Nassim Taleb: Time to Nationalize US Banking System?

[happinesson]

they have to think a million times before making a decision regarding nationalization..weigh the advantages and disadvantages! timely topic..

[rmeddy1]

It's seems so self evident but people but people don't get it.

[davidmesaaz]

@allgoo19 Congressional Budget Office declares that Total federal revenues grew by about $625 billion, or 35 percent, between fiscal year 2003 and fiscal year 2006. The problem is that for ever dollar it receives it spends three times. The problem is spending not tax cuts.

Google Growth in Federal Tax Revenues From 2003 to 2006 cbo

[IMD]

We live in a complex system that delivers extreme deviations. Current risk management and economic analyses methods fail us in such a system because of low predictability. What should we do in such an environment? At the IMD OWP 2010, Nassim Nicholas Taleb will present simple rules (lower leverage, less reliance on deficit spending, less mathematical risk management) for a black swan robust economic system.

[Netherborn]

This is guy is bright AND says how it is, you don't see that lately, 5 stars!

Spread this video around.

[jnort122]

im reading 'fool by randomness' and was impressed by Taleb... until this... you telling me he considers banking a public good!?!

[PhDEconomics]

I take it he's talking about Robert Rubin. I couldnt agree with Nassim anymore, this man deserves Nobel Prize for Economics!

[valleroth]

No punishment thats why this happened, if you just got $115million can you honestly say you would redo your calculations when you went home to see if the investments were too risky?

[RenegadeTimes]

Rewarding the thieves ! Americans are not so bright. The largest heist in history is taking place and we sit idle. Amazing !

[pt1200]

amerikans are arrogantly dumb and that is the truth

[mlndstream]

so...your saying that every single US citizen is completely arrogant and dumb with no exceptions? don't you think that is a glaringly obvious excessive generalization?

[johnrainrules]

I'm with mIndstream on this one. The vast majority of Americans had no say in the bailouts and we had a complete change in both our Executive and Legislative branches and both groups decided to do bailouts whether the taxpayers and voters wanted them to or not.

[masrurkhan]

@johnrainrules It's because the people who drove the world to crisis were the one's that funded both the Republican and Democrat electoral campaigns.

[estorpai]

yes that is what he is saying and i agree.You are the ones who vote or these thugs to go around killing all over the world to satisfy their greed.They are either robbing the banks or killing for oil.Causing civil wars in countries where they want control and the people are resisting.Now it came home and u all are stupid,cos u bail them out.

[mlndstream]

This is my point,I'm not American,I don't live in America and so obviously didn't vote their govt in nor did I have anything to do with bailing any of their failing institutions out,and if you had gone to any trouble at all you would have seen that this was quite obvious from clicking on my profile name,but you chose to make an ignorant assumption and based on this false assumption you conducted yourself arrogantly and in a hostile manner towards me,and you weren't correct to think this either

[MeBoReDsOiLoGiN]

no one agrees with the bailouts... and no socialism isn't the answer...

[RGT88]

I have a problem with bankers having motivation to create money out of thin air because then they get larger bonuses. So no wonder they were happy giving out crap loans and then reselling them as securities.

[garvess]

This is a great idea if we never want the economy to recover.

[gizmosells]

Let the banks fail they need to learn moral hazard

[igorkrupitsky]

Any industry that critical to the entire economy will tend to be engaged in a risky behavior. Just as a child will be engaged in a risky behavior knowing that his parent is watching and is ready to catch him when he falls.

[longspear584]

Electricity/Energy companies are critical to the economy. They don't engage in risky behaviour. With the exception of 'Enron' and no one bailed them out. As Taleb said; "Banks are a utility", like water or electricity. They should not be considered, nor be allowed to operate under the same conditions as traditional businesses or enterprises. This was our mistake, and we have yet to pay for it.

[davidmesaaz]

I don't quite understand.... Are you saying that all risk should be eliminated because people having loses is unsustainable?

[silversalvo]

Whatever ,I've lost interest in this discussion.

[davidmesaaz]

lol well its because you don't know what your talking about...

[TKMSeznam12]

Actually it's probably because you're arguing about banking over YouTube...how little pussy must you not be getting?

[davidmesaaz]

What? please use correct grammar...

[TKMSeznam12]

It's proper - not my fault you're a dolt.

[davidmesaaz]

So your arguing on Youtube about me arguing on Youtube.. So couldn't your statement be a self description?

[TKMSeznam12]

I never said anything about arguing about arguing, did I? I said Banking. Are you illiterate now too?

[davidmesaaz]

Your arguing about me arguing...

[TKMSeznam12]

You're*. Weren't you just trying to correct me a little while ago? Way to go, dipshit.

[davidmesaaz]

That is the point of capitalism... that is the point of taking risks. Business that make good decisions get profits those that make poor decision get loses. But now the government wants to reward poor decisions and punish those who didn't invest

If you continue to make profits and create services and goods that others value your not living beyond your means. Your creating economic value.

[davidmesaaz]

Tax cuts created 5 millon new jobs and higher than projected treasury revenues...To bad that those revenues were spent... in wasteful bridges to nowhere... Now Obama wants to make bridges to everywhere...

[allgoo19]

@davidmesaaz

"Tax cuts created 5 millon new jobs .."

Where did you find the info.?

[davidmesaaz]

@allgoo19 h t t p : / / tiny .cc / 2384o - How to soak the rich the George W Bush way five million new jobs, a 25% increase in business spending, 4% real economic growth for three years and a $4 trillion gain in net wealth.

[allgoo19]

@davidmesaaz

"h t t p : / / tiny .cc / 2384o - How to soak .."

Google, "The deceptive advocacy of Stephen Moore"

In it, "his career has been marked by a pattern of errors, deception and falsehood, many of which have been exposed by print and online commentators."

Any other independent source that matches his information? You are making your point based on just one unreliable source.

[allgoo19]

@davidmesaaz

"h t t p : / / tiny .cc / 2384o .."

Google, "Economic policy of the George W. Bush administration"

This will tell you more realistic picture. Scroll down to "unemployment". Keep in mind that effect of tax cut shows up in long term, not in a short time like a year or two. You remember the crash of 2008, don't you?

[davidmesaaz]

@allgoo19 Your right he did have a lot of job losses but it wasn't because of the tax cut. Bush spend more than ever president since LBJ passed more regulations than any President beside Richard Nixon. In 1999 Fannie Mae had 1 trillion dollars in assets in 2005 they had 4 trillion. He expanded government Clinton followed Reaganomics more than Bush ever did.

[davidmesaaz]

@davidmesaaz Your grasping at straws to think that the housing crisis was caused by a tax cut. The crisis was caused by the Low rates by a government body called the Federal Reserve. Increased spending by the Bush administration through Fannie Mae and FHA to give people homes they could not afford.

[allgoo19]

@davidmesaaz

"Your right he did have a lot of .."

Does this mean you given up on 4 million job increase caused by tax cut?

You still need to provide a credible source(or two) if you still insist on it.

Do you believe first thing you find on the net and not giving it any critical view?

[davidmesaaz]

@allgoo19 I provided the link to the Congressional Budget Office that is a credible source. Paris-based OECD Study Acknowledges Laffer Curve, Admits Progressivity Bad for Growth. The Swiss have low taxes and high job growth and high standard of living. The EU is attacking the tax rates as a unfair subsidy. The fact since the Reagan-Thatcher years tax cuts world nearly every industrialized country has followed suit. Is evidence of the effectiveness of tax cuts to promote and job creation.

[allgoo19]

@davidmesaaz

"I provided the link to the.."

"4 million job increase caused by tax cut?" True or false?

"evidence of the effectiveness of tax cuts to promote and job creation"

Are you aware almost all countries are in financial trouble now? During 40s, 50s and 60s, nearly 30 yr. US had the best economy in the history. Hihest tax bracket paid over *90%* for the period. Tax cut started in 60s. Since 70s, we never had that kind of prolonged boom, only a few bubbles.

Any questions?

[davidmesaaz]

@allgoo19 Wow you are way over simplifying things. Your reducing a countries entire economic policy into one thing whether or not they have a low tax rate. All things being equal tax rates do matter. But when you run up huge deficit have low interest rates that create a housing bubble that will destroy any jobs that were created because of the tax cut.

[allgoo19]

@davidmesaaz

"4 million job increase caused by tax cut?" True or false?

We'll talk other things when you answer it'

[davidmesaaz]

@allgoo19 I have already answered it from 2003-2006 it did create 4 million jobs. The source is the Wall Street Journal.

[davidmesaaz]

@allgoo19 Hoover raised the income tax from 25% to 77% and FDR raised it to 94% and they had some of the worst economic performance of any president. During the post war period they cut many of the business taxes some as much in half and the economy took off. Also the US engaged in free trade with Europe with the Marshall Plan and GATT. The power of Unions was weakened with the Taft -Hawley. The Gov dramatically cut spending That cause the economic growth of the post war period.

[davidmesaaz]

@allgoo19 @davidmesaaz But JFK did have a tax 21% that was larger than the Reagan 20% tax cut and guess what the economy grew at a 5% growth rate. LBJ passed the alternative minimum tax increased spending increased the power of unions. Started keynesian economics in order to spend your way out of a recession and the economy went down or side ways. That was the bubble growth. Inflation gave people the feeling that they were richer than they really were.

[davidmesaaz]

@allgoo19 Supply side economics is more than just changing the tax rate. Its pushed for free trade low regulations. cuts in welfare flexible labor markets. For the better part of a century The United States been the most free market country in the world. When the UK adopted socialism and high taxes they became poorer.

[davidmesaaz]

@allgoo19 Reagan had one of the biggest expansion in history. He added the economy the sized of Germany to the US GDP. Since our economy is still larger even in a recession than the economy in the 1970's it was genuine growth. Please show me that in terms of GDP we have had no economc growth since the 1970's.

[allgoo19]

@davidmesaaz

"Reagan had one of the biggest .."

Google, "Black Monday 1987"

[davidmesaaz]

@allgoo19 Your freakin clueless.... even with the 1987 black monday crash the economy was much larger than when he was elected president in 1980. The economy which was a basketcase of 10% unemployment and 14% inflation.Since then we have never had that type of inflation and only when Bush and Obama started playing with Keynesian economics did we have 10% unemployment. You live in some kind of lala land in which the economy should only go up and never down. So freaking there was a crash.

[davidmesaaz]

@allgoo19 In order to prove your point please give me information that the economy has grown smaller since Reagan. That is in your words a bubble economy. . I am starting to think that your just an intellectual fraud

[allgoo19]

@davidmesaaz

"In order to prove your point please .."

You must be clueless about economics or just pretending.

The size of whole economy has kept growing and will keep growing in the future, only the growth rate is different.

It's the quality of life of people in general that matters.

By the way, Reagan is ranked only 4th for the economical prosperity among recent presidents, Clinton and before.

[allgoo19]

@davidmesaaz

" Reagan had one of the biggest expansion "

I'd like to see the article yu saw.

Google, "Presidents and prosperity"

You think Carter(6th) was bad? Below him, there were 4 presidents, 3 of them Republicans. (Add W. then he'll end up in dead last below his dad.)

[davidmesaaz]

@allgoo19 @allgoo19 I am clueless about economics? Clinton follow Reaganomics possibly even better than Reagan did. Clinton passed one of the largest free trade deals with NAFTA reduced government spending. Passed welfare reform deregulated the telecommunications industry and cut the capital gains tax by 1/3. But because he has a D in front of his name he must be a liberal right? Bush increased spending increased regulations Sarbanes Oxley increased entitlements and the economy tanked.

[allgoo19]

@davidmesaaz

"I am clueless about economics? "

Are you ignoring the article about Reagan took 4th place? In case you didn't notice, top 3 are democrats. Bottom 3 are republicans, soon to be 4.

And you have no opinion on this? Reagan still the greatest? lol

[davidmesaaz]

@allgoo19 I am making a policy argument and your making a partisan one. As I have said before Democrats and Republicans don't always follow the party line. Its policies not Parties that matter. When did I ever say that Reagan was the greatest? Reagan followed a policy that Truman and Clinton followed as well. But you don't want to talk about policy you just want make this into paper thin mindless partisan debate.

[allgoo19]

@davidmesaaz

"When did I ever say that Reagan was the greatest?.."

If you don't think, why you bring him up while I showed you he's ranked only 4th?

Which time of the US history had the most successful economy, that indicates pretty much who did the best, don't you agree?

[visualplant]

@allgoo19 Presidents that want credit for a good economy can push to flood the system with cash today or dramatically reduce regulation that has short-term glowing effects and causes long-term damage. Presidents should work to improve a nation's economy with long-term, infrastructural changes that will only be realized after their presidency, 8 - 10 years out. FDR is an example. Let's hope Obama is.

[allgoo19]

@visualplant

"Let's hope Obama is.."

I had a hope before he was elected. I'm highly skeptical now.

Obama is no FDR.

[davidmesaaz]

@allgoo19 Your not critiquing their policies you just making a partisan argument. In your mind all republicans cut spending and all democrats expand the government but reality is much more complex than that. Clinton & Truman cut the government pushed for free trade. Bush I & Bush II, Nixon & Ford expanded government were terrible Presidents economically because they didn't follow supply side economics. Your partisan comments overlooks that.

[allgoo19]

@davidmesaaz

"republicans cut spending and all democrats expand the government .."

It sounds like copy and paste from conservative web site.

The reality is , Reagan spent and spent.

Google, "Reagnomics" then scroll down to "criticism.

It says, "Debt more than tripled from 900 billion dollars to 2.8 trillion dollars during Reagan's tenure."

Do you think this is false?

[davidmesaaz]

@allgoo19 Criticizing your way of thinking that.. That is not what I believed. During the Reagan increased the deficit but the Debt to GDP ratio decreased. Reagan cut domestic spending will increasing military spending after the Cold War the military spending was cut as well....Please give me the economic statistics that show that Reagan economic growth was a bubble.

[allgoo19]

@davidmesaaz

"Please give me the economic statistics .."

How about showing the credible source of your point first. I already did mine. Anyone can make up false numbers on th editorial that you may have seen. That's not what I'm talking about. I'm talking about a credible real data.

Show me.

[davidmesaaz]

@allgoo19 Your grasping at straws.. 4 out of 44 presidents is pretty dang good. False numbers in an editorial? In the WSJ? Give me a break. You give me some dumb blogger and I give you the most read newspaper in the country? I will stand by the credibility of the WSJ while you can stand by the credibility of the some no name blog

[visualplant]

@davidmesaaz For several years I worked at big name "credible" publications in NYC. I watched the editorial decision-making process be driven by the company's bottom line. They would cow-tow to their advertisers to propel falsehoods and bury truths. A scrappy, "no name" blogger driven to tell the truth is by definition much more actually credible than an complex organization programmed only to perpetuate its existence.

[davidmesaaz]

@visualplant Don't you think that as bloggers are susceptible to the same kind of financial incentives? Or even more so considering that most bloggers don't make that much?

[visualplant]

@davidmesaaz The reason most people start blogging is because they're fed up with bureaucracy, ad-driven media BS or they just want to speak their mind and be heard. A small blogger with relatively low traffic is neither exposed to the same financial carrot that larger media organizations get, so the blogger is not faced with the option to 1- write for cause or 2- change the story for money. The seminal intent for a startup blogger is driven by cause, not money.

[allgoo19]

@davidmesaaz

"I will stand by the credibility of the WSJ .."

I found this instead, while I was googling by "W. Bush job creation"

Google, "Bush On Jobs: The Worst Track Record On Record"

It says, "Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration and only slightly better than President George H.W. Bush did in his four years in office."

[davidmesaaz]

@allgoo19 Your right Clinton created more jobs than Bush. But Clinton spent less money he cut the capital gains tax passed a free trade deal and cut entitlements. Bush's record was the opposite. He increased medicare entitlements increased regulations and increased spending. Obama is following Bush's policies of big spending more regulations and he is getting the same results.

[allgoo19]

@davidmesaaz

"Obama is following Bush's policies of big spending more regulations.."

What regulations you are talking about? Name a few.

And no mention on Bush's job creation? You don't avoid topics only because you have no point. You just have to admit you were wrong. k?

[davidmesaaz]

@allgoo19 Sarbanes Oxley was the largest expansion of regulatory powers in 30 years according to the NY Times. RE regulations with the exception of Richard Nixon GW Bush passed more regulations than any President in History. I did mention Bush's job creation. Reagan & Clinton limited government and the economy soared Bush and Obama expanded govenment and the economy tanked. You blindly follow party labels and ignore Presidential polices. So your the one that is wrong not me.

[davidmesaaz]

@allgoo19 I will say that Bush/Obama record on job creation was horrible because both of them expanded state powers. While Reagan and Clinton had a great record of job creation because they limited not expanded the power of the state. That is a topic that you continually avoid talking about.

[davidmesaaz]

@allgoo19 I have give you plenty of sources about tax cuts. The Wall Street Journal is a legitimate news source. Its the Number 1 newspaper in America. You do not get to pick what sources... and you don't get to discredit my sources with some angry liberal blogger on a site called spinsanity. Economic growth and supply side economics is more than just tax cuts. But to think that you can eliminate all economic downturns through government action is just naive and flat out wrong.

[davidmesaaz]

As for the declining middle class which everyone likes to talk about right now. When you measure incomes over time of flesh and blood people or individual income the income increases are staggering.

When a middle class person makes it rich his income is no longer counted as middle class but rich.

They also compare the pre-reagan inflationary period. Where wages rose fast but prices rose at an equal or greater rate. Post Reagan lower inflation lower wages increases take home pay was greater.

[silversalvo]

Its irrelevant whether or not your living on a dollar a day or 10 thousand dollars a day ; If the minimum due on your balance sheet is more than what is necessary to survive you will have bankruptcies (personal or corporate).

When this occurs its traditionally followed by creditors requiring higher collateral to issue loans. Since this new upkeep cannot be met by the borrowers , since all money is debt and thus you'd have to borrow the collateral , the economy slows, eventually stops.

[silversalvo]

This is the cause of "Stagflation" and subsequent "Deflation" .

So to make my previous point a bit more clear; If you don't bailout Homeowners and nationalize the banks , you'll end up with higher collateral ,less borrowing , less spending , more bankruptcies , more job cuts ... and so on and so forth.

[silversalvo]

*** edit: I should have said : "This is A cause of stagflation..."

I do not mean to imply it is the only cause.

[davidmesaaz]

We are doing all that... And the problem is getting worse its not getting better. If bailouts are the solution where does the money come from Borrowing? Isn't excessive borrowing what got us into the problem in the first place? Some people are living beyond their means.... What Obama is doing is not a break from Bush admin. Its a continuation of the problem. Its a reinflation of the bubble and not addressing the cause which is some people are living beyond their means and too much debt.

[silversalvo]

I'm not very familiar with Bush's economic plans , suffice to say that from what i've heard it was neck deep in tax cuts , almost the opposite to Obama's stimulus plans , which is waste deep in tax cuts. Beside the nationalization prospect and Obama's economic policies are , for all intents and purposes , 2 entirely separate matters.

Nationalization will put a break on the necessity of the baking sector in seeking profits . (Since the government has access to taxation as an alternative.)

[silversalvo]

As for the "Continuation of the problem" : Well living beyond your means is 1/2 the problem , requiring quarterly profits for sustainability is the other 1/2. Because they're both interrelated in interdependent of one an other. If someone is making a profit , somebody else somewhere else is getting less than what he bargained for. This in turn ,inevitably ends up where we started , living in debt and beyond your means.

[silversalvo]

I guess this part didn't get posted, Just to be clear : I'm not taking sides between Obama's policies and Dubaya's . I like him as a person , i don't care much for his policies.

[davidmesaaz]

Umm Wrong... Bush increased spending in the national budget by nearly 1 trillion dollars 2.2 to 3.0 trillion. He passed more regulation than any President every with the exception of Nixon..

Geithner Obama treasury sec. created Bush's TARP. Which Obama endorses. So lets add it up... Regulation excessive spending TARP bailouts... What has changed?? Bush had Keynesian Stimulus spending in 2001 and 2008 both failed to get the economy moving.

[Chrisnoscrub047]

He's suggesting that we have a two tier system like how public schools currently are. 100% state schools running along side private schools. He was 100% state banks with private banks running along side. Why are private schools so expensive? A distorted market-- very low demand, created by govt. very high prices. Public schools SUCK and so will public banks.

[eirefrance]

My best friend went to private school and he can't spell or write for shit.

[Chrisnoscrub047]

I'm sorry to hear that. I looked back at my comment and one could interpret it as implying that right now private schools are better than public schools since private banks is my preference to public banks. However, I did not intend to say, "keep banks private because look how much better our private schools are" rather I tried to say "Don't make banks public, look how bad our public school system is".

[VigilantnotMilitant]

I h8 all these terrible analogies.

Go back to your egocast, bro.

Keep reading only that which confirms your beliefs. You're bound to find the truth.

omg Are we human or are we dancer? We're mos def dancer with sheep like you.

[Chrisnoscrub047]

I'm always taking book recommendations. Send them my way.

[VigilantnotMilitant]

Read the second edition of Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. If that goes well then read The Black Swan: The Impact of the Highly Improbable.

[TheNilesLeshProject]

Banks cannot be a public utility because they do not create or dispense anything that is essential for the public to live like water or energy.

Banks are like a Telecom network that shares a commodity that already exists and charges for the convenience of using the network.

Network failure while inconvenient does not threaten the lives of anyone.

The real issue is that the level of in convenience becomes more acute at the top of the network(CEO,CFO) than for the common account holder

[bar730]

It amazes me sometimes that people don't see what is going on here...........

[portantwas]

Yes - banks are a utility. You can't get paid in cash any more and they force you to have an account with all the fees etc. I'd use a nationalised back if we had one in Australia.

[liber8me]

you realise the last pm that tired to nationalise banks in australia was chifley (ALP) back in 1949 and his instantly lost the election and labor was in opposition for 23 years.

the problem with socialising the banks is that it makes it incredibly innefficent. look at the public health system for example. when you get a lot of public servants who get paid regardless of whether the company is making or losing money the result is extreme innefficency.

[portantwas]

Inefficient, yes. But if banks are about to collapse I want to make sure my money is completely safe, especially since I can't be paid in cash. And yes, the public health system has major flaws in Australia but is much better than the US which doesn't have universal health care. Never ideal, but nothing is perfect.

[liber8me]

true. i think you need to have a mixture of socialism and and private enterprise in a nation.

for instance the private health sector is very efficent, but at the end of the day its out there to turn a proft.

the public system is not as efficent but only there to help people.

the commonwealth bank of australia used to be a government owned bank but it got privatised a while ago

[davidmesaaz]

private health sector is very efficient. ummm not really. Its good at creating drugs.. but there is a ton of government intervention.

Read Back in the USSR. Medicare sets prices that are adopted through out the system,

[8data]

and efficiency to rob people of all their lives hard labour

that is great isnt it

[liber8me]

when you try to socialise too much of a nation it always ends in disaster. look what happened to russia, etc.

[Duckenheimer]

Taleb generally believes in a free market system. I suggest reading some of his works... He doesn't believe in a centrally planned economy.

Nationalising banks is socialising in it's own way; but he's suggesting it to protect people's savings; which is the point of banks... It is not however, central planning of the market itself; which does indeed lead to disaster.

[davidmesaaz]

If you were to nationalize the banks there would be a run on the banks people would be more likely to pull investment from the banks and not put more money in.

Government intervention often becomes a self fulfilling prophecy.

[silversalvo]

Ill take a wild guess here: The average american has little or no savings , very few plans for retirements (including investments). They would not "run on the banks"... because they have nothing to run to.

The only people that could possibly " run on the banks" are the top 10% of the people that owns 85% of the total wealth, but they won't "run on the banks " because the american dollar is the only asset seen as secure and thus valuable lately . Ergo, nationalization would not be catastrophic.

[davidmesaaz]

Wow considering that after the government took control of AIG it was worth less than before... I really don't buy the argument at all...

Umm they have their mattresses... that is an alternative...

[silversalvo]

Actually , AIG was in trouble prior to the fed's interference (And FYI the FED is outside the governments jurisdiction, thus it wasn't a government take over) The trouble began when AIG had its credit rating downgrade due to the sub-mortgage crisis. The fed took over after.

The biggest problem is the 10 trillion dollar household debt you (The citizen) have not nationalization ; More job loss , more foreclosure, the worst gets the financial sector and so on and so forth. Its a feedback loop.

[davidmesaaz]

Citizens and banks can go bankrupt...States cannot. Banks factor in the how many people will default. But if they don't they go under... Other banks will take their place. There is more liquidity world wide than debt..

We need to look at the debt to GDP ratio. If our income is increasing at a greater rate than our debt. the balance sheet is ok.

The greatest threat to the financial health of this country is entitlement spending to Social Security Medicare which are increasing...

[silversalvo]

Actually , "liquidity" is the capability of a subject to pay its debt. Since the central banking practices only offers money as debt , there is always more money owed than available , because of interests.

As for GDP, because it is an average it doesn't translate the disparity of rich and poor , thus it cannot portray sustainable growth (A cause of the crisis) . Second it considers useless spending (such wars) as a production of wealth; Ergo it gives off a distorted version of the economy.

[davidmesaaz]

Are you saying that the financial crisis was caused by the disparity between the rich and the poor?

The growth was unsustainable some banks need to be closed. But excessive bailouts doesn't change anything. It just keeps zombie banks alive... Look at Japan during the 1990's.

Some people purchased homes and mortgages that are "unsustainable." Should the rest of the country bail out their reckless behavior?

[silversalvo]

The crisis was inevitable because the problem is a systemic one; The growing inequality between rich and poor , and consequently the disappearance of the middle class ,was simply the catalyst.

Because the currency in circulation is borrowed at interest , and money is therefore debt , we can conclude that it will never be repaid in full and thus creates inflation. It follows that the need of profit grows exponentially as inflation rises . Inevitably you're unable to pay your minimum due ...

[silversalvo]

And then , it falls on itself, it collapses . This is where you are at the moment.

[davidmesaaz]

We have had a growing inequality between the rich and the poor because 200 years ago everybody was poor. Some of the greatest times in history the Renaissance

But to go back to your argument the greater threat is not one of inflation but deflation. Declining prices that were overvalued because of bubble...

[davidmesaaz]

Some of the greatest periods of time like the Renaissance had great inequality. The 19th century's industrial revolution a period of great inequality. But it brought more people out of poverty and increased the rights of man more than any time in the history of this world.

From 1980 to the present extreme poverty as those living on a dollar a day has declined from 40 to 25 percent. Illiteracy has declined from 40 to 18 percent. According to 2008 State of the Future by the United Nations.

[VigilantnotMilitant]

Have you read Fooled By Randomness?

[WhoRonPaul]

time to end the fed?

[whoo689]

Even if it is a utility, that doesn't justify gov't control. Car insurance is essentially a utility in 47 states because they require you to buy it, but they still let private insurance companies exist. Electric companies exist for a reason, and they've made things much more efficient than when gov't controlled it. How many more 'utilities' does Taleb want gov't to control?

[ferrozm]

exactly. Banks should be completely separated from state. He fails to mention how banks in essence are nationalized because they are only allowed to do business in a government monopoly of currency.

[TheNilesLeshProject]

The banks are reviewable by the national government, but their assets are created privately by the central bank system.

So in essence, it is the government which functions on the central bank's commodities(notes), that is privatized.

That is why in the US, the Federal Reserve does not have to disclose itself to the US government

Nationalizing any banking system would be a meaningless gesture that would effect nothing other than the employees of the banks

[terpis]

Who's argued for across-the-board nationalization?

The arg is that unreg'd casino capitalism F'd itself (and the US & world economies gen'ly); the alt's then are

1) do nothing & watch a carnival of suffering (not moral/ just, not good politics--consrvatve or prgrssve)

2)buy only shitty assets (prvatze prfts, soc'ize the risk--'lemon socialism')

3) nationalize failed banks (fire top tier, keep losses localized, get instit'n solvent, sell back to the mkt, 'utility' fcn never disrupted)

[whoo689]

I'd trust the gov't less with my money than a bank. At least a bank can't propose a wasteful pork bill worth almost a trillion dollars and call it "stimulus." With a bank, I voluntarily decide to keep my money there or invest it. But gov't taxes me and forces me and the rest of taxpayers to pay for all this bullcrap the federal gov't spends money on year after year.

This was a one-time mistake!! I'm sorry, Taleb. Gov't control of the banks is not the solution. Maybe regulation.

[whoo689]

Maybe more regulation is needed, but we should still have faith in the market to correct these mistakes and get back to normality.

Don't forget, too, that it was partly gov't's fault because of all the encouragement of banks to give out bad loans, like with Fannie and Freddie. Banks are not ENTIRELY to blame here. It was Clinton who signed the law in 1999 that led to the housing crisis.

[VigilantnotMilitant]

Have you read Fooled By Randomness?

Have you read any of his work?

[whoo689]

We've already seen the effects of central banks printing excessive money to cover debts and causing massive inflation, sometimes hyperinflation. Nationalizing the entire banking system is NOT the solution. The free market is always preferable to letting the state take control. Centralized planning doesn't work. Planned economies fail every time.

You cannot totally predict what people are going to in an economy. You can only kind of predict.

[Mjhavok]

Unregulated free market faith heads are the problem.

[Duckenheimer]

Taleb is not arguing for centralised planning of the economy.

He is saying banks shouldn't be part of the profit maximising enterprise.

Nassim's arguments on this actually veer towards a much LESS state regulated economy. Watch the longer vid, it's the most recent result for taleb. He's pretty sympathetic to Austrian economics etc.

[edwinthedrummer]

That would be an interesting concept, to nationalize the banking system...