johngonole

The Last Time Globalization Collapsed: Parallels to Today

Kunst - Your right on spot

And those who try to save and live within thier means are punished.

The Last Time Globalization Collapsed: Parallels to Today

Pharma pretty sure your version of history is not correct. Wasn't the US late to WWI. There was a lot more moving parts than your conspiratoral sounding version.

I think the bubble was caused by herd mentality but the easy credit had to spent somewhere. The stock market was shaky, bonds had a low return, and so those willing to leverage put in into housing which "Could never go down" seemed a natural choice after the internet bubble.

But the easy credit was driven by the Federal reserve who was again trying to avoid recession by bailing out the stock market speculators. From listening to some of the new regulation powers that some want to now give the Federal reserve I think the era of deregulation is over.

I disagree with the notion that free markets were the problem. I think the notion is problematic of a false definition of free markets. Free markets must be free from influence of monopolies. The government monopoly is the one people usually think of. This time the culprit is the Federal Reserve and government deregulation in the sense that it allowed financial institutions monopoly like power where their own self interests were no longer tied to serving the customer (a sign of monopoly power). Accountants, bankers brokers, investiment houses all combined under one roof have too many opposing interest to serve their customers. Instead they lobbied government for deregulations that would help them to use mutual fund money to fund IPO's of shaddy internet companies that few individuals would have seriously considered buying before the frenzy. Then accountants signed off on balance sheets so that the same company could get investment banking business etc... The annual stock holder votes for various companies are no longer controlled by large individual stock holders but by mutual funds that always vote yes because if they voted "no" they would not get the IPO or bond business. Nor could the they sit on their board of directors. Again in a free market the people who own the stock would vote not the mutual fund. The conflict of interests are the results of selective deregulation and result in monopoly like powers. Personally I thinkit was just bad dergulation.

You can have a free market but still have laws that say the building inspector can't work for the builder or have financial interest in the builder.

Again the financial industry was allowed to consolidate too much and certain good regulations (good for the free market) were done away with. The Federal reserve has monopoly power over the creation of the dollar and uses it to control interest rates and credit. So the problems in my opinion have little to do with freedom of choice and the free market but with poor lawmaking and monopoly like interference.

So lets not confuse deregulation with the natural operations of the free market. When people have to invest their money in banks, mutual funds, bonds, etc...just because if they don't inflation (induced by the Federal reserve) will eat away at it and then those same institutions are free manage that money in a self dealing way thus hurting the customer and do it knowing that the customer will be back because well they have to invest with our industry its not really so much of a free market but something between fascism and a free market.

Without the Federal reserve we really wouldn't have to invest or even deposit money in banks just to retain our purchasing power. Thus freedom of choice could reign in this self dealing. As it is reality dictates that our money should be depositied in some kind of financial institution. And somewhere in financial food chain it will be used for the purpose of the financial institution most likely in a way that customer really doesn't want.

The powers of the federal reserve constitute a monopoly that unfortuneately is abusing its power to serve speculators, those who leverage or borrow too much, and the irresponsible. They have the power to silently rob from the savers and those storing their purchasing value in their currency. And if you don't store your capitol in the form of a dollar you must invest with the same damn people cause they are all interconnected now so much. Or you buy GOLD which the government has in the passed outlawed. Or you buy real estate which the government taxes.

It is quite a web the government and various REGULATED industries have weaved. I wouldn't call it a free market.