The Looming Bank Collapse • Hacker News Board

Re: The Looming Bank Collapse

#131

Post by bryanlarsen » Thu, Jun 11, 2020, 2:09 PM UTC

rufusroflpunch wrote: post #52

We never "righted" the system after 2008 (or 2001). We just kicked the can down the road, making the problem worse for ourselves when we eventually do finally lose control. Our system is 100% entirely dependent upon ARTIFICIALLY low interest rates driven by Central Banks. It's the only still keeping this zombie of an economy moving, and it's the entire world, not just the United States. Central banks are doing everyt…

I argue that it's positive rates of interest that are artificial, not negative ones.

Traditionally if you had a large pile of gold and you wanted to protect it, you had to buy a safe to put it in and hire guards to keep the thieves out. The guard's salary is in essence a negative interest rate.

It was only the invention and adoption of fractional reserve banking that enabled positive interest rates.

Re: The Looming Bank Collapse

#132

Post by kerkeslager » Thu, Jun 11, 2020, 2:22 PM UTC

lazide wrote: post #10

kerkeslager wrote: post #5

> The federal government stepped in to rescue the other big banks and forestall a panic. The intervention worked—though its success did not seem assured at the time—and the system righted itself. Of course, many Americans suffered as a result of the crash, losing homes, jobs, and wealth. An already troubling gap between America’s haves and have-nots grew wider still. Yet by March 2009, the economy was on the upswing,…

What criteria should someone use to judge 'righted itself'? No event can ever be completely undone, merely compensated for. Many of the people who lost homes should never have bought them leading up to '08 - they only were able to because of unrealistic (and sometimes predatory) underwriting standards and financing that NEVER would have worked out, and blew up shortly thereafter once the people bankrolling it figured…

1. I don't think the system "righting itself" for all parties was ever a possibility. The capital to both pay the mortgages AND let the borrowers continue to own their houses simply did not exist.

2. You're looking at this from a perspective of blame. I recently took out a fairly large loan for a purchase myself, and even as a smart, educated person, it was difficult for me to find insight into what a reasonable monthly payment might be. Lenders have far more information than borrowers do. I think if we're going to place blame for the financial crisis, that blame has to be shared, but I think simply based on the information available to the parties involved, we have to place the blame primarily on the lenders, who have far more information and context than the borrowers do.

3. However, I think blame is fundamentally the wrong way to look at this. To me, the entire point of having an economy is to provide people with a better standard of living. If the economy ceases to perform that function, any intervention by the government should be geared toward causing it to perform that function again. Instead, the bailouts were aimed at improving a few myopic metrics, metrics which only benefitted the already wealthy. The problem isn't that the bailout didn't punish the right people: I'm not interested in punishment. The problem is that the bailout made America a worse place for almost everyone.

Re: The Looming Bank Collapse

#133

Post by cryptica » Thu, Jun 11, 2020, 2:34 PM UTC

QuesnayJr wrote: post #128

cryptica wrote: post #103

Earlier quoted context omitted.

>> the conversation always turns unpleasant Rationalizing the irrational tends to be unpleasant. I think it's a complete fabrication that people are dependent on the financial system and that we need economic stability. People enjoy drama and they are able to recover from any economic failure. Even total failure. Too big to fail is total BS. If a solar storm wiped out all records of bank accounts and all records of a…

Oh look, the conversation has turned unpleasant again. How unpredictable.

Well I find it pleasant.

Re: The Looming Bank Collapse

#134

Post by stuntkite » Fri, Jun 12, 2020, 10:31 AM UTC

How come no one is talking about the fact that a couple months ago our banks went from fractional reserve to zero reserve? If that doesn’t scream disaster is expected I don’t know what does. Literally anyone can form a banking org, get fdic insurance and print. money. out. of. thin. air.

If you aren’t doing it yourself already, maybe you should. I’m gonna try and maybe make a medium.com post about it.

Re: The Looming Bank Collapse

#135

Post by Ambele » Fri, Jun 12, 2020, 3:58 PM UTC

If the banks aren't paying interest on deposits anymore, does it now make sense to withdraw some of the money and store it under a mattress somewhere?

Obviously there are theft, fire, and police confiscation risks that need to be overcome first.