cbirch2
Active Member
- Jul 9, 2011
- 1,394
- 49
- 36
SO you agree you are one dumb motherfucker. That's a good sign.
The gov't does not have infinite borrowing capacity. We already have experienced a downgrade with others on the way. Your plan will render our bonds junk and financing will be difficult.
Your plan makes too big to fail and moral hazard enshrined in our systems. We will face the same crap again in 10 years, as companies figure the gov't will just bail them out. They will start making loans that will make subprime look like triple A credit loans.
That isn't a cure. That's worse than the disease.
The actual way to cure this is to arrange an orlderly liquidation of property via another RTC type corporation with an actual drop dead date. Quit threatening to sue the banks and give them immunity on foreclosure proceedings. Some banks will go under. Others will survive.
Going forward make clear we will not bail out anyone. Remove FDIC guarantees of savings deposits and make banks publish clear statemens of their financial condition.
You sound like a child when you insult people. Actually you sound pretty retarded in this situation.
But i realize that the government does not have infinite borrowing capacity. Thats why i said that the government should do this until the bond market signals, through rising interest rates, that it is becoming less interested in financing debt.
But your claim that the bond market will rate our bonds as junk is bullshit. Rates on treasury bills are at record lows, the market has been more than willing to finance US debt. The S&P downgrade was a result of pessimism about our political situation. It was a statement that S&P feels that its less likely we need to make the changes now to not have a debt problem in the future.
We do not have a debt problem right now, not as far as the people buying the debt are concerned.
If you simply allow collapses you lose real wealth. Do you know anything about fractional banking? A bank leverages its assets. Letting a bank collapse and then liquidating its assets will cause a loss in real wealth because the amount of its assets are less than the amount people have in checking accounts there, this is the difference between M0 and M1.
Just because you know big words like liquidity doesnt mean your right. You dont know how the fractional banking system works.
OK so first you say that we dont have infinite capacity to borrow. Then you claim that we do because the market is still valuing our bonds. Of course a good part of that is the flight to safety from European bonds. We are the best of bad alternatives.
I dont know what you are calling "real wealth." As opposed to, Fake wealth? Ersatz wealth? Paper wealth, which is all that bank loans are. Is real wealth destroyed when bank loans are called or is it destroyed when the loan goes bad?
Your posts are a muddle of half truths, untruths, poor English, and plain confusion. I'll bet you're an Obama voter.
Again, i still havent said we can spend infinitely. I said we can spend MORE. Yields on treasuries are low, so the bond market would be perfectly willing to finance a higher level of government spending, not an infinite one. Eventually if we spend too much yields will rise, but were far from that point right now. In september yields hit record lows.
"Real" as opposed to "Nominal". Those are two basic economic terms you should learn....
But im just trying to say that because of our fractional banking system, in which banks leverage their assets to issue loans, the amount of actual assets in the bank is less than the amount people have deposited.
The difference between the assets of the bank and the money in its checking accounts, the difference between the monetary base measures M0 and M1, is real wealth as opposed to nominal wealth, as conservatives seem to think it is.
So if you let a bank collapse you can liquidate its assets, but its depositors will still lose most of their money. that money is real wealth that has vanished with the trust of the bank, as opposed to just nominal wealth created by trickery.
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