Topic: Fractional Reserve Lending IS NOT bad - its unavoidable - page 2. (Read 12782 times)

I get the precrime bit.  I feel that I should be allowed to drive as drunk and as fast as I wish, through your neighborhood where your kids play.  No one should stop me from doing that no matter how likely it is that I'll end up killing someone.  Precrime is fundamentally wrong.  Let me kill someone, and *then* punish me.
AFTER the fact.  Am I getting it?

No. They committed fraud and should be convicted of that after the fact.

I can't understand why people start insulting others because of divergences of opinion.
Insulting is an aggressive action and aggression usually (lets forget now about cases of greed or power that are irrelevant here) is a manifestation of insecurity.

If someone is ignorant and like to stay that way and hates anyone that tries to help him, that is a case for ignoring him or, at most, to laugh, not to insult.

I'm not taking sides or thinking about anyone in particular. Just read some messages on this thread.

But banking done wrong is certainly a danger to everyone involved, at least those who deposit money.  See Ukyo's victims.  See Pirateat40's victims.
That's why hobby banking enthusiasts are discouraged from starting banks.  See?

In areas where those apply they are state run "businesses". Banking is supposed to be publically run. Plus banking done right should not be a danger to anyone (as opposed to your two examples).

If capital punishment is not bad they should allow me to do it.  Yet they don't.  I wonder why.

If running red lights like ambulances do is not bad they should allow me to do it.  Yet they don't.  I wonder why.

If fractional reserve banking isn't bad they should allow me to do it. Yet they don't. I wonder why.

Alright, we have some common ground.

But don't believe on owners (big or small) doing the right thing. History shows people usually don't do the right thing. Slavery ended not because of owners wanting to do the right thing: it's all about regulations. Hell, in the USA it was necessary to kill more than half a million people to end it.

I agree with efficiency and scale production, but on a monopoly the price has little to do with the cost of production. The monopolist extracts as much as possible from buyers.

I'm no believer on Rousseau good savage or the good human nature of anarchism. I hate power and authority, but I have no illusions, without public authority controlled by the people, mostly it would be hell on earth.

Could you allow, as a hypothetical, that the regulations were not put in place by people intent on causing harm?  That the regulations were arrived at after an entire human history of trial and error, by people who are no less intelligent or aware than us?  Is this at least theoretically possible?

Re. 2nd edit:  A good baker is not necessarily a good bakery owner, a good bakery owner is not always capable of running a chain, the guy who knows how to run a chain of bakeries doesn't always know how to bake.  See?

I believe you. We have it good. However, I believe that it could be better for everyone if the world had more economic freedom. As an American, I feel our struggling economy is a result of growing dead weight loss due to an over-burdensome government.

EDIT: I'm not nearly that old.  

EDIT: One thing I consider is that if individuals and businesses are not qualified to run their own affairs, then why is some bureaucrat with little understanding of how things actually work?

It sure is, but like I said, we're doing something wrong. Having seen some examples of unreasonable regulation, I do believe that it's a major part of the problem.

@Razick:  It's hard to figure out what's "too much" and what's "not enough" without some context.  Having never run an economy the size of US, I can't really say anything intelligent about the numbers (I'm guessing you're talking about this:  "Impact of Regulatory Costs on Small Firms," http://static.mgnetwork.com/rtd/pdfs/20110325_SBAregulation.pdf )

Re. "quality of life":  If you were born in the late '60s, there are twice as many people on this planet as when you were born.  Twice.  Getting a bit tight. Also, when you complain about declining standard of living in US, I'm assuming you're a US native.  I'm not.  Trust me, US has a ways to go  

I am talking about regulations in general. No, I would not get rid of all of those, but I do believe that in general, the more economic freedom we have, the more efficient the economy operates. Regulations can reduce risk, but they also introduce inefficiency. The "laissez faire" times may have been worse, but things were getting better at a faster rate. Quality of life in the US is falling, whereas it used to be rising quickly. We are clearly doing something wrong, and I think that a government that supports almost any rule that has a benefit, regardless of the cost, is a part of that.

I know several business owners (small business owners), and all of them are good people who try to do what is right for their employees and customers. However, they all spend an enormous amount of time and money making the government happy. One of them has about 5 employees, but one of the employees works full time just on regulatory compliance. That adds up to less profit, higher prices for customers, and lower salaries for employees.

EDIT: As for a monopoly being good. I don't think it's common and it's complicated to explain, but basically, when a firm sells a product or service, there is a point at which the average cost per product is as low as possible (efficient scale), and if the firm makes more or less than that many products, it costs more. One firm (a monopoly) might be able to dominate a small market and manufacture "items" for $100, but two firms might each have to spend $150 per "item" because they are not producing at efficient scale. So although the monopoly might overcharge, there is more waste, and maybe not even lower prices with two firms.

I'm okay with anti-monopoly regulation though because I think they are usually bad.

I think you are talking about regulations on social security, health insurance, consumer safety, worker rights and safety. Would you end all of them? A return to the glorious laissez faire times?
Free market rule: 14 hours working time, kids working in mines, corporations selling non-tested drugs, etc.
Do you really believe a monopoly can be good (governmental or "natural")?

Natural monopolies only occur in rare cases and in some cases can be a good thing. Most monopolies are created by government. Very few people would argue for no regulation, but the reality is that right now we have so much that it is smothering economic growth. According to the government's own estimates, (in 2008 I think) the average small business spent over $10,000 per employee, per year on federal regulations alone (according to the U.S. SBA). In addition to taxes.

Do you really think regulations provide enough protection to justify that? If a regulation protects "the economy" from $10,000,000 in loss but costs $20,000,000 to comply with, then it does more harm than good. The problem is politicians seem to ignore the costs of regulations and only look at the benefits.

I don't share all those suspicions about government and I don't agree with the conclusion on their failures.
The "free market" without central regulation usually ends with a monopoly, like standard oil or Carnegie steel: with no free market or accountability, only to serve the interests of the owner of the monopoly.

It's not money they don't have, it's money they do have! You can't physically have money that you loaned out, that's the definition of it being loaned out. Any bank that doesn't have fractional reserves, yet loans out money, would be counterfeiting, not the other way around. When you deposit money in a bank, you are letting them hold your money and loan it out, they even pay you (barely anything thanks to the Fed). If they loaned it out and kept it too, you'd be right, but they don't, which is the whole point of FRB. The only alternative is for deposits to sit around in a vault, doing nothing and for banks to loan out only their own money (does 35% APR on a mortgage sound nice?). It would be a waste, and for no reason other than principle.

EDIT: Also, I should point out that it is not fraud for you to do the same thing. Try it at home: Ask a friend if you can borrow $100 as long as you pay back $110 at the end of the year. Now invest $90 (simulating a 10% reserve requirement) on BTC Jam or in a bond. At the end of the year, pay them back. You've just engaged in FRB.


Now, as for the Fed: It's created by fiat and authorized to be the sole issuer of the nation's sole legal tender. It's chairman is appointed by the President and confirmed by the Senate. Membership is mandatory for all national banks. It creates regulations that are binding for all member institutions (all national banks). Maybe it's technically not a government agency, but the reality is quite different.

Now other than whether or not it's part of the government, you seem to be agreeing with me that interest rates are manipulated by the Fed and that that is part of the problems we're seeing which was my point, so I'm not sure what you mean here.

Quite the contrary.  I can not convince you of your errors, for above-mentioned reasons.  But your ignorance, combined with your humorless faith in the absurdities you believe, are excellent fodder for this edifying thread.  I can open this page in a browser and instruct the precious tot under my tutelage:  "Study your civics, pumpkin, or you'll grow up to be just as silly as solarion."  There may be tears, but the initial shock and dismay will guide my charge to a full, productive life.

And yes, solarion, complicated things are complicated, and so is our monetary system.  Though the egalitarian in me wishes that everything was accessible to everyone, the cruel reality does not agree.  There are things that the likes of you will not understand, such is this brutish life.
But don't let this get you down -- God don't make no junk!  If it wasn't for your ilk, who would dig our ditches and wash our dishes?  

...and this is why I had have you on ignore. You're in a discussion thread, but you don't wish to discuss.

I don't want to change you buddy, you're the perfect lambchop...just the way you are! The last thing I want is for you to have to focus on one topic for more than 5 seconds, when I know that deep down, you'd rather be out tracking down more senseless Internet memes.

"Complicated things are complicated" is no basis for a monetary system.

I release you from having to try to focus on complicated issues.  

I assume what you were trying to say is "I was pwnt.  Now ahmagonna bring up moar random shit and hope you take the bait."
Sorry, fail.


Waaaa?


http://en.wikipedia.org/wiki/Dollar


It's a temporal reality.  Time implies flux.  TL;DR:  Shit changes.


I can try to explain to you that the world isn't binary, that Federal Reserve is a complex entity
"... composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils..." ~wikip
...but i understand your craving for simple answers to complex questions.  Unfortunately, reality doesn't work that way.
Complicated things are complicated


Your points aren't salient, they're the same tired idiocy I have replied to time and time again.  I'm not trying to convince you of this for the same reason I don't try to convince a rock that it is a rock, for the same reason I don't try to persuade a mad man that he's not "a little tea pot, short and stout" -- it's a fool's errand.  But you are fun