Reducing Wealth Statification

[DBTrek]

I think there's a fairly large misperception of the role banks play in an economy here. Banks aren't expected to "create wealth" like a factory cranking products out of a tinker shop. What they can do is loan people the needed capital to start their own tinker shops. Now, if you want to start Widget Inc. and build a tinker shop yourself, you'll probably need a loan. Banks can make that loan happen. By making lots of loans (aggregate risk), banks can make that loan happen when venture capitalists and other alternatives will not.

Banks will not force you to take a loan. But if you take the loan, agree to the terms of the loan, and walk away with the money - it's kinda lame to blame the bank for everything that transpires with your business after that. All the bank did was lend you money, at an interest rate that made the loan worth their risk. You accepted.

Now ... StA does have a point about FDIC meddling with the risk-factor of loaning money, and therefore opening banks up to making more risky loans than the market would dictate. The whole FDIC system came into play because banks *never* have enough cash on hand to pay their outstanding loans. There's a reason it's called fractional reserve banking - because they only keep a fraction on their assets on hand. This means bank runs will, pretty much always, destroy a bank (because they are never holding everyone's money at once). It does *not* mean that the bank does not have all the assets it needs to meet its obligations. It means a bank doesn't have the liquid assets on hand to pay every customer that has an account balance with them at the same time. Much of a bank's wealth may be tied up in 30-year mortgages, or bonds, or other assets that have value but are not readily convertible to cash during a bank run.

So the FDIC is the federal government's response to the bank run dilemma.

As Martin said,"Politics is a game. Capitalism is a game. Markets are a game. None of this stuff came from God's Eye, so they have flaws that can be exploited. "

Fractional reserve banking allows owned money (not circulating in the economy) to become loaned money (circulating back in the economy). This has given the economies that use banks tremendous advantages over those which do not (name a country without banks that you'd consider living in). But, like any game, they can be exploited. The thing is, I don't think anyone here has a system better than fractional reserve banking - so the fact it can be exploited is moot. It's like complaining that the Justice System in America can be exploited. Yep. It can be. But you'd rather have police, judges, jails, Miranda Rights, and trial by jury than not.

[Okeefenokee]

But if I give you a cut of what I can shakedown from Hash, you're cool with it, right?

[Hastur]

A couple of things.

I bought the damn book and I am reading it.

Elon Musk made his fortune by starting PayPal and then selling it. I doubt he's made any profits building electric cars or exploring space. Yet.

Rich people aren't leaving Sweden. Contrary to popular belief Swedish economy was never based on taxing the rich. We tax the working- and middle class. Mostly by consumption taxes. The people leaving Sweden do so to further their careers. Most move back when they have become rich abroad. The number of people leaving is about the same as the amount moving back. When you look at birth countries of our immigrants, Sweden is currently in second place after Syria.

[Okeefenokee]

I'm not saying Sweden is a shithole, but that Swedes in the US are wealthier than Swedes in Sweden.

Martin's idea that his high tax schemes lead to greater wealth don't stand up to scrutiny.

[Martin Hash]

I'm not saying Sweden is a shithole, but that Swedes in the US are wealthier than Swedes in Sweden.

Martin's idea that his high tax schemes lead to greater wealth don't stand up to scrutiny.

That's because I don't understand math or logic, and have to come here to be educated by you.

[Okeefenokee]

I'm not saying Sweden is a shithole, but that Swedes in the US are wealthier than Swedes in Sweden.

Martin's idea that his high tax schemes lead to greater wealth don't stand up to scrutiny.

That's because I don't understand math or logic, and have to come here to be educated by you.

Swedes in high confiscatory tax state Sweden are less wealthy than Swedes in low confiscatory tax state US.

[Okeefenokee]

Sucks when reality shits on your utopian schemes.

[Martin Hash]

Yeah, my life is a bitch.

[Okeefenokee]

Yeah, my life is a bitch.

Not at all.

It's just that you're trying to convince other people to screw themselves so you can pretend you did something for them.

[Martin Hash]

Dude, I haven’t convinced anyone, or haven’t you been paying attention?

p.s. “I am a constituency of 1” - me