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Our banking system nearly collapsed in 2008. Lots of people got hurt. Financialization of the US economy is a larger, delayed version of what happened to Genera

Our banking system nearly collapsed in 2008. Lots of people got hurt. Financialization of the US economy is a larger, delayed version of what happened to General Electric.

vkou 4y ago
> Our banking system nearly collapsed in 2008. Lots of people got hurt. Yes, plenty of people got hurt because they made shitty investments. How many people got hurt due to their bank running off with their money to the Bahamas/betting it all on red? Because that's the degree of 'hurt' that the various crypto exchanges have been inflicting on their customers. Can you find me one American who lost money from their savings account in 2008? Or just had it go poof from their stock brokerage?
- adrr 4y ago
  Investments were only bad in the short term. TARP, which purchased these assets, ended up being profitable for the government.
  - WeylandYutani 4y ago
    Good call yeah. Dutch government managed to buy up banks for cheap and made a profit on them. "Almost crashed" is not the same as "crashed". 2008 Was a stress test and the system survived.
- dumbfoundded 4y ago
  I responded to: "Name a financial firm that had a significant negative impact on consumers?" I didn't respond to which financial firms stole money from customers. What SBF did was more like Bernie Madoff. The only reason we didn't have bank runs and frozen accounts is because the Fed stepped in to provide liquidity to the whole market. The banking system would've collapsed similar to the Great Depression without such action. Lots of people lost their savings in the Great Depression.
  - vkou 4y ago
    > What SBF did was more like Bernie Madoff. Retail investors used FTX, retail was not heavily exposed to Bernie. His marks were mostly institutional and accredited investors, for whom the expectations are far closer to the 'buyer-beware' side of the spectrum. > because the Fed stepped in to provide liquidity to the whole market. That's the Fed's job. Everything worked... Pretty much as intended. And there's a reason it's not stepping in to provide liquidity for the various crypto scams. Liquidity injections can save a situation where value exists, but can't be immediately realized - as in the case of a bank run. In this case, though, there's no value worth saving. > Lots of people lost their savings in the Great Depression. Which is precisely why we built systems to prevent that failure mode from happening again. They worked.
    - dumbfoundded 4y ago
      I agree that the Fed was right in letting these crypto scams fail. The problem inherent to the system is inflation. As the Fed expands its powers, it can avoid significant recessions/depressions but one day it won't work and the dollar will fail like every other fiat currency in the world has eventually failed. This system "working" isn't eliminating risk, it's polarizing it. I wrote a longer comment a year ago but here's a piece: "The price of gold was $45/oz in 1970. 52 years later it's $1,800/ounce. That's roughly 7.6% a year or 45x increase. If you use the inflation provided by the government, CPI, (1), they say inflation is only 3.6%/year or roughly 7x since 1970. Obviously we have a discrepancy. Is the dollar worth 45x less than 1970 or 7x times? When we look at prices of things like education, housing, and healthcare, the 45x number makes a lot more sense. Education has 30x in price over the same time period (2). If you're comparing prices in dollars, it feels like education got really expensive compared to the basket of goods the BEA tracks but in reality, education requires less gold than it did in 1970. Our incredible supply chains and manufacturing automation have lowered most consumer prices such that we don't really notice inflation but when you look at things that can't get much cheaper like housing, healthcare, education, asset prices of all sorts, you can't miss the fact that they correlate more closely with gold than the USD." (1) https://news.ycombinator.com/threads?id=dumbfoundded&next=29871850 https://news.ycombinator.com/threads?id=dumbfoundded&next=29...

Our banking system nearly collapsed in 2008. Lots of people got hurt. Financialization of the US economy is a larger, delayed version of what happened to General Electric.

vkou 4y ago

> Our banking system nearly collapsed in 2008. Lots of people got hurt. Yes, plenty of people got hurt because they made shitty investments. How many people got hurt due to their bank running off with their money to the Bahamas/betting it all on red? Because that's the degree of 'hurt' that the various crypto exchanges have been inflicting on their customers. Can you find me one American who lost money from their savings account in 2008? Or just had it go poof from their stock brokerage?

adrr 4y ago
Investments were only bad in the short term. TARP, which purchased these assets, ended up being profitable for the government.
- WeylandYutani 4y ago
  Good call yeah. Dutch government managed to buy up banks for cheap and made a profit on them. "Almost crashed" is not the same as "crashed". 2008 Was a stress test and the system survived.
dumbfoundded 4y ago
I responded to: "Name a financial firm that had a significant negative impact on consumers?" I didn't respond to which financial firms stole money from customers. What SBF did was more like Bernie Madoff. The only reason we didn't have bank runs and frozen accounts is because the Fed stepped in to provide liquidity to the whole market. The banking system would've collapsed similar to the Great Depression without such action. Lots of people lost their savings in the Great Depression.
- vkou 4y ago
  > What SBF did was more like Bernie Madoff. Retail investors used FTX, retail was not heavily exposed to Bernie. His marks were mostly institutional and accredited investors, for whom the expectations are far closer to the 'buyer-beware' side of the spectrum. > because the Fed stepped in to provide liquidity to the whole market. That's the Fed's job. Everything worked... Pretty much as intended. And there's a reason it's not stepping in to provide liquidity for the various crypto scams. Liquidity injections can save a situation where value exists, but can't be immediately realized - as in the case of a bank run. In this case, though, there's no value worth saving. > Lots of people lost their savings in the Great Depression. Which is precisely why we built systems to prevent that failure mode from happening again. They worked.
  - dumbfoundded 4y ago
    I agree that the Fed was right in letting these crypto scams fail. The problem inherent to the system is inflation. As the Fed expands its powers, it can avoid significant recessions/depressions but one day it won't work and the dollar will fail like every other fiat currency in the world has eventually failed. This system "working" isn't eliminating risk, it's polarizing it. I wrote a longer comment a year ago but here's a piece: "The price of gold was $45/oz in 1970. 52 years later it's $1,800/ounce. That's roughly 7.6% a year or 45x increase. If you use the inflation provided by the government, CPI, (1), they say inflation is only 3.6%/year or roughly 7x since 1970. Obviously we have a discrepancy. Is the dollar worth 45x less than 1970 or 7x times? When we look at prices of things like education, housing, and healthcare, the 45x number makes a lot more sense. Education has 30x in price over the same time period (2). If you're comparing prices in dollars, it feels like education got really expensive compared to the basket of goods the BEA tracks but in reality, education requires less gold than it did in 1970. Our incredible supply chains and manufacturing automation have lowered most consumer prices such that we don't really notice inflation but when you look at things that can't get much cheaper like housing, healthcare, education, asset prices of all sorts, you can't miss the fact that they correlate more closely with gold than the USD." (1) https://news.ycombinator.com/threads?id=dumbfoundded&next=29871850 https://news.ycombinator.com/threads?id=dumbfoundded&next=29...