[adam419]

And our current status quo of rampant and reckless monetarism is what causes such severe crashes and volatility.

(Not necessarily advocating getting rid of fdic)

It's also far less preposterous when you read the next sentence where he advocates banks have a 20% capital reserve requirement.

[dragonwriter]

> And our current status quo of rampant and reckless monetarism is what causes such severe crashes and volatility.

Insofar as there is an overreliance on monetary policy, that's because Congress has been uninterested in fiscal intervention to.address problems, which is the real source of severe economic problems (some short-term market volatility may be tied specifically to monetary policy, but that's far less important.)

Eliminating the independent central bank (the Federal Reserve) -- thus making both fiscal and monetary policy dependent on Congress getting its actually together -- makes this problem worse, not better.

> It's also far less preposterous when you read the next sentence where he advocates banks have a 20% capital reserve requirement.

Increasing reserve requirements will probably reduce the incidencenter of failure slightly, at the expense of being a giant break on the economy. But it doesn't make eliminating the FDIC far less preposterous.

[adam419]

Too many assumptions about my opinions being made from my statement (which I agree I didn't substantiate). I'm making a more broad critique of fed.

We should have a federal reserve, but one who doesn't engage in central planning and has a healthy respect for the efficacy of free markets. If they raised rates fully in 2011-2013 they would've been heros, now they've completely distorted the global economy because prices simply cannot reflect information about the economy when money itself so widely fluctuates.

Money is a measuring stick, plain and simple. Economic activity can be thought of as scientific experimentation, except the results of these experiments can't reliably be measured when the measuring stick itself changes widely for political, and not fundamental reasons.

I'm not really making an argument for institutional changes, just that the people currently occupying the fed are benevolent morons.

[ArkyBeagle]

"Reckless monetarism"? Meaning what, precisely?

We're in essence in stagnation because of low interest rates - assuming that's the cause and not the effect.

So now we're gonna go back to a demonstrably deflationary regime ( the gold standard ) and raise reserve requirements to 20%?

How is that not even more deflationary?

[adam419]

Lol, it is objectively the "effect".

The feds fund rate has been set to near zero for almost 8 years. This is acts as the baseline cost of credit in our country and given our global financial stature, the world.

[yuhong]

The most important I think is how credit has increased since Bretton Woods was abandoned, allowing the country to continue to run trade deficits. Previously, this was limited by a gold standard.

[morgante]

Give me a break. Libertarians don't get to rewrite history on a whim.

There were massive and volatile crashes on the gold standard. Most famously, the Great Depression.

[yuhong]

I think back when the Great Depression happened it was a US trade surplus which eventually ended. US now have a trade deficit and has been since around the 1970s.

[ArkyBeagle]

The laws of double-entry accounting being what they are, there is no "trade deficit" - the difference is made up mostly in financial services.