More government power

[msmith198025]

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032302830_pf.html

Does anyone else think this is a bad idea? We are giving them more and more power. Where does it stop?

[cybok0]

Well we know some businesses can't run things without asking the government for help.

They're just skipping the middle man.

[msmith198025]

The thing is though, the way they are trying to do it, they (the companies) will not be asking for help. The feds can just seize them

[fallout2600]

People wanted regulation, here it comes....Its not seizure as much as accessibility to the company's accounting books to analyze the risk they are taking and the effect it will have short/long term on the market and prices.

[cybok0]

IMO if they take over companies like AIG or Freddy-Mac who did/will collapse, I really don't have a problem with that.

But if a company who is very strong is business, and they go after them, well I do have a problem with that.

Quite frankly what has AIG, Freddy-Mac or Fanny-Mae done for this country? They put us in a tailspin.

[fallout2600]

I got no problem with it unless they over reach.....we need to prevent these bubbles from destroying our wealth.

[froggigger]

I got no problem with it unless they over reach.....we need to prevent these bubbles from destroying our wealth.

I have a big problem with it if they reach at all. Every "reach" takes us further and further from a free market and capitalism. Capitalism is nearly recognizable here already. Government needs to stop trying to eliminate failure with bailouts and takeovers. Failure is what prevents bubbles and is a necessity in a free market. Government control of the money and playing with the tax code for political purposes plays a big part, too. People have had the "goodness" of government shoved down their throats for so long they rarely even question the motives. Government is the problem. We have been over-governed, over-regulated, and over-taxed. More of it will make everything worse. Sadly, it may already be too late to fix.

[fallout2600]

Sadly, it may already be too late to fix.

I feel we are too late and that is why I see no other choice than heavy regulations to pull us out. We have allowed companies to get so big that they can take down the entire system. Example: The DOW 30.....why the hell is my long term retirement investments dependent on 30 companies? That is just asking for failure....Now, in no way am agreeing with Turbo Tim and his plan, but what other choice do we have? How else do we fix the banks?

[froggigger]

I feel we are too late and that is why I see no other choice than heavy regulations to pull us out. We have allowed companies to get so big that they can take down the entire system. Example: The DOW 30.....why the hell is my long term retirement investments dependent on 30 companies? That is just asking for failure....Now, in no way am agreeing with Turbo Tim and his plan, but what other choice do we have? How else do we fix the banks?

Heavy regulation to pull us out?? That's what got us to where we are now! We are regulated to death and government spending is around 40% of the sum of all wages and salaries, profits and interest earned in the USA. This doesn't include off-budget spending or the bailouts. Think about what this means. More than 40 cents of every dollar of output is taken by government whether the producer of the money wants to or not. It's given to the government only because the donor wants to sleep at home and not the county jail. This is a huge violation of the freedom to use one's own income to dispose of as he sees fit.

There are 15 federal cabinet departments of which 9 exist for the very purpose of interfering with housing, transportation, health care, education, energy, mining, agriculture, labor, and commerce. All of these entities run roughshod over many economic freedoms of the individual.

Then we have over 100 federal agencies and commissions. The list is long: IRS, FDIC, EPA, FDA, SEC, FTC, FCC, FEMA, FAA, INS, OHSA, NTSB, EEOC, DEA, NIH, NLRB, etc. etc. etc. Add to that the Federal Register which contains 73,000 pages of detailed government regulations. That's 10,000 more pages than existed in 1978. It's also the time that the NY Times says is "tilted in favor of business deregulation and against new rules." More myth propagation.

Lets also not forget that to all of this must be added the further massive laws, departments, agencies, and regulations at the state and local level. All this proves that the USA is so far removed from the free market that it's not even debatable. The ability to ignore all of the massive government interference that exists today and to characterize our economic system as one of laissez-faire and economic freedom is, if not profoundly dishonest, absolutely delusional.

And you see "no other choice than heavy regulations to pull us out"? That's the last thing we need.

[vurbano]

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032302830_pf.html

Does anyone else think this is a bad idea? We are giving them more and more power. Where does it stop?
When Obama has instituted Communism.

[froggigger]

I feel we are too late and that is why I see no other choice than heavy regulations to pull us out. We have allowed companies to get so big that they can take down the entire system. Example: The DOW 30.....why the hell is my long term retirement investments dependent on 30 companies? That is just asking for failure....Now, in no way am agreeing with Turbo Tim and his plan, but what other choice do we have? How else do we fix the banks?

So how do we fix it? Get government the hell out of the way. Stop rewarding failure. Regulations do not make for sound banking. Sound banking is impossible with fiat money, fractional reserves, and central banking. The answer to fixing the banking problem is actually quite simple, but implementation will be the problem. It will be fought tooth and nail by power-hungry politicians.

Here's the answer, short and sweet. Return to the gold standard with banks holding gold equal to 100% of demand deposits, liquidate the Federal Reserve, abolish the US Mint, and abolish the FDIC. This will prevent government from standing behind bank inflation, and will prevent government from trying to stem a healthy storm of bank runs. It will guarantee banks remain sound and non-inflationary.

Will it happen? Hell no. The people are begging for socialism and they're going to get it.

[fallout2600]

So how do we fix it? Get government the hell out of the way. Stop rewarding failure. Regulations do not make for sound banking. Sound banking is impossible with fiat money, fractional reserves, and central banking. The answer to fixing the banking problem is actually quite simple, but implementation will be the problem. It will be fought tooth and nail by power-hungry politicians.

Here's the answer, short and sweet. Return to the gold standard with banks holding gold equal to 100% of demand deposits, liquidate the Federal Reserve, abolish the US Mint, and abolish the FDIC. This will prevent government from standing behind bank inflation, and will prevent government from trying to stem a healthy storm of bank runs. It will guarantee banks remain sound and non-inflationary.

Will it happen? Hell no. The people are begging for socialism and they're going to get it.

frog, Don't get me wrong, I completely agree with everything you are saying. This country was set on a course for disaster when we abandoned the gold standard. No doubt. I've had enough of the price fixing and centralized planning by the govt.

But to keep it real and drop ideology for a second, how was sub-prime allowed to be invented and used if we had too much regulation? How was Bernie Madoff allowed to scheme for almost a decade if their was too much regulation?

Even Ron Paul or other Austrian economist will say that we can't have a Free Market with absolutely no regulation, there has to be some regulation. The question is, where does the regulation apply? I got no problem with the central govt regulating how much risk financial companies that are to big to fail can take. Had AIG been properly regulated, could we have prevented 40-50% wealth destruction? This doesn't mean the govt has to regulate everyone and everything. You can still invest and trade with any risk level you want to take. Thomas Jefferson warned of allowing the bankers to run the world. Complete deregulation of big financial outfits would allow them to run the world, invent risky products such as sub-prime and destroy our wealth while increasing there's. Of course, this doesn't touch on the topic of the Fed or fiat money which is the root cause of everyone's wealth destruction...

[cybok0]

frog, Don't get me wrong, I completely agree with everything you are saying. This country was set on a course for disaster when we abandoned the gold standard. No doubt. I've had enough of the price fixing and centralized planning by the govt.

But to keep it real and drop ideology for a second, how was sub-prime allowed to be invented and used if we had too much regulation? How was Bernie Madoff allowed to scheme for almost a decade if their was too much regulation?

Even Ron Paul or other Austrian economist will say that we can't have a Free Market with absolutely no regulation, there has to be some regulation. The question is, where does the regulation apply? I got no problem with the central govt regulating how much risk financial companies that are to big to fail can take. Had AIG been properly regulated, could we have prevented 40-50% wealth destruction? This doesn't mean the govt has to regulate everyone and everything. You can still invest and trade with any risk level you want to take. Thomas Jefferson warned of allowing the bankers to run the world. Complete deregulation of big financial outfits would allow them to run the world, invent risky products such as sub-prime and destroy our wealth while increasing there's. Of course, this doesn't touch on the topic of the Fed or fiat money which is the root cause of everyone's wealth destruction...

:thumbup::thumbup::thumbup:

[vurbano]

I wish Ron Paul were a little younger and not so far right? Whatever it is. His views are just unattainable. Its nice to have dreams though I guess.

[froggigger]

frog, Don't get me wrong, I completely agree with everything you are saying. This country was set on a course for disaster when we abandoned the gold standard. No doubt. I've had enough of the price fixing and centralized planning by the govt.

But to keep it real and drop ideology for a second, how was sub-prime allowed to be invented and used if we had too much regulation? How was Bernie Madoff allowed to scheme for almost a decade if their was too much regulation?

I'm not saying investors and CEO's are blameless. They made critical mistakes. However, one would have to be blind to not see that Federal regulators hold a lot of blame also, arguably most of the blame. Regulations exist to limit activities of people in the marketplace. The players in the financial markets will always find ways around, or loopholes in, regulations. This makes regulations ineffective, which leads to calls for more regulation. Regulations by their very nature lead to unforeseen and unintended consequences that require more regulation, but only if if we insist upon governmental controls instead of regulation by true competition. Laissez-faire will regulate itself, no government necessary.

Sub-primes and other derivatives came about because government insisted people could buy houses, even if they couldn't afford them. The Fed gave bankers zero, and even negative, interest rates. Lenders were drowning in money, most of it fiat money. To get people to take out loans, banks lowered interest rates and the standards for credit worthiness. They bundled loans into tradable packages that were passed on to other investors, seemingly minimizing the risk. In reality, they were little more than junk bonds. Then, it was fed by climbing housing prices using all the Federal Reserve fiat money. Add Fannie and Freddie guarantees to the mix and it's a disaster waiting to happen.

At the same time, consumer debt went up 25% between 2003 and 2008. Since the Fed kept interest rates low, there was little incentive to save but big incentives to borrow and consume today. Real income only increased 2% during this time. Debt burdens rose dramatically.

Today, the very same people in DC who are responsible for the mess want even more regulatory authority to "repair" the very same housing and financial markets that they had undermined with their previous actions. The same Federal Reserve System that produced the monetary excesses that generated the artificial bubbles is still flooding the financial markets with even more fake money. Over the last five months they have increased the Monetary Base by 95 percent and M-1 by almost 40 percent at an annualized rate. The bottom line is that the banks did things they would never have considered doing if the risks weren't minimized by government regulations. We are regulated to death and I just can't see how more of the same will fix anything.

Government regulation restricts a shareholder's property rights and results in harsh, unintended consequences on the business' ownership structure. It also negatively affects the organizational architecture's efficiency. The shift of control from shareholders to managers illustrates this and results in management having little incentive to act upon what's best to uphold shareholder principles. Loopholes are found, rules are not enforced so are ignored, government creates new regulations to "fix" these problems, new loopholes are found, rinse and repeat. Suddenly, there are so many rules and regulations that overlap and contradict that no matter the course of action taken by a private sector entity it will likely run afoul of some regulation and may not realize it. And you want more??

Madoff is a financial genius. Unfortunately, his scam was rooted in cheating and stealing. Ponzi schemes have been around forever, and they always fail to the originators complete disgrace. There is no better example of how moral laws are self-enforcing in economics. What sets Madoff apart from the rest is that he ran his scheme in an economic boom to a grand scale. The kicker is that the government is using the exact same tactic to convince us that we are being saved from a recession. This denies reality just as Madoff's scheme denied it. Both are based on the same idea, that something out of nothing is possible. Think about it. How can anyone seriously believe that trillions of dollars can be conjured up to stabilize the economy with a click or three on a computer screen.


Even Ron Paul or other Austrian economist will say that we can't have a Free Market with absolutely no regulation, there has to be some regulation. The question is, where does the regulation apply? I got no problem with the central govt regulating how much risk financial companies that are to big to fail can take. Had AIG been properly regulated, could we have prevented 40-50% wealth destruction? This doesn't mean the govt has to regulate everyone and everything. You can still invest and trade with any risk level you want to take. Thomas Jefferson warned of allowing the bankers to run the world. Complete deregulation of big financial outfits would allow them to run the world, invent risky products such as sub-prime and destroy our wealth while increasing there's. Of course, this doesn't touch on the topic of the Fed or fiat money which is the root cause of everyone's wealth destruction...

I'm not sure exactly what Paul advocates but Austrians believe in laissez-faire. State power is limited to the protection of the individual's rights against physical force. This protection applies to the initiation of physical force by other private individuals, by foreign governments, but, most importantly, by the individual's own government. In true laissez-faire capitalism, the state consists essentially of a police force, courts of law, and a national defense establishment, which deter and combat those who initiate the use of physical force. That's it. Nothing more.

Complete deregulation would do exactly the opposite of what you claim. Property rights would be reinforced, and all rights are based on property rights. The owner uses his property as he sees fit, is fully responsible for his actions, and realizes gain/loss from the property. Using the property efficiently is always the goal. Otherwise, he suffers the losses. IOW, if owners feel that their property rights are not well-secured and well-defined, their incentives to make an efficient use of their property will be reduced. The same holds true whether control is in the hands of a private owner or shareholders.

Now introduce government into the mix. Government regulations are always restrictions on property rights. They are nothing more than commands and prohibitions that restrict the actions of the owner. This holds true even if the actions that are regulated do not infringe on another's property. Government regulation is either violent appropriation, like taxes, or virtual appropriation, like rent control or insider trading laws. Whatever the case, it forces the owner to use his property in a different manner than he otherwise would. Incentives to make the most efficient use of property is reduced by the imposition of government regulations. Rent controls and income tax are two excellent examples.

Sorry for the long post. I was rolling. :)

[fallout2600]

Complete deregulation would do exactly the opposite of what you claim. Property rights would be reinforced, and all rights are based on property rights. The owner uses his property as he sees fit, is fully responsible for his actions, and realizes gain/loss from the property. Using the property efficiently is always the goal. Otherwise, he suffers the losses. IOW, if owners feel that their property rights are not well-secured and well-defined, their incentives to make an efficient use of their property will be reduced. The same holds true whether control is in the hands of a private owner or shareholders.


Great post frog! The above paragraph is what I was missing in my head. It puts the power in the hands of the property owner, but doesn't allow the owner to over-leverage his property.

[froggigger]

Great post frog! The above paragraph is what I was missing in my head. It puts the power in the hands of the property owner, but doesn't allow the owner to over-leverage his property.

Now if we can just convince the other side of this basic truth. :hatsoff: