We need more Regulation!

[Eric21ND]

That's what the media and politicians have been spewing for the past week, but is this really the fix? Can you explain why government regulation got us in this mess and isn't the cure the financial crsis?

[RSLudlum]

We need more cowbell!!! :D

http://www.thepeoplescube.com/images/Obama_Cowbell.gif

[Razorback Fan]

I don't understand it well enough to explain it here, but there are great sources that explain it very well. Probably the best thing you can do for an answer is to look up the Austrian School of economics, either on this forum, on Wikipedia, at the Mises Institute website, etc. If you understand that, then you understand the problems we're having.

[dannno]

I don't think that a bank should have any right to do anything than an individual or any other business cannot.

They should be able to enter into contracts with people just like any other business, but we have regulated them into the industry of creating money. That is the problem. We need to regulate the government, ensure they are following the constitution and have an honest monetary system.

[werdd]

Fed creating artificial intrerest rates inflating and price fixing the currency, influencing companies like fannie mae and freddie mac to give out these sub prime APR mortgages, Leading to the devaluation of our dollar and the global struggle to either strenghten the dollar, or drop it in favor of a better/new global reserve currency.

[JaylieWoW]

I haven't been able to find it, but there was an article on Mises.org that talked about how the government was culpable in the rise of Enron.

In this article the writer was demonstrating why our patenting laws cause more problems than they actually protect people who invent things.

In a nutshell, Enron (was under another name at the time) held a patent for something (I cannot recall the specific patent). While their invention may have been more superior than anything else at the time (and even that is highly debatable) what clinched it was that they helped write the REGULATIONS for everyone in their type of business based on... guess what... THEIR PATENT! This meant anyone engaging in their industry was FORCED to use their methods/patent process whatever, which means everyone had to buy from them.

Since my background in the "freedom" movement originated due to overbearing family court practices, I know a bit more about ANOTHER type of regulation created in that industry.

There is a company called PSI, Inc. (Policy Studies, Inc.). They recommend to states what the states should use as a model to calculate the proper amount of child support that should be paid. The more child support shifting hands the more money PSI makes (they actually run some states CS collection systems). Well, back before there was this whole child support collection behemoth we have today (oh and you can thank CS collections for a portion of our missing Social Security btw, it's funded from there), and during the "welfare reform" era. The states were forced to come up with a method for calculating child support. I'll give you three guesses as to who helped the Federal Government and many of the individual states in coming up with their models. Yes, that's right, PSI, Inc.

Both of these cases demonstrate a clear conflict of interest. Both of these cases just show a very small sample of why regulation is so bad. I realize they do not demonstrate regulation regarding the banking system, but I'm sure there are many parallels there.

Anytime there is regulation there is ALWAYS someone who PROFITS from it and thus the ones who push for the regulation.

You might have better luck than me finding that article on Mises, do a search for Enron.

[mediahasyou]

In a nutshell:

The government created freddie/fannie

Freddie/Fannie buy mortgages in a secondary mortgage market (They buy these capitol to invest elsewhere)

Banks sell mortgages to Freddie/fannie (banks give everyone loans. even people who obviously cant make their payments)

Banks are required by law not to discriminate (by the government's standards)...forcing them to take on more of the minority's people with bad credit

Interests rates are artificially lowered by the fed and cause banks to loan out huge amounts of money they don't have

Artificial rates cause inflation


This economic debacle is more caused by the Federal Reserve than regulation. For a regulation caused crisis just look at the 1970s.
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Read Crash Proof which predicted this written by Ron Paul's adviser Peter Schiff (http://www.ronpaulforums.com/showthread.php?t=101732)

As to: Regulation does hold the market back by not allowing businesses to fully increase production, so prices can be lowered, then everyones standard of living goes up