Glass-Steagall Act of 1933 - Separation of Commercial and Investment banks
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Oh, by the way... If you're curious: http://money.cnn.com/news/specials/storysupplement/bankbailout/[^]
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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Wow that is amazingly small. Glad to hear you're not hit by the problem. Whether we agree or not lol
Actually, when the mortgage crisis started, I was working for Bear Stearns. Got laid-off when J.P. Morgan bought us. No, I wasn't anywhere NEAR the branch of the company that imploded... I never even met the guys in that department. Ironically, I was one of the lucky ones... Since we went down first, the Fed basically TOLD J.P. Morgan to buy us, so I got a standard severance and all that. When Lehman went down soon after, I heard the people essentially came in the next morning and were told "Get your #(%*& and get out." Me, I used the time off to write my first novel :) Oh, and by the way... I know I get a lot of flak in this forum whenever this debate starts, for being in the financial industry... Just keep in mind that I'm not one of the millionaires... In this industry, tech guys are bottom feeders. Unless you've got a PhD in mathematics and are writing quantitative analysis algorithms (Not ashamed to admit that stuff is WAY beyond me), you just make a decent salary, not an extravagant one.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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And that's why I say that you should actually keep some money in either dollars (savings accounts like 401K is ok, but I mean liquid accounts), or gold/silver. because things like this can happen. and you KNOW that those two businesses should have apparently failed, from your findings. You actually kind of helped my case. NO government money should have gone into the private sector like that. It's precisely unconstitutional. BUT the way they got around it is by using the Federal Reserve, a private bank. That's the only way they got around it. It is immoral what they did, for one thing. Stealing from the public to give it to a few banks/institutions and their members. Once this system collapses, we'll have to go back to our American roots, it's the only way.
josda1000 wrote:
And that's why I say that you should actually keep some money in either dollars (savings accounts like 401K is ok, but I mean liquid accounts), or gold/silver. because things like this can happen.
I'd like to point out the incredible stupidity of this statement. You know why banks exist? To keep your money safe. That's what it boils down to. When you hear about some old timer that had all their money stolen by a thief because it was stuffed in a mattress, you shake your head. They aren't getting it back. A bank is insured. A bank keeps it safe and in exchange uses it to make more money. Ian even pointed out there were 401Ks at risk, and you STILL acted like your point was valid. No one keeps gold at home in vast quantities because they would quickly lose their money to a robber. The security required to keep your money safe from robbers that know every person with a nice house has a large wad of cash in it would wipe out any savings. I suppose we should go to our American roots. You know how to ride a horse and chop wood? Far too many people want to go back to a system that just plain didn't work well and won't work with the numbers we deal with nowadays.
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josda1000 wrote:
And that's why I say that you should actually keep some money in either dollars (savings accounts like 401K is ok, but I mean liquid accounts), or gold/silver. because things like this can happen.
I'd like to point out the incredible stupidity of this statement. You know why banks exist? To keep your money safe. That's what it boils down to. When you hear about some old timer that had all their money stolen by a thief because it was stuffed in a mattress, you shake your head. They aren't getting it back. A bank is insured. A bank keeps it safe and in exchange uses it to make more money. Ian even pointed out there were 401Ks at risk, and you STILL acted like your point was valid. No one keeps gold at home in vast quantities because they would quickly lose their money to a robber. The security required to keep your money safe from robbers that know every person with a nice house has a large wad of cash in it would wipe out any savings. I suppose we should go to our American roots. You know how to ride a horse and chop wood? Far too many people want to go back to a system that just plain didn't work well and won't work with the numbers we deal with nowadays.
I'd like to point out the incredible naivity of YOUR statement, sir!
ragnaroknrol wrote:
You know why banks exist? To keep your money safe.
Not at all! They existed so that people didn't have to carry around gold in their pockets! They used gold/silver certificates in place of the actual gold/silver in transactions!
ragnaroknrol wrote:
When you hear about some old timer that had all their money stolen by a thief because it was stuffed in a mattress, you shake your head. They aren't getting it back. A bank is insured. A bank keeps it safe and in exchange uses it to make more money.
A bank does use it to make more money! Completely true! That's the whole point of this problem! It's the fractional reserve system that is collapsing us, and why the dollar is losing value!
ragnaroknrol wrote:
Ian even pointed out there were 401Ks at risk, and you STILL acted like your point was valid.
Yes I am! Because people shouldn't be putting so much faith in a system that is going bankrupt. The dollars are losing value; the Fed is printing money (indirectly as you people pointed out earlier, AND the mint is literally doing it, at the same time...); the stock market almost collapsed a year ago; the stimulus is running out... I think you get it.
ragnaroknrol wrote:
No one keeps gold at home in vast quantities because they would quickly lose their money to a robber.
Then why did people do it before the Fed was enacted? Article I, Section 10: No State shall... make any Thing but gold and silver coin a Tender in Payments of Debt.
ragnaroknrol wrote:
I suppose we should go to our American roots. You know how to ride a horse and chop wood?
What a baseless argument. I'm not saying to stop using cars or stop using table saws. That was a troll type of comment.
ragnaroknrol wrote:
Far too many people want to go back to a system that just plain didn't work well and won't work with the numbers we deal with nowadays.
How do you know? A gold coin today has the same buying power that it did in 1971. The system that I advocate works well, and perfectly, when not in a war. That coincides with my arguments about war. Bring the troops home.
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I'd like to point out the incredible naivity of YOUR statement, sir!
ragnaroknrol wrote:
You know why banks exist? To keep your money safe.
Not at all! They existed so that people didn't have to carry around gold in their pockets! They used gold/silver certificates in place of the actual gold/silver in transactions!
ragnaroknrol wrote:
When you hear about some old timer that had all their money stolen by a thief because it was stuffed in a mattress, you shake your head. They aren't getting it back. A bank is insured. A bank keeps it safe and in exchange uses it to make more money.
A bank does use it to make more money! Completely true! That's the whole point of this problem! It's the fractional reserve system that is collapsing us, and why the dollar is losing value!
ragnaroknrol wrote:
Ian even pointed out there were 401Ks at risk, and you STILL acted like your point was valid.
Yes I am! Because people shouldn't be putting so much faith in a system that is going bankrupt. The dollars are losing value; the Fed is printing money (indirectly as you people pointed out earlier, AND the mint is literally doing it, at the same time...); the stock market almost collapsed a year ago; the stimulus is running out... I think you get it.
ragnaroknrol wrote:
No one keeps gold at home in vast quantities because they would quickly lose their money to a robber.
Then why did people do it before the Fed was enacted? Article I, Section 10: No State shall... make any Thing but gold and silver coin a Tender in Payments of Debt.
ragnaroknrol wrote:
I suppose we should go to our American roots. You know how to ride a horse and chop wood?
What a baseless argument. I'm not saying to stop using cars or stop using table saws. That was a troll type of comment.
ragnaroknrol wrote:
Far too many people want to go back to a system that just plain didn't work well and won't work with the numbers we deal with nowadays.
How do you know? A gold coin today has the same buying power that it did in 1971. The system that I advocate works well, and perfectly, when not in a war. That coincides with my arguments about war. Bring the troops home.
josda1000 wrote:
Not at all! They existed so that people didn't have to carry around gold in their pockets! They used gold/silver certificates in place of the actual gold/silver in transactions!
So the difference in a gold/silver certificate and a dollar is what? Oh yea, PRETTY MUCH NOTHING. I can exchange X numbers of dollars for gold if I want. Oh yea, the dollar is not backed by gold. So, how much gold is in the world? Enough to power our curent economy? I'm guessing the answer is no.
josda1000 wrote:
A bank does use it to make more money! Completely true! That's the whole point of this problem! It's the fractional reserve system that is collapsing us, and why the dollar is losing value!
So what, they should just not make money? Let me explain something, and I will try and make it clear. The dollar is losing value because the world has lost confidence in it. Nothing else. Not some stupid bank scheme, not the fed, confidence. When we ratchet up wars for stupid reasons, people are less likely to trade with us. When we start throwing out money to cover debts instead of working on growing infrastructure and keeping our system strong, people lose confidence. When OPEC decides it hates us and starts talking about th Euro, we bomb one of their countries and they shut up... whoops. I mean the dollar gets weaker.
josda1000 wrote:
Then why did people do it before the Fed was enacted? Article I, Section 10: No State shall... make any Thing but gold and silver coin a Tender in Payments of Debt.
Because back then they just shot the stupid jerk as he walked in. That's a lot less likely now. And I hate to tell you, but paper money was used all the time. Massachussets Bay Colony issued paper money. (1690) In 1785 the Continental COngress determined the dollar would be the official currency. After adoption of the Constitution in 1789, Congress chartered the First Bank of the United States until 1811 and authorized it to issue paper bank notes to eliminate confusion and simplify trade. The bank served as the U.S. Treasury's fiscal agent, thus performing the first central bank functions. In 1836 when the second US bank was no longer in existance and no regulation was happening a bunch of banks printed their own money. That didn't work well. Gold certificates DIDN'T EXIST until 1865 and ended circu
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I'd like to point out the incredible naivity of YOUR statement, sir!
ragnaroknrol wrote:
You know why banks exist? To keep your money safe.
Not at all! They existed so that people didn't have to carry around gold in their pockets! They used gold/silver certificates in place of the actual gold/silver in transactions!
ragnaroknrol wrote:
When you hear about some old timer that had all their money stolen by a thief because it was stuffed in a mattress, you shake your head. They aren't getting it back. A bank is insured. A bank keeps it safe and in exchange uses it to make more money.
A bank does use it to make more money! Completely true! That's the whole point of this problem! It's the fractional reserve system that is collapsing us, and why the dollar is losing value!
ragnaroknrol wrote:
Ian even pointed out there were 401Ks at risk, and you STILL acted like your point was valid.
Yes I am! Because people shouldn't be putting so much faith in a system that is going bankrupt. The dollars are losing value; the Fed is printing money (indirectly as you people pointed out earlier, AND the mint is literally doing it, at the same time...); the stock market almost collapsed a year ago; the stimulus is running out... I think you get it.
ragnaroknrol wrote:
No one keeps gold at home in vast quantities because they would quickly lose their money to a robber.
Then why did people do it before the Fed was enacted? Article I, Section 10: No State shall... make any Thing but gold and silver coin a Tender in Payments of Debt.
ragnaroknrol wrote:
I suppose we should go to our American roots. You know how to ride a horse and chop wood?
What a baseless argument. I'm not saying to stop using cars or stop using table saws. That was a troll type of comment.
ragnaroknrol wrote:
Far too many people want to go back to a system that just plain didn't work well and won't work with the numbers we deal with nowadays.
How do you know? A gold coin today has the same buying power that it did in 1971. The system that I advocate works well, and perfectly, when not in a war. That coincides with my arguments about war. Bring the troops home.
josda1000 wrote:
What a baseless argument. I'm not saying to stop using cars or stop using table saws. That was a troll type of comment.
That's his strawman argument. He is a meathead. He was in hte military as a paper pursher, nevertheless, he is still a meathead. I would argue that since he was a paper pushing bureaucrat, that he is a completely oblivious and self-indulgent meathead.
Watch the Fall of the Republic (High Quality 2:24:19)[^] Sons Of Liberty - Free Album (They sound very much like Metallica, great lyrics too)[^]
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josda1000 wrote:
Not at all! They existed so that people didn't have to carry around gold in their pockets! They used gold/silver certificates in place of the actual gold/silver in transactions!
So the difference in a gold/silver certificate and a dollar is what? Oh yea, PRETTY MUCH NOTHING. I can exchange X numbers of dollars for gold if I want. Oh yea, the dollar is not backed by gold. So, how much gold is in the world? Enough to power our curent economy? I'm guessing the answer is no.
josda1000 wrote:
A bank does use it to make more money! Completely true! That's the whole point of this problem! It's the fractional reserve system that is collapsing us, and why the dollar is losing value!
So what, they should just not make money? Let me explain something, and I will try and make it clear. The dollar is losing value because the world has lost confidence in it. Nothing else. Not some stupid bank scheme, not the fed, confidence. When we ratchet up wars for stupid reasons, people are less likely to trade with us. When we start throwing out money to cover debts instead of working on growing infrastructure and keeping our system strong, people lose confidence. When OPEC decides it hates us and starts talking about th Euro, we bomb one of their countries and they shut up... whoops. I mean the dollar gets weaker.
josda1000 wrote:
Then why did people do it before the Fed was enacted? Article I, Section 10: No State shall... make any Thing but gold and silver coin a Tender in Payments of Debt.
Because back then they just shot the stupid jerk as he walked in. That's a lot less likely now. And I hate to tell you, but paper money was used all the time. Massachussets Bay Colony issued paper money. (1690) In 1785 the Continental COngress determined the dollar would be the official currency. After adoption of the Constitution in 1789, Congress chartered the First Bank of the United States until 1811 and authorized it to issue paper bank notes to eliminate confusion and simplify trade. The bank served as the U.S. Treasury's fiscal agent, thus performing the first central bank functions. In 1836 when the second US bank was no longer in existance and no regulation was happening a bunch of banks printed their own money. That didn't work well. Gold certificates DIDN'T EXIST until 1865 and ended circu
Looks like we need to give a history lesson to someone who wants to give me an attitude.
ragnaroknrol wrote:
Massachussets Bay Colony issued paper money. (1690) In 1785 the Continental COngress determined the dollar would be the official currency.
The "dollar" you're referring to was the Continental. Remember the term, "Ain't worth a Continental"? Yeah, it's because paper money is inherently inflationary.
ragnaroknrol wrote:
After adoption of the Constitution in 1789, Congress chartered the First Bank of the United States until 1811 and authorized it to issue paper bank notes to eliminate confusion and simplify trade. The bank served as the U.S. Treasury's fiscal agent, thus performing the first central bank functions.
Yes. Though the charter was not renewed, because central banks are known to be the cause of problems.
ragnaroknrol wrote:
In 1836 when the second US bank was no longer in existance and no regulation was happening a bunch of banks printed their own money. That didn't work well.
I'm glad you realize that. Printing money doesn't work. Fractional reserve banking has never worked.
ragnaroknrol wrote:
Gold certificates DIDN'T EXIST until 1865 and ended circulation in 1933. Silve certificates were even later, 1878 to 1957.
Yes. They didn't want to be inhibited by hard assets. Absolutely.
ragnaroknrol wrote:
Why did I make that comment about horses and chopping wood? To illustrate a point. You want to go back to "better times" well not everything about old times was better.
I realize that. But I find value in hard money, while you don't. You just made a horrible analogy, IMO.
ragnaroknrol wrote:
So the difference in a gold/silver certificate and a dollar is what? Oh yea, PRETTY MUCH NOTHING.
That's a matter of speculation. The point is, that I could go to a bank with a certificate and demand payment in silver/gold. Gold has been money for thousands of years, you think it's going to change in a matter of thirty years? I'm sorry, let's just say that I have doubts.
ragnaroknrol wrote:
Oh yea, the dollar is not backed by gold.
No, it hasn't been
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Actually, when the mortgage crisis started, I was working for Bear Stearns. Got laid-off when J.P. Morgan bought us. No, I wasn't anywhere NEAR the branch of the company that imploded... I never even met the guys in that department. Ironically, I was one of the lucky ones... Since we went down first, the Fed basically TOLD J.P. Morgan to buy us, so I got a standard severance and all that. When Lehman went down soon after, I heard the people essentially came in the next morning and were told "Get your #(%*& and get out." Me, I used the time off to write my first novel :) Oh, and by the way... I know I get a lot of flak in this forum whenever this debate starts, for being in the financial industry... Just keep in mind that I'm not one of the millionaires... In this industry, tech guys are bottom feeders. Unless you've got a PhD in mathematics and are writing quantitative analysis algorithms (Not ashamed to admit that stuff is WAY beyond me), you just make a decent salary, not an extravagant one.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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Looks like we need to give a history lesson to someone who wants to give me an attitude.
ragnaroknrol wrote:
Massachussets Bay Colony issued paper money. (1690) In 1785 the Continental COngress determined the dollar would be the official currency.
The "dollar" you're referring to was the Continental. Remember the term, "Ain't worth a Continental"? Yeah, it's because paper money is inherently inflationary.
ragnaroknrol wrote:
After adoption of the Constitution in 1789, Congress chartered the First Bank of the United States until 1811 and authorized it to issue paper bank notes to eliminate confusion and simplify trade. The bank served as the U.S. Treasury's fiscal agent, thus performing the first central bank functions.
Yes. Though the charter was not renewed, because central banks are known to be the cause of problems.
ragnaroknrol wrote:
In 1836 when the second US bank was no longer in existance and no regulation was happening a bunch of banks printed their own money. That didn't work well.
I'm glad you realize that. Printing money doesn't work. Fractional reserve banking has never worked.
ragnaroknrol wrote:
Gold certificates DIDN'T EXIST until 1865 and ended circulation in 1933. Silve certificates were even later, 1878 to 1957.
Yes. They didn't want to be inhibited by hard assets. Absolutely.
ragnaroknrol wrote:
Why did I make that comment about horses and chopping wood? To illustrate a point. You want to go back to "better times" well not everything about old times was better.
I realize that. But I find value in hard money, while you don't. You just made a horrible analogy, IMO.
ragnaroknrol wrote:
So the difference in a gold/silver certificate and a dollar is what? Oh yea, PRETTY MUCH NOTHING.
That's a matter of speculation. The point is, that I could go to a bank with a certificate and demand payment in silver/gold. Gold has been money for thousands of years, you think it's going to change in a matter of thirty years? I'm sorry, let's just say that I have doubts.
ragnaroknrol wrote:
Oh yea, the dollar is not backed by gold.
No, it hasn't been
josda1000 wrote:
and the dollar losing 95-98% of its value compared to gold over the span of 100 years.
I'm not going to get into the rest of this debate again... But man, you need to stop quoting this figure. The value of a $1 bill is irrelevant, except when compared to the average income. So if you want a USEFUL statistic, then find the average income for 1913 versus that for today, and compare that to a price index. That'll give you the relative buying power of a person, not the buying power of a changing unit. Basically, if you want to shortcut it, take the average family income from 1913, adjusted to 2009 dollars, and compare that to the average family income from last year. THAT difference is the gain/loss in value of the dollar. I believe it HAS gone down (As in, our salaries buy less goods), but not 95-98%. The ONLY way your statistic makes sense is if you've had that paper money sitting under your bed for the past century. Ok, rant over.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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josda1000 wrote:
and the dollar losing 95-98% of its value compared to gold over the span of 100 years.
I'm not going to get into the rest of this debate again... But man, you need to stop quoting this figure. The value of a $1 bill is irrelevant, except when compared to the average income. So if you want a USEFUL statistic, then find the average income for 1913 versus that for today, and compare that to a price index. That'll give you the relative buying power of a person, not the buying power of a changing unit. Basically, if you want to shortcut it, take the average family income from 1913, adjusted to 2009 dollars, and compare that to the average family income from last year. THAT difference is the gain/loss in value of the dollar. I believe it HAS gone down (As in, our salaries buy less goods), but not 95-98%. The ONLY way your statistic makes sense is if you've had that paper money sitting under your bed for the past century. Ok, rant over.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
OK, let's talk income. In the 1950s, one income could suffice for a family of four. Now, it takes two or three incomes to be sufficient for the same family. Even though, I still disagree with that premise. This is based on Keynesian economics, and I believe in an Austrian view. To me, the austrian theory just is common sense. Of course we're not going to agree on this. I see inflation as complete and utter theft.
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It's a mix of sci-fi and fantasy... Can see the synopsis and an excerpt via the link in my signature.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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OK, let's talk income. In the 1950s, one income could suffice for a family of four. Now, it takes two or three incomes to be sufficient for the same family. Even though, I still disagree with that premise. This is based on Keynesian economics, and I believe in an Austrian view. To me, the austrian theory just is common sense. Of course we're not going to agree on this. I see inflation as complete and utter theft.
josda1000 wrote:
In the 1950s, one income could suffice for a family of four. Now, it takes two or three incomes to be sufficient for the same family.
Agreed... The statistics will still likely support your side of the argument, but the 95-98% figure just isn't relevant.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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josda1000 wrote:
In the 1950s, one income could suffice for a family of four. Now, it takes two or three incomes to be sufficient for the same family.
Agreed... The statistics will still likely support your side of the argument, but the 95-98% figure just isn't relevant.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
I think that the figure is highly relevant. It actually does come into play. You said that the value of the dollar doesn't matter, because "pay raises" help offset that inflation. Like I did say in the previous debate, it's an illusion. Because if the value of the dollar continues to get inflated, then a person with a pay raise at the same rate is actually not getting a raise at all. This is why people are losing value in their buying power, making it necessary to have two incomes instead of one. Therefore, that valuation that I'd stated is highly relevant.
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Ok, so the latest move by the Obama administration is to attack the "To Big to Fail" problem, which Robin Williams amusingly equated to "Too Fat to Diet." Well, time for some weight loss, if Obama gets his way. Basically, what he wants to do is instate something similar to the Glass-Steagall Act of 1933 (Which also started the FDIC), enacted after the Great Depression and partially repealed in 1999. This law prohibited commercial banks from doing business on Wall Street. Right now, the big four (J.P. Morgan, Citigroup, Bank of America, and Wells Fargo) all include both a market security arm and a commercial banking arm (They're not the only ones, just the best examples). That means they're both taking customer deposits, and investing in risky instruments on the market. If they go bankrupt because of those risky instruments, as was happening in '08 and '09, they put the customer accounts (FDIC-insured) at risk, making it the taxpayers' problem. This is only allowed because of the repeal of the Glass-Steagall Act (Well, the parts that prohibited this) in 1999. Now the government wants to reinstate this, which would pretty much force the big guys to do one of three things: 1) Get out of the market, and just work with customer deposits and loans, like a commercial bank (Considerably lowers profits). 2) Close out customer accounts, and operate exclusively as an investment firm (Considerably lowers buying power and market "muscle"). 3) Split into two or more companies, each of which does only one of the above, hence reversing many of the recent mergers (JP Morgan + Chase, Citi + Travelers, etc). Now, the street hates it... When Obama announced it, the market dropped a few hundred points for two days. Personally, I think this might be a good thing, but I'd like to see some other viewpoints. So... Good idea? Bad idea? References: * Wikipedia[^] - Notice the section on the proposed reinstatement, backed by Senator McCain (R-Arizona), Senator Cantwell (D-Washington), and Paul Volcker (Former Fed chairman) * Ratical.com[^] - Some explanation on why it was originally instated *
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I think that the figure is highly relevant. It actually does come into play. You said that the value of the dollar doesn't matter, because "pay raises" help offset that inflation. Like I did say in the previous debate, it's an illusion. Because if the value of the dollar continues to get inflated, then a person with a pay raise at the same rate is actually not getting a raise at all. This is why people are losing value in their buying power, making it necessary to have two incomes instead of one. Therefore, that valuation that I'd stated is highly relevant.
Except that an expected "pay raise" isn't necessary without inflation. So other than reward-type raises, you can consider the standard "pay raise" to just be a consequence of the inflationary system. Hence, the fact that a "pay raise" just keeps your buying power constant instead of increasing it is irrelevant. Keep this to numbers. X is the median 1913 salary, inflation-adjusted to 2009. Y is the median salary from 2009. I would bet that X is less than Y, possibly by a significant amount. I'm not disputing that our buying power has lessened, requiring multiple salaries to support a family. I'm just saying that the 95-98% figure you and CSS both keep repeating isn't relevant, and is just sensationalism.
Proud to have finally moved to the A-Ark. Which one are you in? Author of Guardians of Xen (Sci-Fi/Fantasy novel)
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Ok, so the latest move by the Obama administration is to attack the "To Big to Fail" problem, which Robin Williams amusingly equated to "Too Fat to Diet." Well, time for some weight loss, if Obama gets his way. Basically, what he wants to do is instate something similar to the Glass-Steagall Act of 1933 (Which also started the FDIC), enacted after the Great Depression and partially repealed in 1999. This law prohibited commercial banks from doing business on Wall Street. Right now, the big four (J.P. Morgan, Citigroup, Bank of America, and Wells Fargo) all include both a market security arm and a commercial banking arm (They're not the only ones, just the best examples). That means they're both taking customer deposits, and investing in risky instruments on the market. If they go bankrupt because of those risky instruments, as was happening in '08 and '09, they put the customer accounts (FDIC-insured) at risk, making it the taxpayers' problem. This is only allowed because of the repeal of the Glass-Steagall Act (Well, the parts that prohibited this) in 1999. Now the government wants to reinstate this, which would pretty much force the big guys to do one of three things: 1) Get out of the market, and just work with customer deposits and loans, like a commercial bank (Considerably lowers profits). 2) Close out customer accounts, and operate exclusively as an investment firm (Considerably lowers buying power and market "muscle"). 3) Split into two or more companies, each of which does only one of the above, hence reversing many of the recent mergers (JP Morgan + Chase, Citi + Travelers, etc). Now, the street hates it... When Obama announced it, the market dropped a few hundred points for two days. Personally, I think this might be a good thing, but I'd like to see some other viewpoints. So... Good idea? Bad idea? References: * Wikipedia[^] - Notice the section on the proposed reinstatement, backed by Senator McCain (R-Arizona), Senator Cantwell (D-Washington), and Paul Volcker (Former Fed chairman) * Ratical.com[^] - Some explanation on why it was originally instated *
#3 is the least unpalatable for the big banks. Even that has huge drawbacks - take BAC, for instance. They bought Merrill because ML were in real danger of going under. Fast forward a year and a quarter, now the Merrill division is raking in huge profits while 'traditional' BAC is leaking money. Now there's actually talk that some Wall Street firms are coming together to 'buy back' ML 'out of' BAC, before Obama goes through with what you said. Change is the only constant, etc.
Cheers, Vikram. (Got my troika of CCCs!)
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OK, let's talk income. In the 1950s, one income could suffice for a family of four. Now, it takes two or three incomes to be sufficient for the same family. Even though, I still disagree with that premise. This is based on Keynesian economics, and I believe in an Austrian view. To me, the austrian theory just is common sense. Of course we're not going to agree on this. I see inflation as complete and utter theft.
Okay, so the average family was single income and is now double to get about the same. You equate this with the dollar being weaker and not the true source of the issue. EMPLOYERS ARE CHEAP BASTARDS. Why didn't they adjust the salaries to compensate for the shift? They are making more money due to teh same mechanics for their prices, so they should be paying more.
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Okay, so the average family was single income and is now double to get about the same. You equate this with the dollar being weaker and not the true source of the issue. EMPLOYERS ARE CHEAP BASTARDS. Why didn't they adjust the salaries to compensate for the shift? They are making more money due to teh same mechanics for their prices, so they should be paying more.
ragnaroknrol wrote:
Why didn't they adjust the salaries to compensate for the shift?
Theoretically, according to Ian, they do: they give "raises" to employees. This is where your idea goes completely off.
ragnaroknrol wrote:
EMPLOYERS ARE CHEAP BASTARDS.
I bet you wouldn't say that to your employer, would you? :) You'd be on the street in a heartbeat.
ragnaroknrol wrote:
You equate this with the dollar being weaker and not the true source of the issue.
Sorry about that: The true source of the issue is the interest rates. Yeah... raise the interest rates, stave off inflation (theoretically), which means fewer dollars out in the money supply (written down or physical), which means the value (and confidence) in the dollar remains relatively stable, meaning MAYBE we can get back to having families not having to have two incomes.