Before government started insuring deposits, setting reserve requirements, and regulating banks, speculating with customers deposits was common. Often the banks were more risky than the businesses they were financing. In the 19th century there were huge numbers of bank failures in the bank crises of 1819, 1825, 1837, 1857, 1873, 1884, 1890, 1893, and 1896. In fact, bank failures were so common that few people used them and those that did would certainly not put all their money in one of them. Middle class workers and labors would hide their money at home in cookie jars, and safes. Business would spread deposits of gold and paper money between banks and safes. In short, people did not trust banks and financial organizations. Most people that had money only invested it in real assets such as gold, real estate, or businesses they or their family owned. The type of economic expansion we saw in the 20th century would have been impossible without the banking acts that the states and federal government began passing in the late 19th century.But they did not do those things in the past. They started doing it when gov't insured deposits and relieved them of the burden of being responsible.Advertising??OK, let's play.Imagine an American in which people were wary of putting their money in banks or putting their retirement savings in the hands of financial institutions, an America in which businesses were free to use any tactic to sell their products with no fear of government intervention. That's not an America where I would want to live.No, I'm referring to our government's responsibility to keep our free markets free of corruption and protection of the health and safety of the public; specifically full disclosure of investor information so it's available to not just to the wealthy and power but all Americans, banking regulations that guarantee the safety of deposits, product regulations particularly health and safety that insure that the food we eat and our medicines are safe, and protection of our most precious resources, the air we breath and water we drink.
Well, you're wrapping up quite a bit there. Transparency in trade is important, and I'd agree the state has a responsibility to punish fraud. But "safety" is dubiously subjective. "Protecting" people from their own willingness to accept risk isn't a coherent concept. If I'm willing to drink raw milk, or try out drugs that haven't yet been approved by government, why shouldn't I be allowed to do that?
To be blunt, I simply don't buy the idea that government is there to protect us from our own ignorance. That's rationalizing tyranny.
I have no problem with taking risks in business or investing as long I'm not playing with a stacked deck. However, when it comes to the health and safety of my family, I'm not a risk taker and I doubt many other Americans are.
Let's say you had an America where people didnt want to put money in banks. What would banks do? Sit there and go out of business from lack of funds?
Or would they respond by advertising how solid they were? Because this was the situation prior to FDR. There was no insurance. Banks and their directors were responsible for depositors' money. One bank went so far as to have physical gold in sufficient quantity to cover depositors' funds. They displayed it in the lobby.
The problem with libs is they think without government programs people would just sit on the curb and wait to die.
There is no reason to think that banks and other financial institutions wouldn't do what they have done in the past without regulation, push their reserves lower and lower and take added risks in pursuit of profits until a break in the economy pushed them tumbling down destroying public and investor confidence. A pure capitalist economy would be a boom and bust economy, an economy in which long term growth would be impossible because long term growth requires long term business planning which is impossible without economy stability.
What those that argue for a pure capitalist economy ignore is that government will always do more than protect property. Capitalist would pressure government to intervene in business matters, possibly over unfair trade practices from abroad or strikes disrupting the economy. There would always be reasons for powerful businesses to corrupt government and pure capitalism would become pure fantasy.
People in business are always rent-seeking and trying other ways to keep out competition and make their products immune. Fuck them.
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