Jan 15, 2020, 1:25 PM
—“Thank you! I guess I have to unlearn the libertarian notion that fiat currencies are always some kind of fraud or manipulation game. Would there be bailouts for banks under the propertarian government?”— Niklas Wagner
Great question.
- Fiat currencies are an exception innovation in monetary technology as is digital (electronic) transfer of interests rather than physical currency or money. However, with that graet innovation comes (and came) great opportunity for hideous corruption. The federal reserve (like the bank of England) is incompatible with fiat money, and incompatible with electronic money. In other words, all that interest should be accumulating in the hands of the INSURER (the treasury). And worse, there is no reason to use the banking system and interest to distribute money (increase the money supply). Imagine the government putting out a trillion dollars, and the banks offering you 5x on that money so that they could lend it out at 6-15x to commercial institutions?
You see. I think sh-t thru. 😉 This would make a very awesome economic system.
- As for ‘bailouts’….
We would still have the treasury take over banks. Taking over a bank and liquidating the creditors and shareholders is not ‘bailing it out’. Most banks were not bailed out – they were taken over. Only the big banks were bailed out.
We only ‘bailed out’ the big banks because the treasury does not own the cash distribution network (ATM’s etc) This would have lead to world economic collapse.
We did not however punish anyone and liquidate shareholders. That should have been done.
Furthermore we did not do as I recommended, and Galbraith recommended and a few others timidly, which was simply to pay down everyone’s mortgage by as much as 200k, which would have f—ked the financial sector by externality and ended the crisis immediately. It also would have corrected housing prices. It was an obvious solution. But no. Politicians were involved and the financial sector was involved. Instead of saving the middle class we burned the middle class.
Thankfully it’s reversible.
Under P-constitution banks would be commercial not consumer entities. This would collapse much of the banking sector. And it would isolate bad bank behavior somewhat to commercial banks – which would benefit consumers when it happened.