Ron Paul: The Moral Hazard of Regulation

[Ravi]

Without owning the risk?? If I recall, you advocated the bailout.

Rav, the point of setting rates that low is to spur as much lending as possible. When you restrict banks from making certain loans, that pretty much defeats the purpose of lowering the rates. They go hand in hand.

And since we can probably all agree that this type of housing mess won't happen again, at least in our lifetimes, what do we do about the fact that the Fed can still create new money at will?

I mean, there won't be another housing bubble, but when the next bubble happens because of the excess money, do we argue for more regulation in whatever sector is affected and continue to ignore the Fed's policies?

Sooner or later Rav, you have to face the music on this. Cheap credit is a perpetual economic downfall. Everytime we enter an economic mess, the answer is lower rates, print money, and spur borrowing and spending. This of course leads to more boom and busts.

How long are you willing to endure the same game being played by the same men, merely wearing a different uniform each time?

I did advocate the bailout, reluctantly, because I honestly think without it the world's economy would collapse. You may see that as a good thing, but I don't.

But what I meant by owning the risk was forbidding banks from lending in the morning shaky NINAs and then selling them off in the afternoon. IF they hadn't been allowed to do this, we wouldn't be in this mess. The only banks in danger of failing would be the ones that gave the loans...and I doubt they would have given them if they couldn't sell them.

But I'll accept there are probably more ways than one to fix this type of problem, I just think this is the easiest and least expensive way (not the bailout, the regulation).

 

[Paulie]

I did advocate the bailout, reluctantly, because I honestly think without it the world's economy would collapse. You may see that as a good thing, but I don't.

But what I meant by owning the risk was forbidding banks from lending in the morning shaky NINAs and then selling them off in the afternoon. IF they hadn't been allowed to do this, we wouldn't be in this mess. The only banks in danger of failing would be the ones that gave the loans...and I doubt they would have given them if they couldn't sell them.

But I'll accept there are probably more ways than one to fix this type of problem, I just think this is the easiest and least expensive way (not the bailout, the regulation).

I understand where you're coming from, but that is a market action. The only reason you say they shouldn't have been able to sell the mortgages is because of hindsight. Otherwise, there's nothing illegal about what they did, nor should there be. You're trying to get a VERY socialist agenda by advocating making something like that illegal.

It still ignores the point that borrowers should have been smarter. It also ignores the fact that there will still be more boom and busts in the future for the very same reason that this one happened. You can regulate the banks all you want, but that will not stop the problem of excess money looking for a place to inflate an asset.

I suppose you'd rather just take complete control of the market, and restrict people from making any kind of investment decision that the government doesn't deem "safe"? Since when was the government that trustworthy ANYWAY?

It wouldn't matter anyway. You can make all the restrictions in the world, that money will find somewhere to go regardless.

 

[Paulie]

Wow just wow, you have NO idea what you are talking about.

All of the states have auto dealers licenses.

What the fuck does that even mean? I made a comparison between home buying and car buying. Car buyers get screwed everyday by shady sales deals, and clever financing. I don't see anyone complaining about that and calling for strict regulations. Because it hasn't caused a "crisis". I suppose if it did, you'd be up in arms demanding an iron fist.

You also contradict yourself by saying "Everywhere you go, everywhere you shop, is virtually a free market" then you say "And this market is not "free". Get that through your fucking head".

Virtually a free market still means it is not a FREE MARKET, it is VIRTUALLY a free market. Small markets in your community are VIRTUALLY free markets. There is very little regulation in your convenience store shopping, for instance, but it is still not a TRUE free market because you are required to use only one currency.

Get THAT through YOUR fucking head, dummy.

What I asked for was an historical example of a time when an unfettered market worked in the favor of a democracy.

You are lost.

There were periods throughout the 1800's where there was great prosperity. Specifically after the Lousiana Purchase. This is when the country grew into the economic power it is today, and there was no Federal Reserve, no interest rate manipulation, and no government regulation controlling people's decisions.

People are going to make mistakes. They are not perfect. The point is that you LEARN from them, and become smarter consumers because of it. The government is not perfect either, and to have them control your decision-making, you are giving up a freedom you were intended to have in this country. The freedom to succeed, and the freedom to fail.

Now, run along and cheer on your new president. You're boring the shit out of me in this thread.

 

[Truthmatters]

Name one of the pockets so we can examine them.

This is what I hear every time from "free markets are magic" people.

They always find any example they give is not free enough and thats why it didnt work.

There has never been a time in history where a free market produced the kind of Democratic prosperity that you claim it will.

Get me specific years in a specific country and we will discuss its merits.

Until then you have nothing.

 

[editec]

There were periods throughout the 1800's where there was great prosperity. Specifically after the Lousiana Purchase. This is when the country grew into the economic power it is today, and there was no Federal Reserve, no interest rate manipulation, and no government regulation controlling people's decisions.

And our government made from 50% to 90% of it entire revenues from?

TARIFFS!​

Yeah, that's right folks.

And behind those protective tariffs we built our nation into the most powerful one in the world, and our economy into the most powerful one in the world, too.

Did you know that there was no incomes taxes until we started practicing FREE TRADE?

In 1913 (that date sound familiar, libertarians and anti FED banks people?) Cordell Hull drafted this nations first INCOME TAX bill.

His idea (he was a free-trade idealogue) was to REPLACE THE REVENUE THIS NATION GOT FROM TARIFFS AND REPLACE IT WITH A TAX

TheUNDERWOOD TARIFF ACT of 1913, slashed tariffs and imposed the FIRST PERMANENT INCOME TAXES.

FREE TRADE? Hardly

the term: "Free trade" is a perfect example of an Orwellian BIG LIE.

 

[Paulie]

And our government made from 50% to 90% of it entire revenues from?

TARIFFS!​

Yeah, that's right folks.

And behind those protective tariffs we built our nation into the most powerful one in the world, and our economy into the most powerful one in the world, too.

Did you know that there was no incomes taxes until we started practicing FREE TRADE?

In 1913 (that date sound familiar, libertarians and anti FED banks people?) Cordell Hull drafted this nations first INCOME TAX bill.

His idea (he was a free-trade idealogue) was to REPLACE THE REVENUE THIS NATION GOT FROM TARIFFS AND REPLACE IT WITH A TAX

TheUNDERWOOD TARIFF ACT of 1913, slashed tariffs and imposed the FIRST PERMANENT INCOME TAXES.

FREE TRADE? Hardly

the term: "Free trade" is a perfect example of an Orwellian BIG LIE.

I don't agree with your position on tariffs. Having the government manage trade, rather than a competent market, means the government determines what businesses fail and succeed rather than consumers themselves.

Why do you not want the people to control the market? Instead of advocating for more government control of markets, you ought to be trying to educate your peers and your fellow citizens on how to manage their money and make better informed decisions.

You spend so much time trying to exhonerate consumers for the failures in our marketplace, but then simultaneously state that you think consumers are too incompetent to manage the market and make their own decisions.

You are a defeatist, and because you are, you feel that only government knows best how to manage this market. That we, as consumers, are too incompetent to be able to make our own decisions.

Maybe you want to live in a society where consumers are considered beneath the bureacracy, but I don't.

Enjoy the rising prices from the international TAXES being collected on imports here, Editec. That's a FANTASTIC idea.

 

[Kevin_Kennedy]

Tariffs also hurt the southern states at the time, being that they were mostly agricultural as opposed to the far more industrialized north. They had to import a lot of their goods and high tariffs made everything very expensive. This is the chief reason they tried to secede, and the cause of one of the most pointless and bloodiest wars in American history.

 

[Ravi]

No, Pauli, I don't want the government to take complete control of the market. Jeebus, get a grip and quit pretending someone that doesn't agree with Ron Paul is a socialist.

 

[Paulie]

No, Pauli, I don't want the government to take complete control of the market. Jeebus, get a grip and quit pretending someone that doesn't agree with Ron Paul is a socialist.

Rav, you have shown that your views are socialist. You want the government to regulate the decisions of consumers, and insulate them from the risks within the market. Risks that consumers ought to be educated enough to protect THEMSELVES from.

That, coupled with favoring taxes on higher income to be given to those with lower income, and advocating giving taxpayer money to failed businesses, and you've got yourself a dyed in the wool socialist.

I'm all ears though, as to why that isn't socialism.

 

[GigiBowman]

Rav, you have shown that your views are socialist. You want the government to regulate the decisions of consumers, and insulate them from the risks within the market. Risks that consumers ought to be educated enough to protect THEMSELVES from.

That, coupled with favoring taxes on higher income to be given to those with lower income, and advocating giving taxpayer money to failed businesses, and you've got yourself a dyed in the wool socialist.

I'm all ears though, as to why that isn't socialism.

hi paulitics. From reading this entire thread I have come to the conclusion....that some of us American's need to find a smarter country lol most of the people here have ruined it for the rest of us. They want Socialism, they want to be taken care of and they don't want to have to think.

 

[Paulie]

I like that I'm free to fail. When I fail at something, I learn from it and I become smarter because of it. It allows me to make a more informed decision the next time.

Why would anyone want that to be nullified in society?

What's so bad about failure, that we should insulate ourselves from it?

If I had signed an ARM, and I was on the verge of losing my house or already lost it, I would man up to my stupidity in falling for such a ridiculous offer. I would blame no one else but myself for it.

I would also never be stupid enough to take more money in a loan than I knew I was capable of paying back. Some people asked for X-amount from a bank, and the bank would actually come back and offer MORE than what was asked for, and the people would fucking TAKE it. How fucking RIDICULOUS is that?

Who's greedy? The banks for wanting to make as much money as possible, or the consumers for taking whatever the bank was willing to give them? Both parties were equally as stupid.

 

[GigiBowman]

I like that I'm free to fail. When I fail at something, I learn from it and I become smarter because of it. It allows me to make a more informed decision the next time.

Why would anyone want that to be nullified in society?

What's so bad about failure, that we should insulate ourselves from it?

I totally agree with you. What motivates me is that I want to learn and grow and be rich. Since I know that other people have done that it motivates me to be the best I can be. I do not want to be taken care of. I do not want to grow fat, lazy and complacent. I want to reach for the stars. If I fail...I try harder, I learn from it, I move on.....

Maybe it's a gene we have that 52% of the rest of the people don't????? lol

 

[Ravi]

Rav, you have shown that your views are socialist. You want the government to regulate the decisions of consumers, and insulate them from the risks within the market. Risks that consumers ought to be educated enough to protect THEMSELVES from.

That, coupled with favoring taxes on higher income to be given to those with lower income, and advocating giving taxpayer money to failed businesses, and you've got yourself a dyed in the wool socialist.

I'm all ears though, as to why that isn't socialism.

Okay, I suppose if you agree the military is also socialism you have somewhat of a point. But actual socialism is when the government owns the means of production.

I'm not interested in insulating people that make poor financial decisions from risk, I'm interested in insulating the innocent bystanders from having to assume those risks...and that's exactly what has been happening. The majority of the country is paying for the minority's stupidity.

 

[Care4all]

I totally agree with you. What motivates me is that I want to learn and grow and be rich. Since I know that other people have done that it motivates me to be the best I can be. I do not want to be taken care of. I do not want to grow fat, lazy and complacent. I want to reach for the stars. If I fail...I try harder, I learn from it, I move on.....

Maybe it's a gene we have that 52% of the rest of the people don't????? lol

most all of america wants the same thing....to improve themselves, make the most of themselves.....look at gates, buffet, heinz-kerry...all people on the left, who have made billions thru their own ingenuity and accord....

 

[Kevin_Kennedy]

Okay, I suppose if you agree the military is also socialism you have somewhat of a point. But actual socialism is when the government owns the means of production.

I'm not interested in insulating people that make poor financial decisions from risk, I'm interested in insulating the innocent bystanders from having to assume those risks...and that's exactly what has been happening. The majority of the country is paying for the minority's stupidity.

But what you don't seem to understand is that the federal government made it possible for the business' mistakes to hurt the innocent bystanders with their regulation, and expecting more government regulation to fix the problem is absolutely ridiculous.

 

[Ravi]

But what you don't seem to understand is that the federal government made it possible for the business' mistakes to hurt the innocent bystanders with their regulation,

How exactly?

 

[Zoomie1980]

How exactly?

A prime example were the "equity in lending" policies that essentially forced banks to loan money at rates and in amounts to people they never would have done so on their own.

 

[Ravi]

A prime example were the "equity in lending" policies that essentially forced banks to loan money at rates and in amounts to people they never would have done so on their own.

Sorry, that's simply not true. No one forced the banks to make NINA loans. They did it because they could sell them off immediately and make a profit.

 

[Paulie]

Sorry, that's simply not true. No one forced the banks to make NINA loans. They did it because they could sell them off immediately and make a profit.

No one forced consumers to accept them, either. We had all the power in the world to keep this from happening, by simply realizing how ridiculous an offer they were.

I've asked this before.. Who was more greedy in the end? The banks for wanting to profit off of a business decision, or the consumers for taking whatever was being offered to them, regardless of the consequences of not being able to pay it back?

You could make a good case for either one.

 

[Ravi]

No one forced consumers to accept them, either. We had all the power in the world to keep this from happening, by simply realizing how ridiculous an offer they were.

I've asked this before.. Who was more greedy in the end? The banks for wanting to profit off of a business decision, or the consumers for taking whatever was being offered to them, regardless of the consequences of not being able to pay it back?

You could make a good case for either one.

Sure you could. But none of these people that made bad mortgage decisions would have affected the market if the banks hadn't turned around and sold them again and again to the point where the entire economy hangs in the balance. They would have hurt the borrowers and the lenders that made them only.