Next Up, an Ownership Share in Banks

The Fed and Treasury are perplexed. Liquidity schemes like the TAF, PDCF, TSLF, TARP, ABCPMMMFLF, and the CFFF did not help stimulate bank.

Liquidity measures cannot solve the crisis or stimulate lending for reasons I've stated in Pushing on a String In Academic Wonderland and Thoughts On The Commercial Paper Funding Facility.

Paulson is foolish enough to force the issue and is threatening to take an ownership stake in banks to do it. From NYT:

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials. Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

The Treasury plan, still preliminary, resembles one announced on Wednesday in Britain.

My Comment:  Now it seems the US may abandon the TARP in favor of a

UK- style plan.

This new interest in direct investment in banks comes after yet another tumultuous day in which the Federal Reserve and five other central banks marshaled their combined firepower to cut interest rates but failed to stanch the global financial panic. ...

Yet the world’s markets hardly seemed comforted. Credit markets on Wednesday remained almost as stalled as the day before. Stock prices, which had plunged in Europe and Asia before the announcement, continued to plummet afterward. And stock prices in the United States went on a roller-coaster ride, at the end of which the Dow Jones industrial average was down 189 points, or 2 percent.

My Comment: The world’s markets hardly seemed comforted; 

global coordinated rate cuts won't solve the economic crisis

.

... Yet behind the scramble for solutions lies a hard reality: the financial crisis has mutated into a global downturn that economists warn will be painful and protracted, and for which there is no quick cure.

My Comment: Indeed there is no cure other than time, price, and replenishing the pool of savings.

“Everyone is conditioned to getting instant relief from the medicine, and that is unrealistic,” said Allen Sinai, president of Decision Economics, a forecasting firm in Lexington, Mass. “As hard as it is for investors and jobholders and politicians in an election year, this crisis will not end without a lot more pain.”

My Comment: That is one of the few reasonable opinions I have seen in the mainstream media for days on end.

Treasury officials worry that aggressive government purchases, if not done properly, could alarm bank shareholders by appearing to be punitive or could be interpreted by the market as a sign that target banks were failing.

My Comment: Now that's ridiculous. Anyone with half a clue already knows damn well that banks are failing. Those who don't won't know aren't paying any attention to what the Fed and Treasury are doing.

At a news conference on Wednesday, the Treasury secretary, Henry M. Paulson Jr., pointedly named the Treasury’s new authority to inject capital into institutions as the first in a list of new powers included in the bailout law.

My Comment: Who cares whether that's in the bill or not? Besides, it's perfectly predictable according to the

Fed Uncertainty Principle

Corollary Number Four, which states:

The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it's easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking.

Substitute the word "Treasury" for "Fed" in the above paragraph and you have a perfect match.

“We will use all the tools we’ve been given to maximum effectiveness,” Mr. Paulson said, “including strengthening the capitalization of financial institutions of every size.”

My Comment: Paulson and Bernanke are using all the tools and then some. However, none of them is effective.

The idea is gaining support even among longtime Republican policy makers who have spent most of their careers defending laissez-faire economic policies.

My Comment: We're all socialists now.

“The problem is the uncertainty that people have about doing business with banks, and banks have about doing business with each other,” said William Poole, a staunchly free-market Republican who stepped down as president of the Federal Reserve Bank of St. Louis on Aug. 31. “We need to eliminate that uncertainty as fast as we can, and one way to do that is by injecting capital directly into banks. I think it could be done very quickly.”

My Comment: The problem is not uncertainty. It is 100% certain that the system is insolvent. The problem is insolvency.

“The turmoil will not end quickly,” Mr. Paulson told reporters on Wednesday. “Neither the passage of this law nor the implementation of these initiatives will bring an immediate end to the current difficulties.”

My Comment: That is about the only thing Paulson has said for months that has made any sense whatsoever.

Fed officials increasingly talk about the challenge they face with a phrase that President Bush used in another context: “regime change.”

This regime change refers to a change in the economic environment so radical that, at least for a while, economic policy makers will need to suspend what are usually sacred principles: minimal interference in free markets, gradualism and predictability.

My Comment: Sacred principles? What a joke. The Fed itself is a violation of free market principles. We need a regime change all right. The best thing to do is abolish the Fed.

“The core problem is that the smart people are realizing that the banking system is broken,” said Carl B. Weinberg, chief economist at High Frequency Economics. “Nobody knows who is holding the tainted assets, how much they have and how it affects their balance sheets. So nobody is willing to believe that anybody else isn’t insolvent, until it’s proven otherwise.”

Carl B. Weinberg confuses the symptoms with the disease. The symptoms are tainted assets, insolvency, and mistrust. The cancerous disease is fractional reserve lending, the very existence of the Fed, and an unsound monetary system. The only cure is to eliminate the Fed, abolish fractional reserve lending, and put in place a sound monetary system backed by gold.

Comments

[I weep for ...:]

I can't believe all of this nonsense over AIG. IS EVERYONE STUPID! Obama made damaging reckless comments and didn't even look into the issue. The conference was set a year in advance and paid for by the marketing budget of the insurance companies which can not be tapped to pay back the loan from the FED and the FED loan money is not going into the insurance companies budget at all! Plus, the FED now owns AIG, even after AIG pays back the 100 plus billion dollar loan, the FED owns them. Why are we mad about a conference where 100 of their biggest clients were wined and dined by a 10 AIG employees that was paid for by the insurance companies? That is standard practice. The insurance company has a billion dollar marketing budget and needs now more than ever to keep their huge clients. The better AIG does the better tax payers will be when the FED sells the 79 percent interest later. Piling on against AIG is actually against every taxpayers best interest. We want them to thrive not go bankrupt you IDIOTS!

2008 Oct 09 07:18 AM

[Mr.G:]

I agree - but you dont need the govt to go on a gold standard -you can do it personally on your own today -

As for the govt buying banks it is a huge mistake -if the whole credit derivative markets unravel (many think this is only the beginning of a 59 trillion dollar mkt unraveling ) -the govt is now left holding the bag exactly like fannie and freddie but on a larger scale where investors will start trading the credit derivatives or loaning overnight with the implied notion that the junk cds 's or loans are govt backed -
they would be better off setting up 700 - 1 billion dollar banks which are whole -the banks are going off a cliff the US govt can easily get pulled over with it if they attach a rope to them like this -

2008 Oct 09 07:50 AM

[Alan von Al...:]

Er, 58, no one wants them to thrive. AIG was nationalized. Have to live on minimum wage plus annual bonus of $100 for perfect attendance, eat bologna sandwiches at their desks, punch a time clock, etc.

Mish, about fractional reserves. Grandpa Milton argued for privately-issued competing currencies, which I think is correct, however there's no reason to fear fractional reserves. Pretty basic to the concept of deposit taking. Competition keeps good institutions strong, tempts the cowboys to fail and lose everything.

Lastly, I wanted to mention gold. What we need most is gold lending at gold-priced interest. Have to repeal the "legal tender" doctrine.

2008 Oct 09 07:59 AM

[REal broker:]

There is such a thing as "doing the right thing"! There is no way in h*ll AIG has a any reason to "party" right now. The rationale of oh gee since the Insurance Group is doing well, there is no reason to punish them for what the Financial Services side of AIG did is absolute definition of arrogance on steroids. Your company just took $85,000,000,000.00 from the American people and had a nice little party, then came back and took another $34,500,000,000.00... simple decency and and self respect would suggest that maybe cancelling the "party" would be prudent in a time of crisis. Or do I have it wrong, it's a crisis for everyone else but you?!

You know what is coming next, dont' you! A big sh*t load of govt. regulations, and you will have only yourselves to blame.

I'm a big believer in capitalism, and now because of the unrepentant arrogance of a a relative few, we all have to endure the rath of Socialism.

2008 Oct 09 08:08 AM

[bbzz24:]

buying up banks should have been the only option.
why? better recapitalize and do not interfere in the pricing in the stuff they're trading and wipe partially or fully their shareholders for keeping morons and rewarding them with huge pay packages.
what do we get instead? every CEO stays in office and keeps his pay, the taxpayer is saddled with nonperforming assets and servicing the newly created 700bn debt.

2008 Oct 09 08:10 AM

[moonbat1775:]

Mr. Shedlock,
I agree that fractional reserve lending is bad particularly with a monopoly currency as we have now. It is IMMORAL under our current system. Even with competing currencies it is suspect but at least people could choose a 100% reserve currency instead. Thanks for considering the roots of this problem. God bless.

2008 Oct 09 09:40 AM

[SW Richmond:]

"Indeed there is no cure other than time, price, and replenishing the pool of savings."

Then bbzz24 said: "buying up banks should have been the only option.
why? better recapitalize and do not interfere in the pricing in the stuff they're trading and wipe partially or fully their shareholders"


Mike,
Please explain to this guy that we COULD recap the banks if we had savings (delayed gratification) to recap them with. But recap'ing them with printed new money (since we're already in debt up to our eyeballs) is mathematically pointless: if we could print genuine capital, we'd all be rich beyond our wildest dreams. In fact, just a year ago we thought we were.

bbzz24, can you see how it doesn't work?

2008 Oct 09 09:44 AM

[FromHK:]

The communism doctrine believes the society progression from slavery, to feudalism, to capitalism, to socialism and eventually the nirvana state of communism. The failure of capitalism is inevitable and the raise of socialism is just around the corner. The greed of capitalists and the deprevation of workers (or mortgage borrowers) are the root evil of the system. It looks like Marx is well on his mark:-) The irony is that at the brink of the capitalistic West is collapsing, the socialist countries like China, Russia and the Eastern Bloc are jumping headlong towards Capitalism. How funny. And did you note that China just announced last week that it's going to allow margin lending and short selling! Some guts to encourage leverage when credit problem is bankrupting the system around the world...

2008 Oct 09 09:59 AM

[User 276338:]

Taking part ownership in banking, insurance and other financial firms on the brink of bankruptcy is the biggest mistake the Government can make. The fact is that the promise of public "part ownership" and potential "future profit" for the consumer in these entities is a bluff to calm and hoodwink the consumer and prevent a revolt. The fact is that these corporations are sinking due to their direct or indirect participation in the pyramiding of mortgage-backed securities; thousands of derivative instruments that have really only promisory or speculative value and nothing tangible, and hence cannot generate real wealth and profit. The market is simply attempting to correct itself and shed all these valueless entities. Bailing them out now can only lead to a total collapse of the pyramid,10 or may be 30 years into the future that will be a real reckoning far worse than the correction necessary at this time. Everything that goes up must come down before moving further up, and cannot only go up indefinitely. So let us not build false public hope. The only Government intervention neccessary is strict financial services regulatory enforcement, which they have failed to do for a long time. The only legalized financial pyramid in the world cannot exist without checks and balances.

2008 Oct 09 10:09 AM

[Smarty_Pants:]

"the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system"

Hmmmm, aren't these the same people who can't deliver the mail without losing billions? Now they're going to run the banks? Great. Lucky us.

I'm sure this time "it's different" though. Really. It will be just fine.

2008 Oct 09 10:13 AM

[GeminiAtlas:]

bbzz24, totally agree.
The shareholders should be diluted for having these idiots as their captains. Then the gov't trust holding the equity can get first dibs on any stock buy-backs when the banks are well again in a few years (or decades!) But Paulson was just trying to help out his buddies by not decimating their equity stakes. But I guess that strikes at the deeper problem, rent seeking/lobbying of banks (or other corporations for that matter) of congress and regulatory capture. But of course, that then gets to a deeper problem (not talked about much problem) of congress continuously "tinkering" with the "free market" (I use that term loosely) necessitating the need of business interests to lobby congress to protect themselves from that very same congress, lest they be held at the mercy of overregulation and overtaxation. But the firms with better lobbying efforts and more congressfolk in their pockets get more subsidies and less taxes (i.e. unfair advantage) while the less politically connected get shafted. The distortions in the market propagate over the years until a often volitile "snap-back" occurs. So what does that mean? They should stick to the Constitution which means currency backed by gold or silver, and equal protection under the law, which also would imply equal treatment under the law i.e. no favortism to individuals or organizations (basically treat everyone the same in the tax code and ban subsidies, and clear rules of the market). This is a problem of both sides of the political spectrum. On the Left, more housing for the poor, coers..ahem, encouragment of the banks to make bad loans. On the Right, deregulation on an uneven playing field (which might be as bad as overregulation on an "even" playing field). So, the Right pushes for deregulation at the behest of the business interests. So these banks are not that dumb, they want these bad loans off their balance sheets. Enter stage right Wall street, "ok banks, we have a new thing called debt securitization." Wall street slices and dices these securities to a point where they are unrecognizable, which is not good for a market (keyword:transparency)... This set the stage for a positive feedback loop bubble and the rest is history currently being written.
Sorry for the lengthy rant, but there seems to be too much simplification in the mainstream media these days.

2008 Oct 09 10:49 AM

[alajac:]

A gold standard locks in the Fed`s hundred years of grand larceny, not to mention it will get hoarded exactly at the wrong times, leading to deflation and depression like it always has.

PROTEST THE FED`S EXTORTION RACKET
WITH A WRITE-IN ELECTION CAMPAIGN
TO REVOLUTIONIZE RESOURCE DISTRIBUTION AND TAXATION


The `HOW TO FIX THE ECONOMY` plan addresses three problems with America`s economic system which are destroying our economic security.
.
Problem 1.
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America`s National Debt is approaching 10 trillion dollars and the system is less than 100 years old. Nice work. If human bodies worked like America's currency supply, every time a kid grew a little he would need to take out a loan to buy a transfusion of new blood. We can easily replace Federal Reserve Debt-Money with debt-free U.S. money and pocket the difference.
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Problem 2.
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The Income Tax law was drafted by the same rich guys who invented the Federal Reserve system. They came up with a way to tax us `cash cows` while simultaneously avoiding paying taxes on their own wealth. A kid right out of college shouldn`t be paying a greater percentage of his accumulated wealth in taxes than Bill Gates. We need a flat, transparent, automatically-collecte... tax that produces results corresponding closely to `benefits previously received`.
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Problem 3.
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Thanks to automation, robotics and computers, the days of plentiful, highly-paid jobs employing vast numbers of manual and mental laborers are gone. Remember the days when there were millions of jobs that paid well enough to buy a house, two cars, an RV and a cottage on the lake...and still save plenty for retirement? If you do, then you`re pretty old. For most of us, those days are gone and they`re not coming back. To address this problem we need to either `kill off a lot of people` or else develop a new resource distribution model suitable for a world where jobs are rapidly going the way of `the buggy whip`.
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**********************...
.
HOW TO FIX THE ECONOMY
.
a plan to stimulate the economy, lower taxes, start paying off the National Debt, alleviate poverty and decrease crime
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by replacing our OLD economic system with a NEW system based on
- a new and debt-free U.S. currency to replace Federal Reserve Debt-Money,
- a 0.5% tax on electronic transfers to replace the Federal Income Tax and the IRS,
- and $1000 per month government privatization compensation for legal U.S. residents
.
The problem is always THE SYSTEM, never just `the people who screwed up`. Until we fix THE SYSTEM, similar bad things will keep on happening. Fault for the credit scam lies not with the banks and borrowers who lost their shirts and homes, but with our predecessors for allowing this SYSTEM to become and remain law, and with ourselves for not getting rid of it earlier.
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The primary problem with the OLD SYSTEM is that `our` money (actually the Federal Reserve`s Debt-Money) leaks its purchasing power like a bucket with a hole in the bottom leaks water. The Fed dollar currently buys less than 5% of what it bought in 1913. (To view a video that makes the problems inherent in our use of the Fed`s Debt-Money much clearer, do an online search for `Zeitgeist Fed`.) There is NO BENEFIT AT ALL in having a Central Bank (well, none for us) compared to having the U.S. Treasury print and distribute to ourselves our own debt-free money, and THE ONLY DIFFERENCE between having a central bank (like the Federal Reserve System) or not, is that ``One system costs us 95% of our wealth every hundred years and puts us and our posterity into mind-boggling debt until the end of time``... and the other one doesn`t. So the first thing we need for our NEW SYSTEM is our own, debt-free U.S. Government currency, backed by the value of all of the property within the nation`s borders. Bankers will tell you this will cause `the end of civilization as we know it`. It will certainly end it as THEY knew it.
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Another problem is that the OLD SYSTEM`s income-based taxation creates wasteful tax avoidance behavior, requires an expensive tax reporting industry and an intrusive collection bureaucracy, and is, arguably, a form of `involuntary servitude`. Under a NEW SYSTEM, we could replace all income-related taxes with a one-half percent, automatically-collecte... electronic transfer tax (also known as a `debit tax`) which would be avoidable by business transactions that used only cash or barter. This change will not only rid us of the IRS (saving us the billions of dollars that are currently spent on `tax reporting`), it will also end the OLD SYSTEM`s penalization of work and entrepreneurism, as well as freeing up further untold billions currently spent on `tax avoidance`. (Also inhibits market speculation.)
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The third problem with the OLD SYSTEM is that, because governments privatize all of their claimed property (allocating it however they like), everyone winds up being denied their natural right to free access to all property without being compensated for that loss. That`s not a problem for those with access to capital and property ownership, but for the rest of us, it is totally unfair and creates a slanted playing field upon which wealth tends to gravitate to the rich and well-connected. Free-market or socialist, every government`s allocation method results in `denial to everyone of free access to all land`, for which ALL governments should provide compensation.
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Consequently, our NEW SYSTEM should pay to every legal adult resident $1000 per month (of the new, non-Fed, non-Debt-Money) which can REPLACE ALL FORMS OF PERSONAL AND CORPORATE WELFARE AND SUBSIDIES, no financial qualification required and no restriction on earning additional income (saving us billons in Social Security and Welfare bureauracracy costs and leaving Congress very little to do). Compensation for minors should be held in a trust fund to avoid incentivizing `baby factories`. Since everyone gets the same amount of compensation, this plan does NOT redistribute wealth, but will be of most help to those with the least accumulated wealth.
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Besides its immediate and direct assault on poverty, the benefits of this part of our NEW SYSTEM should include a reduction in crimes of all sorts, more jobs at better pay, better childcare, more rural homesteading, better maintained urban areas, no more `homeless veterans`, less intrusive and cheaper government with lower military-related expenses and a safer world in general. We can expect residents of other countries to insist their governments either copy our NEW SYSTEM or else apply for U.S. statehood (as Texas did in 1845) as soon as the see how well this NEW SYSTEM works.
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HEALTH CARE...the AMA and FDA work to constrain competition in order to maximize the medical and pharmaceutical industries` ability to extort unconscionable prices for services and substances that should be affordable out-of-pocket. We need to train up thousands more doctors and other healthcare professionals and to decriminalize and unbridle access for adults to WHATEVER drugs adults feel they need and let the market work to make prices of normal medical help and pharmacology affordable.
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TO KICK OUR CRUDE (OIL) HABIT, Congress could add on a 10% surcharge at the gas pump, bump it up another 10% every 6 months, and rebate the surcharge revenue in monthly equi-dollar amounts to every registered car OWNER, regardless of how much they drive. The surcharge will incentivize cheaper alternatives which will rapidly come to market, no government subsidies or mandates required.
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HELP ME SEND THIS MESSAGE to candidates running for Congress in 2010 and 2012. ``In order to get elected, you will need to pledge to help us THROW OFF the predatory Federal Reserve System and devise a NEW SYSTEM, one that ``provides new Guards for our future Security``. We can send a very clear message to those candidates with a MASS WRITE-IN CAMPAIGN for an unknown candidate running for no other purpose than to send that message. (That`s where I come in.) With the major parties fielding candidates who seem to be decent people but who are apparently unaware of the damage the present system is causing to us NORMAL folk, and with the 3rd parties addressing only symptoms rather than the BAD SYSTEM at cause, this election is the ideal time to vote for REAL CHANGE, not just new faces. I will register as a write-in candidate in every state that allows write-in votes from which I get emails expressing support. Pass this message along to several people every day (or, even better, to everyone you know today, and to everyone you meet from now on). IF EACH OF US EVERY DAY CONVINCE EVEN ONE OTHER PERSON TO JOIN US, OVER ONE BILLION PEOPLE CAN BE `ON BOARD` IN 30 DAYS. Get out (and online) and DO IT! For questions or more info, email alan_jacquemotte@yahoo...
.
Tell Congress we need a TOTALLY NEW DEAL!
.
VOTE TO
Replace the Federal Reserve System
with U.S. Government Debt-Free Money
Replace the Income Tax with a small, automatically-collecte... flat tax
and Create Better Social Security for ALL
.
BY WRITING-IN
Alan Jacquemotte for U.S. President
(in states which allow write-in voting)
.
WRITE-IN VOTES CAN`T BE HACKED!
Make them hand-count your vote
.
MAKE COPIES OF THIS PLAN AND HAND THEM OUT
.

2008 Oct 09 11:56 AM

[moonbat1775:]

Alajac,

A rule of thumb to help straighten out your thinking:

1. Good ideas do not have to be forced on others.
2. Bad ideas should not be.
3. brevity is the soul of wit.

Your welcome.

2008 Oct 09 12:56 PM

[WAKEUP:]

Face it. The much-ballyhooed mechanisms of the stock market have failed. No, don't start, about how it was the individuals who were implementing the mechanisms who failed. Anybody who got control of that much money would have done the SAME THINGS, for the SAME REASON - - - GREED. It's inherent in the human race. So, now it's time to do the only thing that can be done (and it's clear that most investors still don't have their minds around this, yet); get the feds involved; after all, the federal government is the only thing left that's in a position to do anything. I keep reading and hearing about all this INVESTMENT CASH that's waiting on the sidelines to rush in at the appropriate moment and save the day. So, if THIS isn't the APPROPRIATE MOMENT, what will be the APPROPRIATE MOMENT? No, there is no cavalry coming to the rescue, and "no cavalry" includes the federal government. Federal government is not the cavalry, they are just the last line of anybodies who are actually available to DO SOMETHING. Call it socialism, call it anything you want to; we'd all be extremely interested to see SOMEBODY, ANYBODY from the "financial community" come forward with a workable plan, in place of this "socialistic" trend. But so far, all the much-praised "market forces" do is screw up the situation worse, every time they make a move.

2008 Oct 09 01:52 PM

[henarl:]

WAKEUP: So you don't think that the people who run the federal government are also driven by greed and thirst for power? After all, they too are members of that imperfect human race that is inherently driven by these baser instincts. This current system will eventually be replaced with another, equally immoral and unfair, one. That is how it has always been and such is the destiny of humanity. Depend on yourself not on any organization, governmental or otherwise.

2008 Oct 09 04:07 PM

[moonbat1775:]

"This current system will eventually be replaced with another, equally immoral and unfair, one. " henari

Why so? The Fed was created in 1913. That was a big step backwards. Why can't the good guys win one for a change?

2008 Oct 09 04:18 PM

[henarl:]

Good guys? Name one.

2008 Oct 09 05:08 PM

[TinyTim:]

Mish-
sounds like a plan to ensure monetary responsibility. eliminating fractional reserve lending reduces the need to expand the money supply due to interest on the lending, but does not eliminate it. gold works because it has limited growth and zero consumption, however 80% of it has been discovered in the last 100 yrs. Price stability occurs when economic growth plus interest is comparable to money supply growth.

Can't help noticing that all economic events now are in billions whereas 10 yrs ago they were in millions. What was that Senators quote about pretty soon we're talking real money? Well, we're there, it just doesn't feel like it. Anyone for a 10:1 devaluation?

The assumption is that ensuring monetary responsibility also ensures fiscal responsibility, like a balanced budget amendment. It's not at all clear to me that one follows the other.

2008 Oct 09 05:11 PM

[moonbat1775:]

Me.

2008 Oct 09 05:15 PM

[moonbat1775:]

henrari,

You have a point. The fractional reserve banking system corrupts virtually everyone. Ever got a bank loan? If you did you screwed someone via inflation.

An honest banking system is possible. Competing currencies are part of the solution.

2008 Oct 09 05:20 PM

[moonbat1775:]

Tiny Tim,
Who says price stability is a good thing? The natural result of human progress is falling prices in many things. This does not mean falling profits. Also, with competing currencies, we could have any number of commodities serving as reserves. I would insist on 100% reserves but some say FRB would be OK since without a central bank, bank runs would keep it in check.

2008 Oct 09 05:26 PM

[moonbat1775:]

"The assumption is that ensuring monetary responsibility also ensures fiscal responsibility, like a balanced budget amendment. It's not at all clear to me that one follows the other." TinyTim

This is one reason central banks are set up: to finance government via inflation instead of unpopular tax increases.
If the government has to tax us directly, you can be sure government will shrink.

2008 Oct 09 05:40 PM

[henarl:]

moonbat: You may indeed be a "good guy" but you're not running anything. Name one good guy who is now in a position of authority and whose decisions actually influence the outcome of the current economic situation. How far did "good guy" Ron Paul get in his bid for President? The establishment doesn't like good guys.

2008 Oct 09 06:01 PM

[moonbat1775:]

henari,
I never really expected Ron Paul to win in 2008. But I figure after 4 years of disaster under McCain or Obama the country will be ready for him. I will write in Ron Paul's name Nov 4, so the MSM can't ignore him in 2012.

2008 Oct 09 06:17 PM

[henarl:]

We agree completely on that. Hope it works, altho I'm doubtful.

2008 Oct 09 06:33 PM

[moonbat1775:]

henarl,
After much thought, I've concluded there is a Creator and He holds the real power. (But we should do our part too since He is not fond of lazy.)

2008 Oct 09 07:10 PM

[billp37:]

The problems of today will not be solved by the same thinking that produced the problems in the first place.

Albert Einstein

cheers

www.google.com/search?...

2008 Oct 09 08:10 PM

[moonbat1775:]

"The problems of today will not be solved by the same thinking that produced the problems in the first place. "

I agree. Let's get a banking system not based on fraud and theft by inflation. Who would guess that such things could lead to instability?

2008 Oct 09 09:18 PM