Search results

To the extent that any deposit (even a CD) can be lent out and that lent money redeposited, the system is FRL -- that's the definition of fractional reserve. And FRL does not create money from nothing even if it looks that way. It "creates" money on the cycle of...

This and this contradict this A 25% downside is hardly an "abyss" and hardly a "no where to hide" situation. Just play the short-side. Yes, we do seem to be experiencing Act I of "Great Depression: Part II: Revenge of the Leverage" but it's hardly the abyss. Call me when inflation in...

This chart is JUNK! First, the use of a linear scale intentionally misleads. Redo this chart with a logarithmic scale and you will see that the 1913-1920 period was the worst inflationary period in the data set. And that the deflationary spiral of the Great Depression lags the stock market...

OP port unity is now her E?

Yes, and a CD or bond is a fractional reserve instrument -- the bank holding the CD only holds a fraction of that CD in the vault and lends most of the CD to others. In many situations, the money lent from the CD is then redeposited in the bank, some of which is relent again. That's FRL. If...

And therein lies a big problem. Although I genuinely like Taleb, my quibble with his plan is due to the relative numbers of people that want 3% return versus the numbers of people that want 11% return. One of the trends in consumer behavior has been a shift away from low-risk accounts. And...

I can picture all manner of systems, most of which either perform very poorly or do not accomplish what they claim to accomplish. For example: please explain the following facets of a non-FRL system: 1. Where does the money come from to be lent in a non-FRL system? 2. Where does lent money go...

But the relationship is much more symmetric than you think -- depositors and investors "own" the bank as much as the bank "owns" it's borrowers. If enough depositors flee, then the bank, other depositors, and future borrowers are screwed. And if the borrowers can't repay, the bank and it's...

Excellent points! I freely admit that I've not read the 700 some-odd pages of the stimulus bill. I would hope (perhaps in vain) that the jobs created by the stimulus bill would be the kinds of jobs that create more jobs rather than the kind of make-work jobs that merely keep people off the...

And the problem is worse than that because its not just the reserve ratios of banks, but the reserve ratios of all financial service companies and the range of choices available for companies and consumers. One of the rationale for loosening regulations on the banks (e.g. repeal of Glass...

Yes, the $100-300K does make sense (and may even be a good deal). If all you want to do is pay someone 40k for doing nothing (i.e., pure welfare), then the cost is only 40k plus a bit of admin overhead. But if you want to hire someone at 40k to do something useful, then you also need to...

I agree with the sentiment, but option #5 ("screw the old banks") == #1 ("total collapse") because: 1) "the investors in the old shithead banks" that you want to screw are all the consumers, companies, pension plans, insurance companies in the U.S. and in the world that do business with...

Generally, I'd agree that entities that make bad choices should suffer the consequences. and that the government should never reward stupidity or avarice. A flawed institution should be culled from the economy as quickly and efficiently as possible. But how should that be implemented...

This is one of those "averages vs. individuals" problems. That data also covers all housing, not just all mortgages. Thus, for every house that was refi-ed to the max (0% equity remaining), there's probably a house with no mortgage (100% equity). Moreover, people who trade-up probably made...

I agree with you. It's the companies that create new jobs that should get the support, not the ones that lose jobs. Unfortunately, money-losing and job-losing companies squeal to their congress critters like pigs in an abattoir. Obviously, politicians must show sympathy and "fix the...

From 1981: Some things never change.

The only other minor US tax issue is "gift taxes" because the IRS will see that you gave your dad X dollars and he gave you back Y dollars. As long as X and Y are less that $13k per year, there's no issues at all and you can do it year after year. If the amounts are above $13k per year, then...

And when someone becomes an even bigger bully trying the retaliate against a small bully by attacking everyone who looks vaguely like the bully, they lose all sympathy and support from society at large.

Exactly! Bush-Cheney killed more Americans than bin Laden did. And Bush-Cheney did everything they could to help terrorists raise money, anger, and state sponsorship. Bin Laden couldn't have picked a better pair than Bush-Cheney to help him in his quest to destroy America. If/when another...

Scary bit is that these CDS underestimate the probability of default of the U.S. because they are effectively a spread between the economic situation getting bad enough that the US defaults but are not so terrible that the seller of the CDS also defaults. Moreover, these CDS don't measure the...