Ma Bell, Misunderstood: Capitalism destroys monopolies, government protects them

The Peter Schiff Show - 12/20/2011
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[Dejavo]

Hey Peter. I think you're doing a great job but I just want to give some input:

Listen more to what the guests are saying. Don't ignore them with whatever smart thing is on your mind at the moment. Reply to what THEY are saying. And don't cut them off.

[brendanmcwilliams]

If tobacco or alcohol companies miss a lobbyist payment to the gov't, we will turn on them faster than we did on our former allies, Saddam Hussein, Gaddafi, Stalin (also known as "Uncle Joe" back when Churchill was warning FDR not to support that genocidal maniac), etc.

[TWSceptic]

@Dejavo Doesn't seem like a problem in this particular video. He does that sometimes though and I agree he could let his guest or callers speak a bit longer sometimes.

[ElJefer]

@bullshit3118 Can you show me a source for JP Morgan setting fire to the tower? If he did, that's a criminal case that is covered by the free market.

Which Android are you talking about?

Companies don't have thoughts, so they can't care or not care about people.

You haven't answered my question about Bell's methods of keeping companies from competing. Notice that anger might mean you aren't as confident in your beliefs as you should be.

[twk373]

@drankin2112

No, you discredit yourself by being wrong.

What the fuck, exactly, is "fair competition?" FACT: no one is entitled to a loan--indeed, no one is ever entitled to some else's property. PERIOD. However, genius, lenders are looking to make a profit, thus they (shock!) do their best to only loan to those who can pay it back with interest.

The FDIC as it has no hard money with which to guarantee anything, anyway--the "guarantee" is an lie, like Bernie Madoff's ponzi scheme. Wake up.

[drankin2112]

@twk373 You discredit yourself by sounding hostile and tossing around insults for no reason. Lenders do pick winners when they eliminate fair competition and access to lending. Businesses used to have many more lending sources than they do now. But that doesn't matter because you obviously put zero thought into the economic fallout that cancelling FDIC and SIPC would create. Instead, you just respond with extremely predictable rhetoric. Good luck.

[twk373]

@drankin2112

You cannot be serious. No one "should" guarantee bank deposits. Are you insane? Now, if someone can make a PROFIT guaranteeing bank deposits (c.f., the insurance industry) then it's great.

The cookie jar is the government, silly. If you hate cookies such much, get rid of the jar.

Oh, it's very feasible to go back to free banking. But statists are terrified of that because then they'll lose all their power.

[twk373]

@drankin2112

5) You are an idiot. Lenders do not pick "winners and losers." It is up to the borrower to demonstrate to the lender that they are a good bet.

6) In a free market, everyone has equal access to capital, silly. You just mad that capital, in fact, has a price.

[drankin2112]

@mrrobotica (9)

In your world view, who do you see guaranteeing bank deposits? And, through what mechanism do you enforce it? The only solution so far, that has worked, is to have the govt. do it and regulate the shit out of the banks who have thier hands in the cookie jar. It isn't feasable to just go back to pre 1933 banking.

[drankin2112]

@mrrobotica (8)

4) They can't be easily torn apart under threat of condition 1).

5) A small number of companies control most lending in a free society (picking winners and losers).

6) Capitalism isn't free or fair if businesses don't have equal access to capital.

etc...

[drankin2112]

@mrrobotica (7)

Without "some" system of guaranteed deposits, an economy like the US economy just isn't possible. How does this bank deleveraging create leverage over you?

1) The narrow visioned incompetence of a small number of bankers can destabilize local, national and global economies.

2) They can gamble with the implicit promise that you will cover thier losses in threat of condition 1).

3) They are exempt from prosecution because effective punishment would invoke condition 1).

[drankin2112]

@mrrobotica (6)

They invented a casino where they can legally gamble with the citizen's deposits with the implicit guarantee of FDIC insurance. This is a form of bank de-leveraging. The leverage is passed onto you. Prior to the 1930s, private banking was extremely unpopular among citizens for a litany of reasons that preceeded and culminated in the Great Depression of the 1930s. Prior to 1933, you literally deposited your money into a bank with no warranty that you would ever get it back.

[drankin2112]

@mrrobotica (5)

Not long after that the Derivitives and Credit Default Swap (CDS) markets were born. They were invented by the investment bankers and, conveniently, are totally unregulated and demand no capital requirements from the commercial or investment banks that use them. In this system a single entity can write a loan, sell that loan, write insurance against that loan, and wager that the payor will default on that loan. None of these actions require the entity to depart with any money.

[drankin2112]

@mrrobotica (4)

This gave commercial banks a complete competitive advantage over community banks because they could offer banking at nearly no cost to the consumer. Commercial banks don't compete with each other through pricing, they colude and fix prices on the front end. This leverage created a boom in commercial banking leaving smaller banks to be bought out mainly for thier depository base and thier real estate.

[drankin2112]

@mrrobotica (3)

Unfortunately, a society needs a system of laws to prevent such obvious and gross conflicts of interest from being exploited. The first obvious change you could feel from this was that the profit model of the commecial banks moved from charging front-end banking fees, to selling and investing in back-end financial products. Around 2000, we started to see banks offering inhouse brokerage services.

[drankin2112]

@mrrobotica (2)

Following the housing bubble, a handful of US banks had merged and acquired thier way into holding nearly 70% of the country's depository accounts. In 1999, a Glass-Steagall provision was repealed after 70 yrs of preventing the same holding company from controlling both a commercial bank and an investment bank. This restored an unethical point of leverage whereby the granting of credit, and the use of credit, can be managed by the same entity.

[drankin2112]

@mrrobotica (1)

Your post reads as if I owe you an explaination for something. Please don't do that. I am simply posting my view on youtube. You are implying either that corporations don't use leverage, which is silly, or that a mysterious force inherently prevents over-leveraging in an unregulated society. I will take the time to offer you one simple and relevant example of overleveraging but it is only one example.

[mrrobotica]

@drankin2112 Explain to me this mechanism of leverage. How does it work in a completely capitalist society? How is it a bad thing? Explain to me how this means we should be a mixed society.

[drankin2112]

@jeffiek Since some regulations are erronious we should remove all regulations? That argument is like saying that if you remove all laws, people will not commit crimes. It's not a question of ideological purity. Captialism is about one thing, leverage. Corporations will always use leverage over thier competitors, the public, and thier employees to the maximum extent they can get away with legally. When the public gets over-leveraged, socialism gets introduced. We are a mixed society.

[jeffiek]

@drankin2112 "Six banks ...."

The FED has been around since 1913. The FDIC since 1933. There are so many regulations on banking you couldn't read them all in your lifetime.

You want an answer to the current economic crises? Why don't you ask the guys that have been in charge for decades? You clearly think they can solve things in spite of a 75+ year track record of failure.

"What stopped monopolies before monopoly laws? "

Nothing, there are none. Law creates monopolies.

[FreeSTOCKnolossROBOT]

thanks Peter...

[ghostclownprophet]

Separation of church and state was a good idea.

Separation of economy and state is a great idea.