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I don't understand what's free market about mortgage-backed securities, bank bailouts and giving the banking elite a monopoly on money through the federal reser

I don't understand what's free market about mortgage-backed securities, bank bailouts and giving the banking elite a monopoly on money through the federal reserve...

anamax 15y ago
> what's free market about mortgage-backed securities It's an aggregation of assets to reduce variance. I won't invest in a single mortgage because of the variance. However, I'll consider investing in a small piece of 1000 mortgages. Of course, I'll want to know what those mortgages look like and what the mortgages in the market look like. (Fannie lied about the makeup of the market, significantly understating the fraction of sub-prime, which threw off everyone's risk calculation.) > bank bailouts and giving the banking elite a monopoly on money through the federal reserve... It's a vehicle for funding politicians and buying votes. "Nice bank there, be a pity if it was burned down by folks who can't afford a mortgage that they can't pay for".
- acslater00 15y ago
  Mortgage backed securities are the epitome of a free-market innovation. The ability to pool mortgages and sell them in chunks essentially allows small investors (say, me, although I did not ever buy a MBS share) to make home loans. That makes home loans easier to come by, which makes homes easier to come by, and it's all delivered by the innovation of the free market. The bailouts, on the other hand, were quite obviously not a free-market device. Finally the federal reserve doesn't "give the banking elite a monopoly on money". Although, I honestly don't even know what that means. The federal reserve is supposed to control monetary policy to prevent inflation (good for normal people) and minimize unemployment (good for normal people). They do that by controlling interest rates and "reserve" rules. In other words, they do that by bossing around banks, and manipulating them into making more or fewer loans. That is also not a "free market" system, but there's good reason to suspect it's better than a private money alternative.
  - mchusma 15y ago
    Coherent thoughts on what is and is not "free market". I would disagree that the fed is really meant to prevent inflation. Many of their actions are specifically designed to increase inflation. I also disagree that there is any reason to suspect that its better than a private money alternative, or backing to some kind of commodity based standard like gold. I would say most evidence is to the contrary (although this is generally a lengthy discussion).

I don't understand what's free market about mortgage-backed securities, bank bailouts and giving the banking elite a monopoly on money through the federal reserve...

anamax 15y ago

> what's free market about mortgage-backed securities It's an aggregation of assets to reduce variance. I won't invest in a single mortgage because of the variance. However, I'll consider investing in a small piece of 1000 mortgages. Of course, I'll want to know what those mortgages look like and what the mortgages in the market look like. (Fannie lied about the makeup of the market, significantly understating the fraction of sub-prime, which threw off everyone's risk calculation.) > bank bailouts and giving the banking elite a monopoly on money through the federal reserve... It's a vehicle for funding politicians and buying votes. "Nice bank there, be a pity if it was burned down by folks who can't afford a mortgage that they can't pay for".

acslater00 15y ago
Mortgage backed securities are the epitome of a free-market innovation. The ability to pool mortgages and sell them in chunks essentially allows small investors (say, me, although I did not ever buy a MBS share) to make home loans. That makes home loans easier to come by, which makes homes easier to come by, and it's all delivered by the innovation of the free market. The bailouts, on the other hand, were quite obviously not a free-market device. Finally the federal reserve doesn't "give the banking elite a monopoly on money". Although, I honestly don't even know what that means. The federal reserve is supposed to control monetary policy to prevent inflation (good for normal people) and minimize unemployment (good for normal people). They do that by controlling interest rates and "reserve" rules. In other words, they do that by bossing around banks, and manipulating them into making more or fewer loans. That is also not a "free market" system, but there's good reason to suspect it's better than a private money alternative.
- mchusma 15y ago
  Coherent thoughts on what is and is not "free market". I would disagree that the fed is really meant to prevent inflation. Many of their actions are specifically designed to increase inflation. I also disagree that there is any reason to suspect that its better than a private money alternative, or backing to some kind of commodity based standard like gold. I would say most evidence is to the contrary (although this is generally a lengthy discussion).