The (Democratic) politics of the mortgage mess
The foreclosure crisis (current or pending, depending on one's perspective) should play a major role in the presidential primaries. In particular, it poses a terrific opportunity for one or more Democrats to articulate the fundamental rationales of the regulatory state: not to micromanage the decisions of consumers or supersede market mechanisms, but to protect against predictably dangerous outcomes, provide the type of safety net that only the government can, and avoid negative externalities that strain markets in lean times. Personally, I'll be paying close attention to see which candidates, if any, can make the case.
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Comments (10)
How about putting a stop to inflation by going back to the Gold Standard, or something like that? Just so that the government can't just print money when they need it, and to bring back discipline in lending? I'm not a democrat, but I'd vote for a democrat who took that stand, and promised to make that change. It doesn't solve all our problems, but it would be a major step to stopping the slow decline of the dollar and thus our economy.
Jim Anderson
The Truth About Credit
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Ministry WebsiteAugust 8, 2007 8:44 AM | Reply | Permalink
Whoa, 3 posts in a row. When did this blog become "The Spitalnick Reports on the Middle Class"?
;P
August 8, 2007 2:04 PM | Reply | Permalink
Thought I'd also add this quote:
This applies to both terrorism and the short term convenience of borrowing money on a macro and micro level.
Jim Anderson
The Truth About Credit
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Ministry WebsiteAugust 9, 2007 9:23 AM | Reply | Permalink
Re: How about putting a stop to inflation by going back to the Gold Standard
The gold standard never prevented inflation. I would suggest looking at the economic history of the Roman and Byzantine empires or Spain in the 16th and 17th century. Inflation is caused (crudely put) by too much demand for too little supply. Gold does not prevent this from occuring.
August 9, 2007 2:21 PM | Reply | Permalink
ACORN members have been actively protesting against home foreclosures nationwide and have a toll-free number that anyone in danger of losing their home can call for counseling. They also personally met with the Federal Reserve Chairman Ben Bernanke to urge him to regulate subprime lending.
August 10, 2007 10:33 AM | Reply | Permalink
The gold standard never prevented banks from creating money. In fact, banks arguably started issuing checks and credit because of the gold standard. Gold is too heavy to carry around.
August 10, 2007 9:24 PM | Reply | Permalink
I know what you are talking about. It is called fractional reserves. Bankers figured out they could start issuing certificates of deposit without a corresponding amount of gold on deposit. It did start us down the wrong path. That doesn't mean we should decide that the gold standard doesn't work.
Jim Anderson
The Truth About Credit
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Ministry WebsiteAugust 10, 2007 10:22 PM | Reply | Permalink
You'll find that inflation was in check, if you look historically. The destructive inflation in the Roman and Byzantine empires was a result of shaving coins. They started creating additional coins that didn't correspond to the value of the gold, and the shaved coins had the same problem.
It may not be perfect, but it is certainly better than the fiat currency we currently have. Our current path leads to hyperinflation and a failure of the dollar. This has been repeated throughout history with fiat currencies.
Jim Anderson
The Truth About Credit
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Ministry WebsiteAugust 10, 2007 10:27 PM | Reply | Permalink
Re: It may not be perfect, but it is certainly better than the fiat currency we currently have.
Sorry, but I disagree and quite strongly and the evidence is all on my side. Just compare the history of the American economy pre- and post- 1930.
Would you rather live through the Panic of 1873 or the IT slump of 2001? Even with President Dumbass in office now, we do a helluva lot better job keeping the economy from veering into extreme trouble nowadays than we used to.
And why in the world should the wealth of any nation depend on how much of a almost totally useless heavy metal it can dig up? A nation's wealth is the sum total of all its production, not just its gold mining sector (or, for that matter, its military sector as once upon a time seizing another nation's gold reserves or mines was a big but unspoken reason for many wars).
August 11, 2007 9:27 PM | Reply | Permalink
You are entitled to your opinion. However, I think you are blaming the Panic of 1873 on the wrong cause. It wasn't the contraction of the money supply, it was a result of borrowing too much money.
All the FRB does now is delay the inevitable - a failure of the currency. Proper discipline can only be maintained through a control mechanism beyond regulators. Regulators are now operating without accountability. We are a selfish and greedy human race, we can't be relied upon to always do what is best for the greater good at personal loss. The slow and steady decline of the justice in our legal system is a case study in that. We have strayed from our country's founders values and principles, and redefined the U.S. Constitution to justify violating those very values and principles woven into it.
The motivation of going off the gold standard was not for the greater good, it had more to do with short term problem solving. They swept a problem under the rug, that future generations would pay for.
The wealth of our nation isn't reliant on the money supply. In fact, if we produce more value in the economy, each dollar would be worth more. The Gold Standard doesn't determine the wealth of the economy, it simply provides accountability for regulators so they don't just print more money when they need it, as Bush did for the Iraq war and for the Katrina disaster, which will now be paid for in a hidden tax called inflation.
Jim Anderson
The Truth About Credit
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Ministry WebsiteAugust 13, 2007 8:16 AM | Reply | Permalink