more rationally. To put it another way, the market rewards economically beneficial behavior, like shorting bubbles and investing during depressions. That markets reduce market volatility is a widely accepted conclusion of economists.
    - 6y ago

Then you shouldn't entrust your money to that business. The problem is the false sense of safety implied by regulatory control. Rather than inducing market incentives for transparency and increasing consumer intelligence over time, regulatory bodies want you to “just let us handle the tough stuff.”

CryptoPunk 6y ago

But you have a way to assess the effectiveness of politicians at appointing the heads of regulatory agencies? Consumers know more about the TV they're going to buy than the bank they're going to deposit with, and that's due to the moral hazard created by taxpayer subsidized risk management by regulatory agencies and deposit insurance. The FDIC's risk socialization function increases systemic risk: https://www.nber.org/papers/w22223 https://www.nber.org/papers/w22223

pgayed 6y ago
Thank you. I am getting destroyed in this thread. I thought this was hacker news. I don't understand the level of confidence being accorded here to centralizing bodies.
- CryptoPunk 6y ago
  To the layman, theories on the efficacy of free markets sounds like a type of fundemantalism, and economists who promulgate it are suspected of being coopted to promote the interests of a corporate elite. Anti-free-market-ism is the anti-vaxxerism of the intelligentsia. To this group, anti-free-market-ism is seen as a form of contrarianism, that open-minded/free-spirited people engage in.
  - sgt101 6y ago
    "Anti-free-market-ism is the anti-vaxxerism of the intelligentsia." It isn't - the fact is that the "free market" is in fact a market shackled to whoever has the capital to manipulate it. That's seen in every market in history sooner or later. The time and extent of capital dominance is determined by regulation - the more regulation, the later and less rigged in favour of the richest participant the market is. These are just facts - free markets aren't free, they aren't efficient and they aren't good. Unfortunately the known alternative is a fudge.
    - deleted 6y ago
      [deleted]
    - CryptoPunk 6y ago
      >>These are just facts It's no such thing. It's quackery rejected by experts.
      - sgt101 6y ago
        You can see it; under stress markets fail to clear because the actors stop acting rationally. This leaves market participants holding assets that in theory they should have been able to offload. This is because free market theory depends on rational actors working without friction and with perfect information. In reality the actors are irrational, the process has friction and information is horded and distributed unequally with noise.
        CryptoPunk 6y ago
        Rational actors make money from the irrational behavior of others, leading to the most rational acquiring more capital at the expense of the less rational over time, and therefore capital in general being governed more rationally. To put it another way, the market rewards economically beneficial behavior, like shorting bubbles and investing during depressions. That markets reduce market volatility is a widely accepted conclusion of economists.
  - 6y ago