The Daily Ticker's Henry Blodget posted a Business Insider entitled: OUTRAGE OF THE DAY: Do You Realize That The Government Is Still Paying Banks Not To Lend...? Blodget explains that "the Federal Reserve is still paying big banks not to lend money. And it's doing that while screwing average Americans who have been responsible and lived within their means."
... But fund manager Mark Dow of Pharo Management, a former staff economist at the IMF and Treasury, has a different opinion. Dow believes "interest on excess reserves" and the other more explicit bailouts for banks were – and are – a necessary evil to keep the banking system up and running. ... "Unless you want to kill the capitalist system," you need a banking system, Dow says.
But what is the capitalist system? Capitalism is not a free-market system, despite its ordinary usage. Capitalism has come to describe a system of corporatism, bureaucracy and overwhelming regulation that has little to do with the way free-markets are supposed to work a do work ... when they are left alone. A free market system certainly would not have included a central bank that could bail out banks that made innumerable bad loans.
Further, that central bank doesn't bail out commercial banks at no cost; the newly created currency used to prop up those commercial banks essentially socializes the costs and will hurt everyone else in the economy that has to deal in the currency in question.
Mark Dow, Pharo Management
No comments:
Post a Comment