Comment 28036

By A Smith (anonymous) | Posted January 05, 2009 at 14:28:09

Areyoukiddingme, what's your point? Banks failed in those years because the economy tanked. Since fractional banks use large amounts of leverage, when the economy shrinks, it sets them up for huge losses. The government helps promote this system by issuing deposit insurance, which gives depositors the false impression that their deposits, which are actually investments in people's homes and businesses are somehow safe from the real world. Therefore , the government has promoted a banking system where risk taking is encouraged, since the people who supply the capital feel it is not at risk.

Jonathan/Jason, I didn't say the U.S. auto industry was the most innovative, I said that the overall U.S. economy has been. Think about who "invented" the internet, the airplane, the car industry, the cell phone, satellite T.V., satellite radio, private space travel, etc. Your point about cell phone/gadgets only reinforces my point that other countries are second tier adopters of this new technology. Of course, they add their tweaks to existing breakthroughs, but the fact remains that the dynamic U.S. economy creates them.

Brandon, regulation and rules are only helpful if the deliver as much as they promise. Otherwise, all rules do is allow people to let their guard down, thus making it easier for shady business operators to take advantage of them. With regard to rising home prices, I find it interesting that the government didn't recognize that an average 10% increase in home prices was not inflationary. If they couldn't or wouldn't see that obvious fact, why should anyone put any trust in these people to protect any other parts of the financial system.

The fact is, governments love making big promises, but they also have a long track record of under delivering. I would much rather have a government that promised very little, thus allowing individuals to do their own homework before investing.

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