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This is incredibly stupid. Letting just Lehman fail sparked 08 and bankrupted millions of middle class Americans, and banks are always sold after bank failures.

This is incredibly stupid. Letting just Lehman fail sparked 08 and bankrupted millions of middle class Americans, and banks are always sold after bank failures. The Fed had an extremely similar approach to what you propose in the late 20s, it was called liquidationism. It sparked the Great Depression, which was a terrible tragedy that destroyed millions of people’s lives, and through global aftereffects is arguably one of the main causes of Hitler’s rise to power. Destroying the economy is very bad

effingwewt 3y ago
[flagged]
- selimthegrim 3y ago
  Rich industrialists literally put Hitler in power and you’re sitting around saying he was making war on the banks
rendall 3y ago
> through global aftereffects is arguably one of the main causes of Hitler’s rise to power By the time of Hitler's rise, hyper inflation was over and German economy was stable and beginning to prosper. Here is one paper covering it https://blogs.lse.ac.uk/businessreview/2021/10/19/debunking-the-idea-that-interwar-hyperinflation-in-germany-led-to-the-rise-of-the-nazi-party/ https://blogs.lse.ac.uk/businessreview/2021/10/19/debunking-...
- javanissen 3y ago
  Hyperinflation isn’t the cited issue above - it’s the deflationary period from 1929-1932, which aligns quite well with the rise of the Nazi party. Both the GFC and Great Depression were deflationary.
  - Rury 3y ago
    Yes, it correlates, but deflation is not really the cause behind the rise of the Nazi party. Did you ever wonder why Hitler hated jews so much? Why antisemitism became very popular? Let me give you a hint, it had to do with banks, who ran them, and who owned almost all the wealth, along with a decade of economic woes for most folks. According to Arthur Bryant the British court historian writing in Unfinished Victory (1940 pp. 136-144): "even in November 1938, after five years of anti-Semitic legislation and persecution, they still owned, according to the Times correspondent in Berlin, something like a third of the real property in the Reich. Most of it came into their hands during the inflation.."
    - javanissen 3y ago
      How could a British journalist know, with any degree of credulity, what share of the national wealth was owned by Jewish people in Nazi Germany in 1938? The same government that massacred millions of Jews a few years later would have happily lied about Jewish wealth to justify their actions. Anyway, here’s [0] an article that disagrees with Bryant’s stated claim. [0] https://cepr.org/voxeu/columns/fiscal-destruction-confiscatory-taxation-jewish-property-and-income-nazi-germany https://cepr.org/voxeu/columns/fiscal-destruction-confiscato...
smugma 3y ago
We shouldn't let banks fail and destroy the economy. A key difference here is that bond and equity holders are wiped out, which helps reduce moral hazard. The broader concern is the privatization of profits while losses are absorbed by the government/public.
- deleted 3y ago
  [deleted]
- astrange 3y ago
  > The broader concern is the privatization of profits while losses are absorbed by the government/public. It seems like people just say this happened no matter what actually happens? Equityholders are always wiped out when the government takes over a bank or business. Not sure about bondholders, but the point of backing up a bank is to prevent losses to the public of their bank accounts and payrolls. For something like covid airline bailouts, equityholders got support but that's because the airlines have unions, not because the government loves airline shareholders.

effingwewt 3y ago

[flagged]

selimthegrim 3y ago
Rich industrialists literally put Hitler in power and you’re sitting around saying he was making war on the banks

rendall 3y ago

> through global aftereffects is arguably one of the main causes of Hitler’s rise to power By the time of Hitler's rise, hyper inflation was over and German economy was stable and beginning to prosper. Here is one paper covering it https://blogs.lse.ac.uk/businessreview/2021/10/19/debunking-the-idea-that-interwar-hyperinflation-in-germany-led-to-the-rise-of-the-nazi-party/ https://blogs.lse.ac.uk/businessreview/2021/10/19/debunking-...

javanissen 3y ago
Hyperinflation isn’t the cited issue above - it’s the deflationary period from 1929-1932, which aligns quite well with the rise of the Nazi party. Both the GFC and Great Depression were deflationary.
- Rury 3y ago
  Yes, it correlates, but deflation is not really the cause behind the rise of the Nazi party. Did you ever wonder why Hitler hated jews so much? Why antisemitism became very popular? Let me give you a hint, it had to do with banks, who ran them, and who owned almost all the wealth, along with a decade of economic woes for most folks. According to Arthur Bryant the British court historian writing in Unfinished Victory (1940 pp. 136-144): "even in November 1938, after five years of anti-Semitic legislation and persecution, they still owned, according to the Times correspondent in Berlin, something like a third of the real property in the Reich. Most of it came into their hands during the inflation.."
  - javanissen 3y ago
    How could a British journalist know, with any degree of credulity, what share of the national wealth was owned by Jewish people in Nazi Germany in 1938? The same government that massacred millions of Jews a few years later would have happily lied about Jewish wealth to justify their actions. Anyway, here’s [0] an article that disagrees with Bryant’s stated claim. [0] https://cepr.org/voxeu/columns/fiscal-destruction-confiscatory-taxation-jewish-property-and-income-nazi-germany https://cepr.org/voxeu/columns/fiscal-destruction-confiscato...

smugma 3y ago

We shouldn't let banks fail and destroy the economy. A key difference here is that bond and equity holders are wiped out, which helps reduce moral hazard. The broader concern is the privatization of profits while losses are absorbed by the government/public.

deleted 3y ago
[deleted]
astrange 3y ago
> The broader concern is the privatization of profits while losses are absorbed by the government/public. It seems like people just say this happened no matter what actually happens? Equityholders are always wiped out when the government takes over a bank or business. Not sure about bondholders, but the point of backing up a bank is to prevent losses to the public of their bank accounts and payrolls. For something like covid airline bailouts, equityholders got support but that's because the airlines have unions, not because the government loves airline shareholders.