[size=150]How come business’s lie cheat and steal and we the people have to pay for their mistakes? Inflation recession depression hyper inflation helping banks and business’s out of there problems they created and we pay for? Where is the logic? It seems disorder is running amoke and no one helps. How come?[/size] pljames
because that’s the way the government set it up. also, believe it or not, because most people support government policies that actually promote bad investments.
think about this: when you deposit your money in a bank, the government insures that money up to like 10,000 or 100,000 or something like that. so, just psychologically speaking, when you’re choosing which bank you’re going to put your money in to, guess what: YOU REALLY DON’T GIVE A SHIT ABOUT WHAT THE BANK DOES WITH IT! Why should you? it’s insured! why the hell would you care what the bank does with it? it doesn’t matter to you, you’ll get your money even if they lose every penny, BECAUSE THE GOVERNMENT INSURES IT.
so, you no longer give a shit about what a bank does with your money, which, SURPRISE SURPRISE, makes banks much less likely to have investment strategies that are safe. why would they care about a safe investment strategy? they’ll get bank customers one way or another, customers don’t care what their investment strategy is. so, since banks don’t really have anything to lose by making big bets with other peoples’ money, THEY MAKE THOSE BIG BETS! why wouldn’t they? if the bet goes right, they get paid big time. if it goes wrong…oh well, the government’s got our back.
so, this government policy of insuring everyone’s bank deposit has a hardcore bad side. but guess what: PEOPLE WANT THAT INSURANCE! people want it bad. sometimes, the people want what’s worst for them. they don’t see the negative side-effects of their policies. it’s the common paradigm that when there’s a problem in society, we should just throw money and laws and regulation at it. but there are always unintended consequences of such actions. so, somebody once had the bright idea that banks should be insured by the government to solve some problem – in other words, they saw a problem and threw money and laws at it haphazardly – and now that policy is biting us in the ass. but imagine telling americans “your bank deposits will no longer be insured by the federal government.” Jesus Christ JUST IMAGINE THAT! No way! No way in hell would that happen.
So, people will still have no incentive to give a shit which bank their money goes to, and therefore banks will still have complete incentive to make big, risky bets instead of small safe ones, and therefore the problems will continue. So, you wanted to know why businesses lie, cheat and steal and we have to pay the consequences? Well, at least on Wall Street, GOVERNMENT INTERVENTIONISM is your answer.
Sam Byck, where are you now that your country needs you?