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[SalmonGod]

Nicely put. Now explain that to someone who only has interest in what facilitates the lifestyle they want to live.

This is a good observation.  It's one of, if not the toughest obstacle to change.  The effects that our political/economic system has on our culture are so ingrained in our thinking.  It guides our ambitions, and even the fact that we have ambitions in the modern sense (career, wealth, etc).  I started asking people if they could imagine a world without money when I was 14, and the most common answer has always been "how would I buy things?"

So when people talk about needing a new core economic system, I think it's just trading one way people hoard for another.

But this is a statement still grounded in our current paradigm, along with all of the assumptions that fuel it.

If we're so evolved, then we need to start focusing on the real problem, which is human attitudes about wealth, sharing, cooperation, altruism and greed.

Such as the assumption that our motivations are completely independent of civilization's operating system.  I think they form a feedback loop. 

In the case of capitalism, it is explicitly designed to harness people's greed as a vehicle for progress, with the assumption that all people are greedy.  I've had many long arguments about whether this is true or not.  Regardless of that, it can't be denied that this creates mechanisms whereby the greedy are selected for success.  Greed combined with luck and/or talent is rewarded with power.  Generosity is punished.  Luck and talent are very rarely rewarded without some amount of greed to go along with them.  So we end up with a society dominated by the greedy.  From their position of domination, they shape society to further reward the qualities that define them.  The incentive to be greedy grows and grows.  To be anything else becomes more and more a source of fear.  All the while, culture evolves as necessary to normalize the amount of greed necessary for survival, and it's gone on for long enough that we're to the point where wiping it from the operating system becomes unthinkable.

In short, society is destined to be defined by the qualities it deliberately rewards.

I'm beginning to think that an uphill battle may not be necessary to change this.  I've always thought, like most people, that to change the way our society functions would have to be all about resistance, struggle, and slowly converting people to your point of view.  I thought that the structure of society needed to be slowly dismantled before it could be rebuilt another way. 

I'm thinking less like this lately.  Perhaps subverting the current paradigm would be easier than I've ever realized.  In fact, I think it's already kind of happening.  Look at what's happening on the internet as the formal economy abandons people.  People are finding ways to use our new technology to organize help for each other.  Informal economies and a general sort of mutualism are slowly becoming more normalized.  We have things like Freecycle and Craigslist where people organize activities and give away, trade, or sell stuff.  Information and media are becoming more freely available online.  Large-scale leaderless organization is becoming more powerful through the memetic nature of online information.  I'd love to point out more examples, but I just haven't gotten around to doing the research yet. 

The thing is, it's out there.  People's lifestyles are changing already.  Our society is facing problems at the same time that we have new tools giving us tons of creative solutions for those problems.  I just don't think anybody has made the right tools for this unspoken movement to begin truly subverting old societal structures yet.  Most of the tools we have right now are designed for specific purposes, and very little scalability.

So what if someone designed a social media organizing tool for no specific purpose and infinite scalability?  Where could it take us if such a thing made its debut in the near future?  I have some rough ideas for such a thing.  Imagine something like a cascading forum structure.  People post something that they or their community wants or needs, or simply suggestions for things that could be done.  This post is made viewable to people within the relevant geographic radius.  So if somebody posts that they need some plumbing fixed, it might be viewable to people within 50 miles.  Post something like "cure for cancer" and it posts globally.  This is all so that you can see things that you might be motivated to go out and get involved in.  Then this post is subject to votes structured something like modern consensus process.  If somebody just has a personal need, this isn't too necessary.  If it's something more like a community project, then there will be function for voting, blocks, etc.  For actually organizing, each post would generate an appropriate communication system.  Someone's personal need would get something like a small drop-down comment thread.  A community project would get a small forum.  Cure for cancer would get something much bigger.

These are very rough ideas.  I've only been thinking about this for a relatively short time.  The point is it's all about facilitating a system of sharing, which is something that internet culture is slowly normalizing and many people would be eager to take advantage of today when organizing their lives around money is becoming impossible.  I'm not saying "replace society with this thing".  I'm saying that we're already sort of heading in this direction, but it's badly in need of a major boost towards becoming something bigger.  If we could do this, we could naturally evolve our lifestyle towards something more mutualistic instead of competitive.

I think online piracy is a great parallel to look at.  Piracy took off less because it's free stuff and more because it just makes sense.  Technology made information (i.e. anything that can be translated into bits) almost an infinite resource with the most efficient possible distribution.  It's had a huge impact on old information and media industries, because they now have to compete with what people are going to naturally turn towards as most naturally and efficiently fitting into their lives.  The only reason those old industries still exist is by pure brute force fueled by the clout they accumulated before things began to change, but everybody understands that they've become obsolete.

This is what needs to happen to society as a whole.  Unfortunately, we're in a position where we have to fight existing powers just to survive.  We need things like Occupy.  However, we need to stop expecting resistance and conflict to lead to change.  Instead, let's figure out how to make the tools to facilitate a different way of life that people will naturally gravitate to without so much need for conversion or conflict.


Gah... I hope this post is still comprehensible... I've been thinking about this the last couple weeks and thought it was finally time to put it in writing.  Unfortunately, I got pulled away in the middle of writing this several times, which tends to make coherency difficult when writing something like this.

[Truean]

The government didn't have the money available to them. The Fed did. They printed most of it.

Yes.

The government didn't have the money available to them. The Fed did. They printed most of it.

A central bank loan isn't exactly the same thing as a bailout like you are thinking of. 

At 0.0001% interest, and you use that money to buy treasury bonds at 3%, no it's not the same as a bailout. It's free money that you are paid for taking. The US government sold them a whole ton of $1 bills at $0.97. The banks made an estimated $13 Billion off this....

It's better than a bailout, because the government PAYS THEM to take it and they pay their employees and directors for doing it with bonuses..... This is a SUPERBAILOUT....

I don't think the government should be subsidizing corporations either, let alone handing out bail out money. Although every bail-out so far has been a loan, presumably they are required to pay the money back. The ironic bit is the arguments for providing corporate welfare are made with the aim of saving jobs and protecting employee pensions and what not. Of course, these businesses that started the economic down turn in the first place by making terrible, risky business decisions are being bailed out, so the bail outs are actually creating an incentive to persue risky business models, because, 'hey, even if they don't pan out and we lose money, the government will cover our losses, right?' Then they help themselves some million dollar CEO bonuses for their incredible insight. Sucks for any start-ups that try to compete with huge firms that will always be bailed out if their business decisions backfire on them.

Basically, government intervention in the economy is what got us here in the first place and its what created, perhaps unintentionally, this great disparity in wealth in this country. This is why I don't think MORE government meddling is the solution. Divorcing itself from the corporations and lowering the barriers to market entry for smaller competing firms would do better then trying to further legislate how corporations conduct business. Let the large firms collapse because of their mistakes and let better run firms compete. Removing the unholy alliance between business and the government would be the solution, not further extending the power of the government so that corporations are given further incentive to corrupt and game the system. The welfare of workers, unemployment and disparity will largely resolve itself.

I believe in a meritocracy; equal opportunities, not equal outcomes.

 Anyways, I'm skeptical about '7.7 trillion in bailouts' because the government doesn't even have a fraction of that amount available to them. That's about 50% of the entire GNP of the USA and more then the net income of every large corporation in the USA combined.

Who don't you believe? the Fed's own reporting? The treasury department? Believe it, they are that corrupt.

I think everyone here believes in a meritocracy. This is not it. This is not it. They didn't earn anything, because anything they did earn has been far, far overshadowed by the corruption they've infected the system with.

All this does is insure the exact opposite of a meritocracy. It isn't "subsidizing corporations" or businesses. It is subsidizing failure. This isn't even free markets because there you allegedly rise and fall on your own merits and when you screw up so spectacularly that you tank the entire economy you're fired and probably lose at least your business. Not so here.

Do you understand that for that amount of money, even and especially on those terms, you could start the world's largest, most profitable bank to take over the failures we have today.

They aren't good, they aren't hard working, they are failures to the point where the government they bought had to give them 7.7 Trillion NOT COUNTING TARP, so it was even more. Who cares if they have to pay it back, because the government paid them $13 Billion to take it (due to the banks buying US treasury bonds and thus loaning the government its own money back at a much higher interest rate.

None of these "job creators" we're not supposed to tax are creating jobs.... If you are too big to fail then you are too big to exist.

Funny how the American people aren't too big to fail.

[mainiac]

Three problems. First, the crash was the banks' fault in the first place, even if the loan did save the economy those reponscible should have gotten the full wrath of the law. Second, Congress and a great number of other people didn't actually know about this. And third, the money was loaned to the bank with a 0.01% interest rate, then loaned back to the government for a much higher intertest rate. This is beyond insane.

1) Yes...
2) Congress didn't know that the Fed had a mandate to do precisely this sort of lending for nearly a century now?
3) Aye, there's the rub.  However this can be very simply traced back to congresses choice to not assume majority shareholder equity in the banks back in 2008, which would have been the normal thing to do.  The very last thing in the world that you want is for the Fed to try to punish wrong doing.  That undermines your currency and that exact type of behavior is what is currently causing vast amounts of economic in destruction right now in Europe thanks to the stupidity of the ECB.  The Fed isn't supposed to be a force for good or evil, it merely supplies the amount of liquidity that the market needs.  And that is a very, very good thing.  Which would you rather have making decisions of who is right or who is wrong?  Unelected bankers or elected congress people?

[Truean]

Three problems. First, the crash was the banks' fault in the first place, even if the loan did save the economy those reponscible should have gotten the full wrath of the law. Second, Congress and a great number of other people didn't actually know about this. And third, the money was loaned to the bank with a 0.01% interest rate, then loaned back to the government for a much higher intertest rate. This is beyond insane.

1) Yes...
2) Congress didn't know that the Fed had a mandate to do precisely this sort of lending for nearly a century now?
3) Aye, there's the rub.  However this can be very simply traced back to congresses choice to not assume majority shareholder equity in the banks back in 2008, which would have been the normal thing to do.  The very last thing in the world that you want is for the Fed to try to punish wrong doing.  That undermines your currency and that exact type of behavior is what is currently causing vast amounts of economic in destruction right now in Europe thanks to the stupidity of the ECB.  The Fed isn't supposed to be a force for good or evil, it merely supplies the amount of liquidity that the market needs.  And that is a very, very good thing.  Which would you rather have making decisions of who is right or who is wrong?  Unelected bankers or elected congress people?

The unelected bankers didn't inform the elected congress people, so the unelected bankers made the decision of who was right or wrong by denying congress the information to do so. Something so simple as, "O hi, by the way we're gonna loan out $7.7 Trillion to the banks to meet that mandate you gave us kthxbye," would've been nice.

Instead, we got jack....

I told the doctor to fix me; I'd like to know what that fix is before he does it, especially if we're talking 7.7 Trillion.

[Il Palazzo]

I was wondering, has anybody seen a documentary film called "Inside Job"? If so, I'd like to know whether you think it is an accurate analysis of the crisis of 2008 or not?
The film, among other things, suggests that Alan Greenspan's insistence on keeping regulations off the economy - regulation of the derivative investments specifically - was one of the main reasons it happened, so I assume Montague didn't watch it or doesn't agree with that.

It also paints a grim picture indeed, pointing out that the people who were directly involved in the crisis are happily serving in the Obama administration and/or teach economics at major American universities.

[Duuvian]

http://en.wikipedia.org/wiki/Excess_reserves



On October 3, 2008, Section 128 of the Emergency Economic Stabilization Act of 2008 allowed the Fed to begin paying interest on excess reserve balances as well as required reserves. They began doing so three days later.[2] Banks had already begun increasing the amount of their money on deposit with the Fed at the beginning of September, up from about $10 billion total at the end of August, 2008, to $880 billion by the end of the second week of January, 2009.[3][4] In comparison, the increase in reserve balances reached only $65 billion after September 11, 2001 before falling back to normal levels within a month. Former U.S. Treasury Secretary Henry Paulson's original bailout proposal under which the government would acquire up to $700 billion worth of mortgage-backed securities contained no provision to begin paying interest on reserve balances.[5]

What this implies is that due to an agreement between the Fed and the banks, the banks suddenly were being paid interest  in 2008 for the first time by the government to not loan out money if I'm reading this correctly. Please correct me if I have something backwards as it would be a weight off my mind.

EDIT: (from the wiki link) At the end of January, 2009, excess reserve balances at the Fed stood at $793 billion[17] but less than two weeks later on February 11, total reserve balances had fallen to $603 billion. On April 1, reserve balances had again increased to $806 billion, and on February 10, 2010, they stood at $1.154 trillion. By August 2011, they reached $1.6 trillion.[18]

[mainiac]

The unelected bankers didn't inform the elected congress people, so the unelected bankers made the decision of who was right or wrong by denying congress the information to do so. Something so simple as, "O hi, by the way we're gonna loan out $7.7 Trillion to the banks to meet that mandate you gave us kthxbye," would've been nice.

While the exact details were not always published in full, the fact that the Fed was lending trillions of dollars at give-away rates was entirely known to anyone who follows Fed policy.  This break-glass-in-case-of-emergency plan was laid out over 60 years before the crises began.  While there is a shadowy cabal of bankers at play here, they are only in the shadows because nobody bothered to ask them what they were doing until recently.  And what they are doing is exactly what we asked them to be doing.  But a bunch of media outlets who don't have the slightest fucking clue what the Fed does discover these stuff for the first time and immediately go "Oh noes!  8 trillion dollars!"

It's sad but true that you would get a better understanding of what the Fed is doing by reading history books about events 60 years ago than from reading much of the media coverage of today.

What this implies is that due to an agreement between the Fed and the banks, the banks suddenly were being paid interest by the government to not loan out money if I'm reading this correctly. Please correct me if I have something backwards as it would be a weight off my mind.

Nope, you are reading that right.  The context of this was that at the time we were seriously worried about major banks going bankrupt which would have produced an economic collapse worse then the great depression.  Giving them free money straight off the printing press was therefore seen as an acceptable plan B.  Plan A in these circumstances would be to capitalize the banks by having the US Treasury buy equity, but Congress didn't want to do that.  Because Congress wouldn't act, the Federal Reserve was forced to act.

While the banks were getting money on Fed reserves, that interest rate was very, very low.  I'd agree that it would have been better to go the Sweden route and start charging interest on Fed reserve deposits instead.  But it's not quite the biggest deal in the world.  There are a lot of other things Sweden did to respond to this crises that I think we should care about emulating more then charging for excess Fed reserve deposits.  Of course on the other hand, charging on excess reserve deposits might be politically feasible?  Not sure but maybe?

[Criptfeind]

I saw inside job. Chilling ending.

Most get off scott free and put back into power and the only guy who really tries to fight back gets turned into a scum bag.

[Truean]

I understand what a discount window is: an inter bank loan to make sure reserves are sufficient at very very low rates.

1.) The amount is unprecedented.
2.) While the policy was in place, it would've been nice if they specifically informed Congress (see point one) because let's be honest, Congress has no clue what the Fed does. Have you ever watched CSPAN when the head of the Fed comes on? All the Congressmen have a page come up to them and hand them a sheet of paper so it looks like they're reading something instead of completely dumbfounded.

It is about the procedure in how it was carried out.
It is about the foreclosure clients I have every day, being mistreated by banks who KNOW what they are doing is illegal and count on my clients not being able to afford suing them
It is about the gross inequity of how we deal with massive screw ups.

I'm actually quite well versed in Economics. I get the liquidity problem and the money supply. However, the credit markets are still illiquid despite all our efforts. The reason why is corruption. Rather than loan out that money, the banks bought their competitors, had a bonus holiday, etc.

[Duuvian]

Mostly I'm worried about why excess reserves haven't gone down again. Did they forget that they are paying the banks to not give out loans and that it was a temporary measure?

While the banks were getting money on Fed reserves, that interest rate was very, very low.  I'd agree that it would have been better to go the Sweden route and start charging interest on Fed reserve deposits instead.  But it's not quite the biggest deal in the world.  There are a lot of other things Sweden did to respond to this crises that I think we should care about emulating more then charging for excess Fed reserve deposits.  Of course on the other hand, charging on excess reserve deposits might be politically feasible?  Not sure but maybe?

EDIT: OK, I re-read that a third time and it makes more sense to me now. I think it would be feasible politically with some work. The people are pretty mad that banks were first in line for help, even if it did prop up the system. The trouble would be getting enough Republicans to see it the way I do so that: the politicians on both sides who have been lobbied by the banks + obstinate Republicans < Democrats + enlightened conservatives

I think that's what you were asking anyways?

[mainiac]

I understand what a discount window is: an inter bank loan to make sure reserves are sufficient at very very low rates.

1.) The amount is unprecedented.

It's unprecedented in US (not international) experience because this is the first time we've had a situation this bad since the federal reserve has known the answer to this sort of solution.  The federal reserve did nothing in 1929 and the great depression was the result.  And the crash of 1929 was not as large as the crash of 2007.

A doctor performing neurosurgery on me would be unprecedented from my experience.  But if I've got a severe head trauma or a malignant brain tumor, I sure as holy hell would want such "unprecedented" treatment.  The fact that it will leave me in bad health for a long time would be a tiny price to pay.

2.) While the policy was in place, it would've been nice if they specifically informed Congress (see point one) because let's be honest, Congress has no clue what the Fed does. Have you ever watched CSPAN when the head of the Fed comes on? All the Congressmen have a page come up to them and hand them a sheet of paper so it looks like they're reading something instead of completely dumbfounded.

And how is it the Fed's fault that we elect dumbasses?  The Fed's job is to maintain an appropriate money supply to meet the dual mandate of low inflation and low unemployment.  Criticize them on that front (especially the second part!).  But don't criticize them for things that they aren't supposed to do (and for good reason!).

Mostly I'm worried about why excess reserves haven't gone down again. Did they forget that they are paying the banks to not give out loans and that it was a temporary measure?

If we took the money back from them at this time, it would be deflationary and cause unemployment to go way up.  See "Depression, Great".  Yes these policies are supposed to be temporary.  But these temporary policies should be extended until we are back to a healthy economy.

[Truean]

I understand what a discount window is: an inter bank loan to make sure reserves are sufficient at very very low rates.

1.) The amount is unprecedented.

It's unprecedented in US (not international) experience because this is the first time we've had a situation this bad since the federal reserve has known the answer to this sort of solution.  The federal reserve did nothing in 1929 and the great depression was the result.  And the crash of 1929 was not as large as the crash of 2007.

A doctor performing neurosurgery on me would be unprecedented from my experience.  But if I've got a severe head trauma or a malignant brain tumor, I sure as holy hell would want such "unprecedented" treatment.  The fact that it will leave me in bad health for a long time would be a tiny price to pay.

2.) While the policy was in place, it would've been nice if they specifically informed Congress (see point one) because let's be honest, Congress has no clue what the Fed does. Have you ever watched CSPAN when the head of the Fed comes on? All the Congressmen have a page come up to them and hand them a sheet of paper so it looks like they're reading something instead of completely dumbfounded.

And how is it the Fed's fault that we elect dumbasses?  The Fed's job is to maintain an appropriate money supply to meet the dual mandate of low inflation and low unemployment.  Criticize them on that front (especially the second part!).  But don't criticize them for things that they aren't supposed to do (and for good reason!).

Mostly I'm worried about why excess reserves haven't gone down again. Did they forget that they are paying the banks to not give out loans and that it was a temporary measure?

If we took the money back from them at this time, it would be deflationary and cause unemployment to go way up.  See "Depression, Great".  Yes these policies are supposed to be temporary.  But these temporary policies should be extended until we are back to a healthy economy.

1.) If the neurosurgeon operates on a patient without informed consent, then he or she has committed the tort of battery and can be sued for any at all damages resulting therefrom. In the event the patient is unconscious, the physician must make all efforts to get informed consent from next of kin or power of attorney. Failure to do so is a major malpractice problem.

Even if the operation is "Good for the patient," the doctor does not get to make that call. Bodily integrity is arguably the foundation of our legal system. I will happily sue any doctor who does not give due diligence in getting informed consent and I will win/settle big.

2.) The issue is not that we have dumbasses in Congress. We always do. The issue is that the fed did not even so much as inform the dumbasses in Congress. See "Informed Consent" argument above. I'm pretty sure if they would've said the same things you did, then it would've gone through.

It's the procedure I'm objecting to. That is to say specifically the way in which it was carried out as opposed to the substance of what was done.

Additionally, it completely destroys the idea that "Government doesn't do anything for the rich."

[Duuvian]

I'm not saying take the money back from them, just that there shouldn't be an incentive for them not to loan money. Otherwise nothing keeps them from always having a much higher than 0 excess reserve while earning interest; which would basically be money stagnating in limbo while the bank makes interest from it if I'm thinking right.

Basically all I'd say is take away the interest rate paid to banks on excess reserves, so it goes back to normal.

EDIT: By incentive I should have said 'safer bet'. I mean if you can make interest without even loaning, why loan?

EDIT2: Obviously to make a profit. (theoretical ->) But what if you continued to not loan so you could make the people mad at the government and fund a right wing third party to (hopefully) loosen regulations for you in the next election and basically make government a farce for the next few years while you happily collect your interest?

[mainiac]

1.) If the neurosurgeon operates on a patient without informed consent, then he or she has committed the tort of battery and can be sued for any at all damages resulting therefrom. In the event the patient is unconscious, the physician must make all efforts to get informed consent from next of kin or power of attorney. Failure to do so is a major malpractice problem.

Even if the operation is "Good for the patient," the doctor does not get to make that call. Bodily integrity is arguably the foundation of our legal system. I will happily sue any doctor who does not give due diligence in getting informed consent and I will win/settle big.

2.) The issue is not that we have dumbasses in Congress. We always do. The issue is that the fed did not even so much as inform the dumbasses in Congress. See "Informed Consent" argument above. I'm pretty sure if they would've said the same things you did, then it would've gone through.

It's the procedure I'm objecting to. That is to say specifically the way in which it was carried out as opposed to the substance of what was done.

Additionally, it completely destroys the idea that "Government doesn't do anything for the rich."

I was taking issue with the word "unprecedented".  Yes, the Feds actions were unprecedented.  But the crises was the first one they could have applied to.  Should the Fed have just repeated the mistakes of the great depression because they were precedented?  No, the Fed needed to boldly discover new mistakes!

But the argument you said makes so sense.  A patient comes into the ER unconscious.  A doctor treats them without consent.  I would personally bitch slap that patient if they sued.  After congress fucked things up, the Fed had to do all the things you are complaining about, really, really quickly.  It's hard to change this stuff after the fact when it isn't outright illegal.  The Fed came in to put out a fire that congress failed to act on and you want to blame the fireman for not explaining things before getting to work.

I repeat again, if congress had just taken an equity stake in the banks in exchange for the bailouts, NONE of this stuff would be a problem.

Vis-a-vis informed consent, Congress was informed and congress consented.  Case closed.  Don't give me crap about congress not understanding because tons of people understood and were more then happy to explain things to congress.  Ben Bernanke wrote a book on this exact situation before becoming Fed Chairman for Christs' sake!  You didn't even need to read the news, reading the history books was enough.  Many congress members understood, like Elizabeth Warren.  Warren, btw, is a very smart critic of the mistakes of the Fed and the Treasury.  She doesn't go saying "7.7 trillion, OMG!" but points at pointless giveaways along the way and the failure to fix the system afterwards.

[ChairmanPoo]

I know this is only tangential to the topic, but for the record, you don't need consent to perform emergency care.