3 ms·
If we wanted to remove leverage we could sign a law to remove it tomorrow. The problem is credit is a good thing that lets us accomplish more that what resource
by polygamous_bat 4y ago
If we wanted to remove leverage we could sign a law to remove it tomorrow. The problem is credit is a good thing that lets us accomplish more that what resources what we have right now. The fact that some people abuse trust doesn't mean we should throw trust out altogether, rather find ways to cost of breaching trust more.
- SkyMarshal 4y agoTheoretically we sign a law to remove it tomorrow, but practically it’s completely impossible. The financial industry would never allow it, and would spend billions defeating both the law and any politician who even remotely supported it.
- polygamous_bat 4y agoNot because there will be billions spent, but because such a law would be extremely unpopular. Try convincing people that any option for your home loan and your car loan won't exist anymore (those are leverage too!) and see how happy they are.
- everfree 4y ago> If we wanted to remove leverage we could sign a law to remove it tomorrow. The kind of unsafe leveraged bundling that caused the great financial crisis was already illegal. In theory, the banks should have suffered the consequences of their poor trades. In practice, both the banks and the government knew that by enforcing those consequences, the entire financial system as we knew it would fall apart. So the banks smartly factored the bailouts into their risk calculations when entering into those trades. Crypto enables systems that cannot be as easily bailed out. It changes the game theory so that failure is no longer a "get bailout and still win" condition for speculative lenders. So in a way, crypto absolutely does create "ways to make breaches of trust cost more."