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Thread: the idea of money is crazy

  1. #81
    <MaximumTouge> ssonsk's Avatar
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    Quote Originally Posted by Vteckidd View Post
    Just watch the first part of the video, tell me what you disagree with
    Ok, I watched the first 15-20 minutes. For the most part, the disagreement I would have with him isn't over the facts, it's over what is the proper thing to do in light of those facts. For example, he stated that the FDIC creates a moral hazard and without it, banks would take less risks. Totally agree, but that doesn't mean to me we should get rid of the FDIC. The reason being that while in the aggregate, banks would be more responsible, there would still be many who were not and that could leave many depositors high and dry when such a risks explode. That is not an acceptable solution in my opinion.

    I know he has limited time and I didn't watch the entire video but he makes a lot of statements as if they are facts when they are more of opinions and gives very limited arguments to support that position. He talks about interest rates are too low because the market would make them higher if the Fed would let it. I don't subscribe to the argument that whatever the market would do is the correct place for interest rates to be. He also says savings rates are too low because of the low interest rates. True enough, but he gives very little reasoning why at this particular time, higher savings rates are more important than low interest rates.

    Next he goes on to discuss how the gold standard would prevent the government from being fiscally irresponsible. I don't see that as the case at all because the gold standard doesn't prevent the government from borrowing money from other countries and racking up mountains of debt that way. What it does do is prevent the government from having any way out should they get themselves into a debt problem. You can see that problem playing out now in Greece. If Greece were able to print money, they could use inflation as a tool to minimize the economic pain they are in. Sure you could argue that they deserve all the pain, or need the pain, but that is very much an opinion rather than an economic fact. To me, the gold standard is a cure that is worse than the problem it tries to solve.

    I guess my disagreements boil down to these things:
    1) The market knows what is best
    2) People and banks will behave rationally/responsibly in a free market
    3) The aggregate is always more important than individuals
    4) The Fed's ability to manipulate the money supply not only can cause economic problems, but that's all it can do

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