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True Size of the Shadow Banking System Revealed (Spoiler: Humongous)
KentuckyFC writes "The banking system is closely regulated and monitored by central banks and other government agencies. But it has become common practice for banks to get around this by doing business in ways that don't show up on conventional balance sheets. This so-called shadow banking system is thought to be huge, but nobody knows exactly how big. Now three econophysicists have discovered that the size distribution of the world's largest financial firms significantly differs from the size distribution of smaller ones or indeed non-financial firms. And they hypothesize that the difference is the result of the hidden transactions that make up the shadow banking system. By this new measure, the shadow banking system has grown dramatically since the financial crisis and was worth over $100 trillion in 2012, significantly more than had been thought and more even than the GDP of the entire planet. Nothing to worry about, then."
AHAHAHAHA Stop it! Yer killing me!
I did my masters in non-Newtonian budget surpluses.
Those shining brand new banknotes need to accumulate somewhere, preferable to those that would be impacted the most in absolute value by the ensuing inflation.
You wouldn't expect "the 1%" to take the hit, that's what the "middle class" is for. The trickle economy is still operating, except that now it's no longer the "value" that trickles, it is the "value depreciation".
Questions raise, answers kill. Raise questions to stay alive.
No surprise here. What FED was doing for the last couple decades?
Printing the money and printing and printing and printing and printing and printing and printing and printing and printing and printing and printing and printing
All these cries about savings and cuts are pathetic.
There is enormous amount of money in circulation, so much that economic bubbles just put little dent in it.
All contributions should be tax deductible.
“He’s not deformed, he’s just drunk!”
You really think that every single American is making ~800k under the table per year?
See subject line.
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
"Shadow", that sounds really scary. I don't like scary things like shadows and terrorists.
Let's give the government a lot of power to regulate cash flow so they can protect us.
If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
The largest banks don't fit their oversimplified power law predictions, so the most reasonable explanation is that the evil geniuses have created a shadow market greater than the GDP of the entire planet!!
I bet they're the same villains who skewed the results of my lab assignments, too.
As long as we get our .01% annual fee on that $100T, you have nothing to worry about.
Sincerely,
Your shadow banking overlords.
And is anyone actually being harmed by this "shadow banking"? If so, I'd be interested in a concrete example.
I immediately thought of Sid Maier's Alpha Centauri and it's wonderful tech tree and prescient ideas [1]
Note: while in SMAC, computing resources are used to solve big problems, mainly we're using them to run HFT schemes aiding the super-wealthy get even more wealthy.
[1] http://alphacentauri2.info/wiki/Sentient_Econometrics
Make sure everyone's vote counts: Verified Voting
There are surprisingly people in other parts of the world than American (IKR!!), but even if you take the global working population that still comes to around $40,000 for every worker per year. So, still calling bullshit.
The under-the-table business-to-employee market is nothing compared to the $8.3 Quadrillion in unfunded pension liabilities. We'll need 221 Earths to pay that off.
Maw! Fire up the karma burner!
How do I get in on this?
You really think that every single American is making ~800k under the table per year?
Either that or he's implying that those jobs that only illegals are 'willing' to do actually pay 8-9 figures a year.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
and more even than the GDP of the entire planet.
The size of the shadow banking system may be worrisome (I guess), but banks hold assets, whereas GDP measures income. It would be extremely surprising if the GDP of the world were more than its income.
Incidentally, if you are upset about the 'shadow banking system' or the name 'shadow' scares you, money market funds are part of the shadow banking system. So are ETFs. So it is very possible that you are part of the SBS, since normal people invest in these kinds of things.
In general the SBS only matters because tax payers are committed to bailing banks out if they lose too much money there. If we followed Paul Volcker's advise and made a rule that, "any bank that is too large to fail is too large to exist. Any bank that receives money from the federal government will be broken up in pieces and sold," then it would solve a large portion of these problems. Make a rule that you can clawback salaries and bonuses from execs who made very very bad decisions, and that will solve another large portion of the problem.
As it is now, all the incentives are aligned to ensure another financial crisis, whether we have a shadow market or not. Focus on fixing the incentives, focus on smaller details. But we won't focus on changing the incentives as long as the administration continues to keep stooges from the financial industry in his cabinet.
"First they came for the slanderers and i said nothing."
My presumption of Americas was driven by the pricing in USD, not from nowhere.
There is a guy in a corner office somewhere that is apparently making my $40k share of the underground banking economy.
I would guess to say he's also making the $40k share of many most of the people in my 5 square miles as well.
... and do they have any expertise in economics? Or is it kind of like an econobiologist or econocabdriver -- someone interested in economics but doesn't know any more than I do about it.
An investor in a bank, or a purchaser of A-rated securities offered by that bank, may not be aware that there are unregulated, undocumented liabilities held by that bank, which, were they to go sour (see "Credit Default Swap"), could cause the bank to collapse.
If you knew that your bank was involved in large, unregulated transactions worth more than the bank's holdings, would you continue to do business with them?
Mission: To provide products that consume time and energy as entertainingly as permitted by the laws of thermodynamics.
Lord Humongous: Transact, my vermin, transact!
Surgically remove your conscience, you'll get a letter of invitation a week later.
And they hypothesize
In other words they are making this shit up for some unknown reason.
In his Principia, 2nd ed (published 300 years ago in 1713) Isaac Newton made some pithy comments about this sort of baloney.
"I have not as yet been able to discover the reason for these properties of gravity from phenomena, and I do not feign hypotheses. For whatever is not deduced from the phenomena must be called a hypothesis; and hypotheses, whether metaphysical or physical, or based on occult qualities, or mechanical, have no place in experimental philosophy. In this philosophy particular propositions are inferred from the phenomena, and afterwards rendered general by induction."
So really there is nothing to see here. Just move along now.
At what point can we end the delusion that fiat currencies are worth anything at all?
Let's just go back to bartering. How many chickens do I need to give my Cox Cable for my internet access?
We don't have a state-run media we have a media-run state.
Other than the tens of millions who are upside-down on their house loans, or who have already lost them; other than the entire middle class, who have had stagnant wages for the last 40 years, no, no-one at all. Everything is lollipops and unicorns when the 0.1% are allowed to "trickle down"* on the rest of us.
*
An investor in a bank, or a purchaser of A-rated securities offered by that bank, may not be aware that there are unregulated, undocumented liabilities held by that bank, which, were they to go sour (see "Credit Default Swap"), could cause the bank to collapse.
I thought everyone knew these ratings were bullshit.
If you knew that your bank was involved in large, unregulated transactions worth more than the bank's holdings, would you continue to do business with them?
Well, this presumes that I am doing business with them in the first place, but I would say that this information wouldn't change my mind, because I just assumed nearly everything the banks did was not actually regulated anyway. Yes there are bank regulators, but they don't really understand how anything works, nor do the banks for that matter. This might be pretty scary for the banks if they weren't able to get taxpayers to pay their losses. It also might cause regulators to start shutting all these banks down if their bosses weren't completely in the pockets of the banks.
Hell even I have my money in a bank. I basically dumped almost all my money into a house because I don't trust banks, but the money I have left over is in a bank. The Federal reserve has made it so that the only thing dumber than putting your money in a bank is not putting your money in a bank. They basically force everyone to become irresponsible investors or they confiscate your money through inflation. It's really quite an ingenious system, but it sucks for people who want to play it safe. Then again life sucks for people who want to play it safe.
But to my understanding, "shadow banking" means completely off the books. Meaning it's a "trust" system. "White" cash couldn't be used to satisfy any liabilities acquired from shadow banking, so the bank's cash reserves are safe. Or maybe my understanding of "shadow banking" is wrong?
It's almost as if there are two separate banks and the two can never meet. Or like I said, maybe I haven't grasped the real meaning of shadow banking.
Buy a couple dozen senators, just like anybody else. You can get a discount price if you're a Christian Armageddonist, or willing to go along with them.
We have two intermingled crises - governmental corruption on a global scale, administered and centered in the USA, and of course the failure of the hereditary ruling class to build anything resembling a sustainable economy.
That article is weird. But then, so is the site. In the middle of the article, there are ads for other articles:
New Healing Mechanism Closes Wounds By Up to 50 Percent in 30 Seconds -- And Leaves No Scar
Universe May Contain "Tardis-like: Regions of Spacetime, say Cosmologists
Reliable source problem here.
Anyway, their claim is that, based on Zipf's law, there must be some "long tail" of unknown small financial institutions which have vast but uncounted assets. No way. There's halawa, Indian gold merchants, and Bitcoin, but together they don't add up to one of the big banks.
"It is in the nature of markets to move money from the many to the few."
The page is down, so hopefully someone can explain: how can the GDP of a system which is itself only a fraction of the planet, exceed the value of the planet?
If, as I suspect, this is calculated by totaling transactions alone - ie if I sell you an apple for $1, and then buy it back for $1, we've just added $2 to the total GDP of the system...well then my next question is why we even pay attention to such a worthless number in the first place?
-Styopa
These guys are rank amateurs. I received my Doctorate in EconomicPrognostication from the Ms. Cleo University and I predict that the impending implosion of fiat currencies will be cancelled out by an equal distribution of Fiat 500s. In the meantime, please pay $50 for my current research entitled "Tomorrow we'll all be broke, so buy more guns and ammo now!"
Harrison's Postulate - "For every action there is an equal and opposite criticism"
Maybe some large outliers are skewing the average...
"When information is power, privacy is freedom" - Jah-Wren Ryel
Right. Banks have minimum capital requirements. If something is 'off the books', then it can't be a part of the assets used to satisfy these regulations.
Unregistered securities should be worth zero for any 'mark to market' rules.
Have gnu, will travel.
Your understanding of shadow banking is wrong. That is precisely the reason a bank called "Wachovia" doesn't exist anymore.
Oh so it just puts the global economic system on the ragged edge of violent implosion. No big deal.
"When information is power, privacy is freedom" - Jah-Wren Ryel
In addition to this, I also want: 1) A continuous mapping and quantification of the Military Industrial Complex, complete with relations to people, and businesses up and down the chain. 2) Continuously updated Corporate to Lobbyist to Politician studies, with full exposure. I want to make smarter decisions about the people and companies that I choose to deal with and give money to on a day to day basis. And I can't do that without such clear analysis. These people are only in power because _we_ allow them to be.
I am still reading the underlying article but it looks like the figures are referring to nominal value – not real value. Nominal value will normally way overstate how large the shadow banking system is.
Example – I enter into a future to swap 2m US Dollars for 1m British Pounds in 90 days. (not the right exchange but I am trying to keep things simple.) The nominal value is either 2 or 4m depending on how you counting. In reality you are agreeing to swap to things of equal value so the economic value is zero.
Credit default swaps were a major cause of the domino like collapse of financial institutions in 2008 that required a government intervention of unprecedented size and scope. CDS's are a large part of the shadow banking system, they are black boxes to regulators who have no ability to regulate the market or ability to model the effects of problems in the market.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
We are ALL being harmed by the vicious hoarding of capital and wealth by a select group of individuals. Things like this are a major driving factor in poverty which is directly correlated to higher rates of crimes both violent and non-violent. Don't like your car being broken into? Don't like getting mugged? Don't like not being able to go to certain cities or areas of cities around the world? It is directly related to the fact that the global banking industry is moving wealth our of the hands of the many to the hands of the few at a pace never seen previously in recorded human history.
I got here through a series of tubes
Consider I-Bonds, inflation-protected bonds from the Treasury.
http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm
The banker initiation involves kicking a puppy and stealing a little old lady's pension check.
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
was one that worked for cheap.
You are completely right – it is the other people who are confusing you. “Shadow Banking” is when non-banks, such a pension funds and money markets provide funding for lending instead of the banks.
Credit Default swap is a bad example. If it is held by the bank then it is on the books. It might be mispriced but that is another issue.
Commercial paper is the classic example. Companies go out into the market and borrow money for less than 270 days. The normally sell to money market funds and the like. Banks help in issues and selling the paper. It is off the books but it is lending. A lot of firms were borrowing lots of money like this because it was cheap. And at the end of the 270 days you just rolled it over. When the financial crisis hit nobody wanted to buy anything so you could not roll over your paper. A lot of good companies had to scramble.
Asset Backed Securities might be better. A bank (or GE, Target, or anybody selling almost anything) has 100m in loans. They then package those loans into a bond and sell 90m of that bond. They sell mainly to pension funds. Now the bank only has 10m on the books. This keeps leverage low and regulators happy. However now they are dependent on the market to buy their bonds. If they can’t sell their bonds then they can’t lend.
It apparently is. Of French, at least.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Now if it was only printed on paper it might actually have some value; but don't - there's not enough trees on the planet to do so
Agreed, we want:
About your assertion that "These people are only in power because _we_ allow them to be" ... your heart is in the right place, but my head says otherwise. I wouldn't say that the powerful are powerful because we *allowed* them to be -- that overstates how much power *we* really have to prevent the concentration of power.
The powerful either have power to begin with, or they take it. Either way, they won't give it up, and if you try to take it from them, they will fight you. Since they have power -- and I don't -- they will tend to win. Indeed, because I believe they will win, I don't even begin.
For everyone today who says "Bad Guys run the world, let us liberate ourselves from our corrupt overlords", I remind you: we said the same thing in the nineties, and the eighties, and the seventies, and the sixties. And the thirties. And the teens. And the eighteen-nineties. And so on -- the American Revolution, for example.
I'm not saying "Give Up" -- but let's not comfort ourselves with false optimism. If you declare revolutionary intent, do so in pragmatic terms, with specific achievable goals. No idealism: a successful revolution demands hard-headed realists.
-kgj
From their site
1.18% through October 31, 2013
So you still have roughly a -8% ROI through these bonds if you are going by real inflation figures. So how exactly are these protected from inflation?
Hear hear, another scam from your federal treasury and your not-so-federal central bank.
According to this web site, there's $228 trillion in derivatives. I didn't believe that number at first, but then I checked the source of the data and it comes from the FDIC (Schedule RL-C). Oh, and that data was for the end of the 2011 calendar year. Anyone wanna take bets that the number was much higher for 2012 and will be even higher in 2013? Don't worry, though - I'm sure the banks aren't playing fast and loose and we have absolutely nothing to worry about.
The banker initiation involves kicking the old lady's puppy and stealing the little old lady's pension check. (ftfy)
Life is a great ride, the vehicle doesn't matter
The Federal reserve has made it so that the only thing dumber than putting your money in a bank is not putting your money in a bank. They basically force everyone to become irresponsible investors or they confiscate your money through inflation.
So buy something.
Inflation makes the dollar worth less. Things cost more. Those two statements are the same thing. If your dollar would buy you a sandwich today, and you're worried about it not being worth enough to buy a sandwich tomorrow, buy the sandwich.
That's the entire idea of investments. You buy portions of things. You then own portions of things rather than owning money.
There's an upper limit of how safe you can play it. One of the safer things you can invest in is, yeah, bonds. But you shouldn't hang on to bonds for too long (I mean, otherwise you might as well play the stock market), and inflation doesn't have that big of an impact over a few years. If it did, crazy shit would be hitting the fan like down in Zimbabwe, or the USA back in the 70's.
Forget shadow banking.
Try this instead:
https://bitcoinera.net/?ref=kbroadfoot
Ken
Bitcoin pyramid: Join here: http://www.bitcoinpyramid.com/r/1427 it's FREE!
So buy something.
I basically dumped almost all my money into a house because I don't trust banks, but the money I have left over is in a bank.
I did. I bought a house. In fact I borrowed money to buy a house. Which is extra smart if inflation is going to happen.
What I am saying is that the path of least resistance is to be a risky investor. The other paths that are safer require a good amount of effort. I has enough money that it made sense for me to expend this effort to try to protect it (only time will tell if it worked), but for most other people I don't think it makes sense for them to spend lots of time and money to figure out what to invest in. A lot of those people just put their money in the biggest most responsible looking bank they can find. Maybe that was a good idea at one point in history. Maybe it's still a good idea considering banks can be too big to fail.
No, it was the On The Books stuff that killed them.
Their MBSs and ABSs (off the book) products were shoddy – people not making their mortgage payment for the first 90 days that they were in the home. So Wachovia had to “make whole” the MBS but stuffing in more mortgages.
What happened was that the Shadow Banks (Pension Funds, Hedge Funds, etc.) stopped buying their MBSs and ABSs. What they should have done is stop making loans. Instead they kept on going, building up an inventory or shoddy mortgages – which is on the books. When the financial crisis hit the on the book stuff blew up.
It sounds like money laundering to me. Perhaps the DOJ should investigate.
True, also this means that banks are bypassing the stock market and money market systems. So for example if you trade Forex or have stocks then this is hurting you. Though only minutely.
The major effect from this is that these may be undocumented loans of billions of dollars... there may be massive mis-evaluations of the exchange rates for example, cough USD.
You sir, are a fucking moron and don't really deserve a response farther than this.
I got here through a series of tubes
And is anyone actually being harmed by this "shadow banking"? If so, I'd be interested in a concrete example.
Off the top of my head? How about the people who live in the year 2013 who are still living in poverty? How about the children who died this year from preventable and curable disease that couldn't get the treatment they needed because their area doesn't have money to afford things like clinics and hospitals that the developed world takes for granted.
The Blade Itself
And is anyone actually being harmed by this "shadow banking"?
You mean, aside from every single person on the planet who isn't directly involved?
An enigma, wrapped in a riddle, shrouded in bacon and cheese
You ever play the tabletop game Jenga? You know, the one where you pull blocks from the bottom and stack them on top?
Well, try to think of the economy as a big ass game of Jenga, with the banksters and their Smaug-esque cash hoards at the top, and all us regular folk making up the bottom; just like the game, unless you leave yourself a strong, solid foundation, only so many blocks can be pulled from the bottom before the whole thing comes crashing down.
There's no logical reason any individual person should have billions of dollars of personal wealth; Especially with an economy in the shape ours (USAians) is in right now.
Actually, that gives me an idea for a bumper sticker: You become a millionaire by spending money; you become a billionaire by hoarding it.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
I have read that Debt = Money.
Where is the other 3%?
How do hard owned assets play into this?
If one has fully paid for a home worth say $500,000, is there $500,000 in debt owed by somebody else to compensate?
What if the home was initially $250,000 and inflation brought it up to $500,000?
Do I need to specify a specific child? Maybe if I were writing a scientific paper on the topic but it should be this simple. The people involved in shadow banking are controlling trillions of dollars assets. I ask you, who needs a trillion dollars worth of assets? Personally I mean. What individuals could possibly need so much wealth? The 'shadowbankers' for lack of a better term are indifferent to the deaths of the 100 million children in the world who are starving. If they were not indifferent, the children would not be starving. Money would be invested in helping developing areas. Evil actions are to be feared. But indifference is what we should fear the most. The indifference of the one's who carry this wealth is what's killing people. It is the non-action of the shadowbank that makes it an evil entity.
The Blade Itself
Reminds me of this article about the failings of extrapolation. Those graphs look like perfectly reasonable first-order Bode plots to me.
Well's Fargo bought them back in 2008, in 2011 the name "Wachovia" had earned too much negative press so they quietly discontinued the "Wachovia" name and brought them under the Well's Fargo branding. But other than some new paint on the branch locations and a little shuffling around at the top of the food chain, it's business as usual.
Which, of course, is hilarious to anyone who was a First Union customer before they bought Wachovia and then swapped names to shed the negative press around the First Union name. I think they're running out of banks to ruin the names of.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
From the Zorro Project:- (I'm not posting a link, use google)
"Technical progress has enormously boosted productivity worldwide and is still increasing it at a rate of about 2% per year. Theoretically, we needed to work four days less every year for producing the same goods and earning the same income.
However it does not happen this way. Producers use productivity boosts for reducing costs - mostly wages and salaries. This is supposed to improve their profits, but it also has an adverse affect. Layoffs, unemployment, subsequent demand shortfall and economic crises eat a large part of the benefits from increased productivity.
The remaining excess profits are invested - however not in production of goods, but in financial assets. Hedge funds, investment banks, and trading firms circulate an immense money volume (up to seven trillion US$ per day) through the financial markets, this way creating a shadow economy that largely surpasses the market of real products and services. It consumes most rewards of technical progress, and gives back occasional market crashes and financial crises.
But it also offers the opportunity to redistribute some of the excess profit back from the rich to the poor. Providing many people with a small but regular trading income will take liquidity out of the financial markets and inject it back into the production cycle. This will boost demand worldwide and soften the world's economical problems."
READY.
PRINT ""+-0
What the hell is Shadow Banking?
Try Wikipedia, amongst many other places. The term "shadow banking" has been around for years, is at least well enough defined to make it a worthwhile topic of discussion, and most definitely was not invented by the authors.
What if you look at it like this:
An ISP signs up customers assuming that they will not all be using their full bandwidth at the same time. So they sign up, say, 9 times more customers than they have actual bandwidth to support. Have they created bandwidth out of nowhere? If so, it doesn't seem to hurt the customers in most cases and even helps them by making their bills lower than they would have been otherwise.
Isn't this something like fractional reserve banking? Isn't the debt you're talking about something like the bandwidth from nowhere above? Maybe I'm wrong. I'm trying to get a better understanding of how banking works.
Fractional reserve banking isn't the only way to set up a banking system. For instance, there could be a 100% reserve banking system where a bank could only loan money equal to assets it holds like savings accounts and certificates of deposit. I'm not sure if that would be better.
I will point out that this sale was a little different. The FDIC had already sized the bank and had chopped it up into a “good bank” (branches and deposit base) and the “bad bank” (lots of dud loans.)
This was more like vultures picking meat off the bones then anything.
And then foreclosing on her house?
__
ipsa scientia potestas est
"knowledge itself is power" - Francis Bacon
In a way, even I'm indifferent to starving children. But that doesn't make me responsible for their deaths.
Meanwhile, back in real reality, those of us who understand statistics have figured out that you can't just take a couple of data points, draw a liner regression, and assume your claims hold true in all cases, particularly when there are other well-known data points that contradict them. In English: Just because making a communist dictatorship somewhat less communist is good for their economy, it doesn't follow that eliminating all regulation in an already capitalist economy will be beneficial.
The countries that do the worst economically are the ones, as you said, with the most strictly controlled economies. The ones that do the best are the ones that have controls to prevent the excesses of capitalism and provide a social safety net while still allowing the free market to drive the economy.
If you take a look at libertarian paradises like Hong Kong, you'll notice that, while the mean income is very high, the median income is actually fairly low, due to a very uneven distribution of wealth. In these situations, you end up with a few people at the top who have more money than they know what to do with, and everyone else on the bottom struggling to get by. This is the direction the United States is headed.
Ahh, dogmatic capitalism. A bunch of people at the top take money from everyone else, exerting coercive power in various ways, but that's okay, since they're all only hurting people a little bit individually, you can't say that the specific actions of one person caused a specific child to starve. That child probably would have starved anyway, right?
Consider for a moment... why the constant slow inflation? It isn't to protect us from deflationary spirals. Combine it with low interest rates in the market, and bonds start to look pretty good.
What does the US government get out of a thriving bond market? It effectively lowers the interest rate on the national debt. You've been hoodwinked. (and you're not alone)
I won't join Slashcott. OTOH, If Beta goes live, I just won't be back until it's fixed. Sorry Dice.
Far and away one of my favorite Heinlein quotes.
“Do you understand what I'm saying?" shouted Moist. "You can't just go around killing people!" "Why Not? You Do." The golem lowered his arm. "What?" snapped Moist. "I do not! Who told you that?" "I Worked It Out. You Have Killed Two Point Three Three Eight People," said the golem calmly. "I have never laid a finger on anyone in my life, Mr Pump. I may be–– all the things you know I am, but I am not a killer! I have never so much as drawn a sword!" "No, You Have Not. But You Have Stolen, Embezzled, Defrauded And Swindled Without Discrimination, Mr Lipvig. You Have Ruined Businesses And Destroyed Jobs. When Banks Fail, It Is Seldom Bankers Who Starve. Your Actions Have Taken Money From Those Who Had Little Enough To Begin With. In A Myriad Small Ways You Have Hastened The Deaths Of Many. You Do Not Know Them. You Did Not See Them Bleed. But You Snatched Bread From Their Mouths And Tore Clothes From Their Backs. For Sport, Mr Lipvig. For Sport. For The Joy Of The Game.” -- Going Postal, Terry Pratchett
The more people I meet, the better I like my dog.
Yet your hypothetical golem merely made an assertion without showing a single causative chain of events.
For example "Your Actions Have Taken Money From Those Who Had Little Enough To Begin With" - how?
"In A Myriad Small Ways You Have Hastened The Deaths Of Many." - give one example of these "small ways"
I don't mind how small the examples are. I just want one concrete causative chain of events.
Yeah, I'm pretty sure I know Wells Fargo exists.
Look into computerized stock trading, where software is making all the decisions. They spend all day long making billions of trades of hundreds or thousands of shares of stock at a time on their own markets, and prices are negotiated to 1/1000 of a cent for less than a rounding error of profit per trade.
Very interesting.
"Those who consume the bulk of goods are those who make them. We must never forget this secret of our prosperity."
In fact I borrowed money to buy ___________. Which is extra smart if ____________
Whoooooa there dude, and you're complaining about the dollar not being a safe investment?
That's basically the gist of:
They basically force everyone to become irresponsible investors or they confiscate your money through inflation.
Whoooooa there dude, and you're complaining about the dollar not being a safe investment?
I wasn't complaining at all. In fact, if you recall, I said:
It's really quite an ingenious system, but it sucks for people who want to play it safe.
Or rather I should say that I wasn't complaining about the Federal Reserve, and the inherent risk involved with investing in the dollar. I was complaining about the false sense of security that the government perpetuates through regulators that don't actually regulate anything, and ratings agencies that are paid directly and indirectly by the companies they are raitng. I was also complaining about the bailouts that some banks that were too big to fail got, which creates a moral hazard to become as big as possible and be as risky as regulations/and their minimal enforcement will allow.
The part about the Federal reserve driving investment through inflation, I think is pretty smart. I don't think it is necessarily implemented in practice in the best way possible, but I think the basic idea makes sense if your goal is maximum growth.