View: Silver Coin Values
Spotted over at Jesse Felder's Posterous via the AAEC.Uncle Sam's looking a little worse for wear...
It began in the early 90s, when Alan G lowered rates to rescue the S&L industry. Note that the rates were not lowered for any general economic reason, but to bail out the S&L industry. That's when bubble trouble began in earnest, and unrepayable debt climbed to the moon.Unwinding this is problematical. Printing is a terrible way to bail out banks, as the whole country suffers from the fallout. This was wanton abuse of the central bank for bank/S&L gain. It has created a terrible problem for the country.
I see some are calling the 00's the "Decade From Hell". Ha ha. They haven't seen anything yet.
Why not go back to H.W.Bush deregulating the S&L's, or back one more step, to the start of Barrow and Spend under Reagan.
Deregulation only works if companies that choose bad business models are allowed to go out of business. Bailing out the S&L industry after deregulating them just perpetuates bad business models. Bailing them out with the printing press allowed the disaster to spread to the entire economy.If an industry cannot be allowed to fail, it must be regulated to keep the risk to taxpayers under control. Either regulate the banks, or let them go out of business when they do something stupid. Regulation means plain vanilla banking, with no innovation (e.g., derivatives).No more bailouts of deregulated banks. No more bailouts via the printing press under any circumstances.
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