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the_austrian

Banking Is Not A Free Market Because Their Liabilities Are Backed By The Taxpayer

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I'm just about sick of hearing about a failure of the markets in all this mess. The banking system is not a free market, they are able to be reckless with their bets, and cream off the "profits" (they swallow some of the positive cashflow) because the liabilities they issue are backed by the taxpayer. They are always in debt, even from the the very beginning when they write their first "loan" that is backed by a demand deposit.

Markets are a good thing (for all parties involved, by definition otherwise they would refuse) and should be left alone in all cases, meaning no taxes, no restrictions; no (consenting) trade should be illegal. Banking, in its present form, is not a good thing because we have no choice in paying for their mistakes.

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I'm just about sick of hearing about a failure of the markets in all this mess. The banking system is not a free market, they are able to be reckless with their bets, and cream off the "profits" (they swallow some of the positive cashflow) because the liabilities they issue are backed by the taxpayer. They are always in debt, even from the the very beginning when they write their first "loan" that is backed by a demand deposit.

Markets are a good thing (for all parties involved, by definition otherwise they would refuse) and should be left alone in all cases, meaning no taxes, no restrictions; no (consenting) trade should be illegal. Banking, in its present form, is not a good thing because we have no choice in paying for their mistakes.

I'm with you 100% and the only reason the bankers are getting away with things at the moment is that the economy is still fragile.

I repeat the bankers are not special or clever and do not possess unique talents. They have a Government license to create credit and the Government sponsored benefit of being able to borrow cheaper than everyone else and Government backing for their liabilities.

As the Banks are essentially state institutions, they should be paid like teachers and lollipop ladies.

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No (consenting) trade should be illegal.

Can't help being sidetracked from your main point by this statement.

It's easy to make statements like this but they tend to be meaningless, and I think this is no exception.

If I take you literally you imply that it would be legal for an assassin to whack the Don's nephew, if he had freely made a legally binding contract to do so. Now maybe you do mean this, which has the benefit of being consistent, but I doubt you do.

Or perhaps you mean to imply this: "Any trade should be legal provided it does not break any other specific criminal laws."

Well that's such a big get-out-of-jail card that it invalidates your original sentence. All I have to do is posit a criminal law that says it's a crime to sell oranges below £1 an orange, and bingo: no free market in reality, despite your conditions in the paragraph above being met.

Therefore it is an empty statement to say "all consenting trade should be legal". All a free-marketer can ask is that legal restrictions on trades are kept to a proportionate minimum, and to argue about where exactly the line dividing criminal from legal activity should be drawn.

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I'm with you 100% and the only reason the bankers are getting away with things at the moment is that the economy is still fragile.

I repeat the bankers are not special or clever and do not possess unique talents. They have a Government license to create credit and the Government sponsored benefit of being able to borrow cheaper than everyone else and Government backing for their liabilities.

As the Banks are essentially state institutions, they should be paid like teachers and lollipop ladies.

Nope. Now is the time to re-write the rules whilst the banks are weak.

No bank should be so big it can't fail. No bank should be allowed to take on risk it cannot meet. There should be a clear division between investment banking and retail business.

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Nope. Now is the time to re-write the rules whilst the banks are weak.

No bank should be so big it can't fail. No bank should be allowed to take on risk it cannot meet. There should be a clear division between investment banking and retail business.

you mean like the glass steagall act that was ceased in 1999 - only took them 8 years to bust the world

but the criminals dont want it bringing back

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