The Free Market Was Framed: Government Intervention Caused The Financial Crisis

This was as concise as I could make it.

Fannie Mae Eases Credit To Aid Mortgage Lending: http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mor...

Another interesting video to watch.
http://www.youtube.com/watch?v=ivmL-lXNy64

Do you disagree with me? I encourage you to make a video response or comment explaining why I'm wrong.

Alternate Channel: http://www.youtube.com/otherjacobspinney

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[Anglagard1]

I think you are mistaking the Federal Reserve with the government. The Federal Reserve is what is making the decisions you describe in your video, and it is run by a consortium of privately held banks.

[JacobSpinney]

@Anglagard1 And who granted the Federal Reserve the power to print money out of thin air and set interest rates?

[Anglagard1]

@JacobSpinney The very same people who own the government, that is to say the financiers. You know, those guys that work for Goldman-Sachs, spend a little time in government doing Golman-Sachs' bidding, and then go back to G-S.

[JacobSpinney]

@Anglagard1 The government distorts everyones incentives from legitimately making money by providing the goods and services that people want to exploiting money from the entire population by being the ones who get control of the state. It's like playing chess with someone who, at any time, has the option of switching all his pieces to queens. Should we really blame him for taking advantage of this queen option? Or should we blame the fact that there is an unfair queen option in the first place?

[kikdcat]

Love your videos. I have a question about the gold standard you refer to in the beginning of this vid. I understand the importance of a gold standard (precious medal standard) to combat inflation but with a fixed money supply how do you deal with increasing populations? As the population of the globe constantly increases wouldn't an economy based on a fixed money supply eventually run out of dollars to go around??

[JacobSpinney]

@kikdcat If you have a fixed supply of money, but an ever growing supply of people and products, then the thing that naturally happens is price deflation. That is, the price of things continually go lower and lower to meet the fixed supply of money . . . which is all a good thing. What a kilogram of gold could buy today perhaps a gram would buy in the future.

[sandman3697]

gotta say im really liking your channel. i like it when people actually make sense. or atleast spread other peoples ideas that make sense.... makes me feel warm and fuzzy.

[goonerLIFE1]

@TheBalancedAmerican ahh ok. thanks !

[TheBalancedAmerican]

@JacobSpinney Kikdcat is asking the right question. Every modern economic theory, including Austrian, identify deflation with recession. To Austrians, it is a temporary "correction." To Keynesians or Monetarist, deflation has the potential of causing a "death spiral" where falling prices and wages greatly compound the recession, as happened during the great depression.

In any case, gold is not money, it is a product/asset. Money is the infrastructure that all products and assets float in ;)

[TheBalancedAmerican]

@goonerLIFE1 New money is created only on the balance sheets of banks. No new "dollars" have been printed. Banks increase the amount on deposits without increasing the dollars in their vault.

Money from an ATM is actual physical dollars. But when you get money from a mortgage, or car loan, it is created on balance sheets, not printed.The loan is the new pseudo-currency, and it gets deposited into another bank, who accounts for the loan money as new dollars/deposits. Confusing, i know =)

[TheBalancedAmerican]

Great Info! Couple of things. (1) The artificial inflation of money under FRB is literally caused by a "glitch" in accounting. Money is not created from the original loan. The new money is created when the money from the original loan is deposited into another bank. The money multiplier is a result of transaction between banks, not simply reserve lending.

(2) I disagree with your stance on a commodity backed monetary framework. You may want to examine the side effects of deflation more. =)

[DesecrateConformity]

Great video. But I disagree with a revival of the gold standard.

[goonerLIFE1]

I have a question on the fractional reserve banking. You said that the bank ends up giving you money that is printed out of thin air when you want some of your deposit back. But how does this happen? Does the federal reserve give money directly to banks? Or were talking about the time when the banks got bailed out? In which case a simple yes would do. lol

[sam11182]

I wish I could DJ. I would definitely take up the "Remix" rights you've now given me :)

[bootiack]

outstanding -- well done -- now to counter more obama talking points -- love it 

[Anglagard1]

"We are an ownership society." So began President Bush's speech in which he declared that the solution to the suffering of the lower classes was to help them to buy their own house. It was a capitalist's solution to the problem of the suffering produced by capitalism. So it ended up that people without enough money were encouraged to invest, and low-life profiteers backed by the government made lots of money. Very predictable what was going to happen.