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Thread: The Derivative Market?

  1. #1

    The Derivative Market?

    Is the Derivative Market the biggest reason we are in debt?, and if not what do you say to someone that says this is why and not big-goverment?
    Last edited by jpoole23; 06-25-2012 at 09:29 PM.



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  3. #2
    Quote Originally Posted by jpoole23 View Post
    Is the Derivative Market the biggest reason we are in debt?
    We, who? I'm not in debt. First clarify that you're talking about government debt rather than household and corporate debt.

    Quote Originally Posted by jpoole23 View Post
    and if not what do you say to someone that says this is why and not big-goverment?
    Once you figure out what debt he's talking about, just ask him to explain how the derivative market created said debt. If he can't even do that, you win by default.

  4. #3
    Derivatives have nothing to do with debt, just bad investments.

    So people who do not have pensions or stocks are not affected, until the government bailed the losers out at taxpayer expense.

  5. #4
    Quote Originally Posted by enoch150 View Post
    We, who? I'm not in debt. First clarify that you're talking about government debt rather than household and corporate debt.



    Once you figure out what debt he's talking about, just ask him to explain how the derivative market created said debt. If he can't even do that, you win by default.
    It was about goverment debt...my argue was there was too many regulations...his argument was it was the 'de-regulated' derivative market that holds and is responsible for the American debt.

  6. #5
    Derivatives are not debt... we are in debt because we spend too much, period. It is no more complicated than that.

  7. #6
    Quote Originally Posted by jpoole23 View Post
    Is the Derivative Market the biggest reason we are in debt?, and if not what do you say to someone that says this is why and not big-goverment?
    No. The biggest reason we are in debt is US unfunded liabilities. (Go to: http://www.usdebtclock.org/)

    On the top right section you'll see the US government revenue. It's about 2.3 Trillion annually right now.
    (You'll see other stuff like US GDP is less than our total Debt and stuff as well.)

    15.8 Trillion is our national debt. But we aren't exactly paying it down each year.
    If you look at the top left section under US federal spending, that is 3.6 Trillion in spending each year.
    What the media says is "1.3 Trillion dollar Deficit" so the public doesn't freak.

    So not to bad right? Balance the budget in a few years, Romney's plan is enough to take out 15.8 trillion right?
    Nope.

    Go down to the bottom of the page. Look where it says "social security" and "medicare". See that big number? 119 Trillion?
    Yeah. That number is beyond the bounds of our ability to pay it off. See what happens is as time goes by, it gets bigger and adds to our debt. This doesn't include the interest and "Total US debt" on the books we citizens owe people. (57 Trillion is found in the middle by the way)

    Financially, its mathematically impossible to pay it off. Trying to print money to pay it off makes us owe MORE interest to... THE $#@!ING FED for printing it out for us.

    So what about derivatives? That 700 or 600 Trillion nightmare? Well that just means the entire fiancial industry is unstable. A really bad economic hit in a day has the potential cause all those markets to put insane amounts of pressure on shadow markets that could cause a financial collapse of capital because of the way it is traded (by computers). It's impossible to even pay a fraction of it. In fact, it requires a lot more research on articles discussing their real threat.

    But its technically not "real" money a country owes like our own insolvent country's balance sheet.
    Last edited by Athan; 06-26-2012 at 09:42 AM.
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  8. #7
    There was a very good interview about the Black-Scholes equation on the Peter Schiff Show some time ago. Sadly I can't find it. He and his guest argue that without speculation and derivatives (such as credit default swaps, etc.) even more damage would have been done to the economy.


    Basically a derivative is a claim on a claim.

    Lets say I'm a wheat farmer. Sometimes my harvest is terrible, most of the times it's medium and sometimes it's great. If it's great - good for me! If it's medium I can survive and have a decent live. But if it's bad I die. Therefore I will try to find someone who agrees to pay a specific amount of money for my whole harvest before the summer starts. Because this guy, lets say the miller, is not an idiot it will be less money then the expected value of my harvest. But I'm willing to lessen my profits on average for additional security.

    But now the miller has the risk of a bad harvest so why is he going to take that risk? Because he buys huge amounts of wheat every year from many farmers in different locations to sell the milled wheat as flour to bakeries. So by having multiple of these certificates he is using the strategy of hedging. He pays every farmer less than the expected value of his harvest and because of the law of big numbers he will make a profit even when some of the harvests are - as expected - bad because others will be very good. Of course that's only true if his risk calculation was correct.

    As of know there were no derivatives. The certificates for the individual harvests didn't derive from any other certificate (which is the definition of a derivative). But there was specualtion going on which is always mentioned in combination with derivatives as possible root for this crisis.

    But what exactly did this speculation do? It created certainty for the farmer but took away his chances for great profits in good years. So in a free market speculation is not a tool to increase risks but a tool to insure against risks and to bring prices to equilibrium level.

    But know the miller begins to wonder what happens to him in a year with very bad weather in the whole region? He has obligations to pay the farmers even if the real value of the combined harvests is far less than the expected value. So he goes to an insurance company. He is willing to give up some of his expected profits in order to gain a little bit more certainty. So the insurance company insures every certificate to a negotiable sum for a fee. The insurance certificate for every harvest certificate is a derivative. And the insurance company might have a reinsurence policy at a reinsurer for every single insurence certificate they create. But that isn't a bad practice. It redcuces volatility in the market. Every actor in the market is willing to give up possible profits for security and without speculation this is impossible and without derivates it's only possible to some extend.


    The derivate speculation in the housing market was just a symptom. There would have been just as much speculation as there was (maybe even more) but the risk wouldn't have been shared to many actors if there weren't any derivates. So it's likely that the housing bubble would have grown even bigger and caused even more suffering. It was because of the reactions in the derivative market that the bubble finally came to an end.

    The big problem with many people is that they see the crisis as the problem. Austrian economists (the branch, not the nation, I feel obligated to say that ) know that this is not true. The problem is the framework that allows and encourages the boom - or even makes it inevitable due to prisoner dillemmas. The bust is nothing but the consequence of former bad behaviour. Let's be happy that the housing bubble burst because had it countinued even more ressources would have gone in a market where they are not supposed to be.


    Just a random article I just googled on that topic:

    http://www.forbes.com/sites/timworst...-increases-it/


    Speculators buy when prices are low (additional demand that drives prices up) to sell when prices are high (additional supply that drives prices down). The argument that speculators in a free market (!) would cause food prices to skyrocket is insane. Why should speculators buy high priced food to sell it even higher? Increasing the price doesn't necessarily increase profits. If that were the case, why don't the farmers increase the prices in the first place? Are they not interested in higher profits for themselves?

    In a free market, without governmental prisoner dillemmas, speculation is always decreasing volatility and overall beneficial.

  9. #8
    i think ( i may be wrong ) the derivatives market is 700-800 trillion $$$ ( face value ) , that is the value of the derivatives ( all commodities , futures , puts , calls , etc ) , what i am getting at is these derivatives are bought at margin of about 2-6%,so the $$$ value would be 2-6% of the $700-800t.

    still about $ 30 trillion cash in the derivatives market.

    this makes it much worse if the cards start falling , margin is a double edged sword .



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  11. #9
    The derivative market DOES play a role in debt, both public and private, but it can hardly be blamed for our massive national debt. We had a huge national debt before there was such a thing as derivatives.

    Derivatives are like insurance policies on other debt obligations. For example, people like Golden Sacks sell derivatives that hedge investment in European Sovereign debt. This makes it easier to sell that debt. They do the same for other debt - like sub-prime mortgages - which made it easier to sell that debt.

    So the derivative market makes it easier to borrow money and so does contribute to debt, both public and private. But our national debt is largely due to government spending money it doesn't have.
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  12. #10
    Quote Originally Posted by ILUVRP View Post
    i think ( i may be wrong ) the derivatives market is 700-800 trillion $$$ ( face value ) , that is the value of the derivatives ( all commodities , futures , puts , calls , etc ) , what i am getting at is these derivatives are bought at margin of about 2-6%,so the $$$ value would be 2-6% of the $700-800t.

    still about $ 30 trillion cash in the derivatives market.

    this makes it much worse if the cards start falling , margin is a double edged sword .
    Can anyone confirm this?

    im really trying to get an understanding on how much the Derivatives added to our debt...im being told 700-800 trillion which would make it our biggest problem, and that just dont seem right to me.
    Last edited by jpoole23; 06-26-2012 at 10:05 PM.

  13. #11
    Quote Originally Posted by Danan View Post
    There was a very good interview about the Black-Scholes equation on the Peter Schiff Show some time ago. Sadly I can't find it. He and his guest argue that without speculation and derivatives (such as credit default swaps, etc.) even more damage would have been done to the economy.


    Basically a derivative is a claim on a claim.

    Lets say I'm a wheat farmer. Sometimes my harvest is terrible, most of the times it's medium and sometimes it's great. If it's great - good for me! If it's medium I can survive and have a decent live. But if it's bad I die. Therefore I will try to find someone who agrees to pay a specific amount of money for my whole harvest before the summer starts. Because this guy, lets say the miller, is not an idiot it will be less money then the expected value of my harvest. But I'm willing to lessen my profits on average for additional security.

    But now the miller has the risk of a bad harvest so why is he going to take that risk? Because he buys huge amounts of wheat every year from many farmers in different locations to sell the milled wheat as flour to bakeries. So by having multiple of these certificates he is using the strategy of hedging. He pays every farmer less than the expected value of his harvest and because of the law of big numbers he will make a profit even when some of the harvests are - as expected - bad because others will be very good. Of course that's only true if his risk calculation was correct.

    As of know there were no derivatives. The certificates for the individual harvests didn't derive from any other certificate (which is the definition of a derivative). But there was specualtion going on which is always mentioned in combination with derivatives as possible root for this crisis.

    But what exactly did this speculation do? It created certainty for the farmer but took away his chances for great profits in good years. So in a free market speculation is not a tool to increase risks but a tool to insure against risks and to bring prices to equilibrium level.

    But know the miller begins to wonder what happens to him in a year with very bad weather in the whole region? He has obligations to pay the farmers even if the real value of the combined harvests is far less than the expected value. So he goes to an insurance company. He is willing to give up some of his expected profits in order to gain a little bit more certainty. So the insurance company insures every certificate to a negotiable sum for a fee. The insurance certificate for every harvest certificate is a derivative. And the insurance company might have a reinsurence policy at a reinsurer for every single insurence certificate they create. But that isn't a bad practice. It redcuces volatility in the market. Every actor in the market is willing to give up possible profits for security and without speculation this is impossible and without derivates it's only possible to some extend.


    The derivate speculation in the housing market was just a symptom. There would have been just as much speculation as there was (maybe even more) but the risk wouldn't have been shared to many actors if there weren't any derivates. So it's likely that the housing bubble would have grown even bigger and caused even more suffering. It was because of the reactions in the derivative market that the bubble finally came to an end.

    The big problem with many people is that they see the crisis as the problem. Austrian economists (the branch, not the nation, I feel obligated to say that ) know that this is not true. The problem is the framework that allows and encourages the boom - or even makes it inevitable due to prisoner dillemmas. The bust is nothing but the consequence of former bad behaviour. Let's be happy that the housing bubble burst because had it countinued even more ressources would have gone in a market where they are not supposed to be.


    Just a random article I just googled on that topic:

    http://www.forbes.com/sites/timworst...-increases-it/


    Speculators buy when prices are low (additional demand that drives prices up) to sell when prices are high (additional supply that drives prices down). The argument that speculators in a free market (!) would cause food prices to skyrocket is insane. Why should speculators buy high priced food to sell it even higher? Increasing the price doesn't necessarily increase profits. If that were the case, why don't the farmers increase the prices in the first place? Are they not interested in higher profits for themselves?

    In a free market, without governmental prisoner dillemmas, speculation is always decreasing volatility and overall beneficial.
    +rep. Free markets are not incompatible with derivatives, despite what some here would lead you to believe (likely because they don't understand what derivatives are). Any contract that can be written should also be permitted to trade freely. Risk-seekers should be able to buy risk from those holding undue amounts of it.
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  14. #12
    Quote Originally Posted by Acala View Post
    The derivative market DOES play a role in debt, both public and private, but it can hardly be blamed for our massive national debt. We had a huge national debt before there was such a thing as derivatives.

    Derivatives are like insurance policies on other debt obligations. For example, people like Golden Sacks sell derivatives that hedge investment in European Sovereign debt. This makes it easier to sell that debt. They do the same for other debt - like sub-prime mortgages - which made it easier to sell that debt.

    So the derivative market makes it easier to borrow money and so does contribute to debt, both public and private. But our national debt is largely due to government spending money it doesn't have.
    I disagree with this - generally what you're talking about are securitizations, which are just one form of derivative. Securitizations are meant to pool risk together which cancels each other out - this was the logic behind the mortgage-backed securities ("Some housing prices will go up, some will go down, they will cancel each other out"). Obviously, securitizations are not always established on good economic foundations.

    Other forms of derivatives may be said to "make it easier to sell" something, but not necessarily debt - mostly, it's risk (risk of an underlying price going up or down) which is a neutral position - no debt is created, and the contract is a zero-sum game.
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  15. #13
    Quote Originally Posted by jpoole23 View Post
    Can anyone confirm this?

    im really trying to get an understanding on how much the Derivatives added to our debt...im being told 700-800 trillion which would make it our biggest problem, and that just dont seem right to me.
    Derivatives add nothing to the national debt. Not a single dime. The national debt is a result of the government spending more on the military, entitlements, and bureaucracy than it collects in taxes. Derivatives are a private market transaction.

    The thing to keep in mind about the notional value of the derivative market is that some claims are offsetting - they cancel each other out.

  16. #14
    1) so all in all...from all the fancy words being thrown around (im not a econ major by any means) Derivatives are private trading of stock, or more insurance policies on those contracts?

    2) how much of this private trading of derivatives contributed to the financial collapse in '08? which in turn caused a bailout, which then turned a private matter into a public matter?

    this seems to be one of the harder things in economic to grasp for me, idk why.

  17. #15
    o screw it...what would you say to this?

    [quote]Derivates, mortgage backed securities, poison pill mortgage, all of these things are specific issues that didn't just exacerbate a financial meltdown, they caused a TOTAL collapse. When mortgage firms and banks, which hold that high of a percentage of wealth, are making bets like this is vegas, when insurance agencies like AIG have to start paying on CountryWide style predatory mortgages, not only are fake bets turning into real liquid cash, but it becomes a situation of investor panic. It becomes a situation where banks don't have your money because they have traded it fifteen times over.

    It becomes a freeze on credit. It becomes people not getting their money out of the bank when there is a run on it. It is EVERYTHING collapsing. And it doesn't discriminate. And two weeks later, the grocery store has no milk.

    That's what the issue was. An overburdened financial system not held in check by ANY regulations. Medicare? Medicare didn't cause one $#@!ing stitch of the collapse in 07.[quote]

    basically im trying to get someone to see the big picture and and how less regulation/goverment would help...with a liberal minded econ major...

  18. #16
    and this...

    [quote]I can't let that slide read the clock Medicare liabilities are at $82 trillion, backed by traced transfer payments and very regulated. Derivatives are at $730 trillion, 20% did you actually look at the debt clock?[quote]

    thank you, any honest input would help alot of people in such discussion better understand the financial system and its problems.



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  20. #17
    Derivatives exist because Fractional banking exist. If bankers couldnt create money out of thin air, then there wouldnt be any money to "play with" in the derivatives market. Well there might be, but the market would be much smaller.


    when bankers are bailed out by the government, this adds to the debt plain and simple. TARP was never paid back it was just a handout to the bankers.

  21. #18
    Quote Originally Posted by jpoole23 View Post
    Can anyone confirm this?

    im really trying to get an understanding on how much the Derivatives added to our debt...im being told 700-800 trillion which would make it our biggest problem, and that just dont seem right to me.
    The numbers are nearly that high, but it is impossible to really know. Older numbers said 550 to 700 Trillion in estimates. If they are saying 800 Trillion, its still insane, but it is also hard to verify due to the nature of the trading. There is NO REAL accounting of this money done. Banks hide derivatives trading from their public balance sheet. With the national debt, we at least have the congressional budget office providing numbers of accounting.
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  22. #19
    Quote Originally Posted by jpoole23 View Post
    1) so all in all...from all the fancy words being thrown around (im not a econ major by any means) Derivatives are private trading of stock, or more insurance policies on those contracts?

    2) how much of this private trading of derivatives contributed to the financial collapse in '08? which in turn caused a bailout, which then turned a private matter into a public matter?

    this seems to be one of the harder things in economic to grasp for me, idk why.
    1. Yes.
    2. A lot. The market was moving down a lot mostly due to computers trading at ultra high speeds. The public bailout however was completely the fault of stupid and/or greedy humans.
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  23. #20
    Quote Originally Posted by jpoole23 View Post
    o screw it...what would you say to this?

    Derivates, mortgage backed securities, poison pill mortgage, all of these things are specific issues that didn't just exacerbate a financial meltdown, they caused a market collapse. When mortgage firms and banks, which hold that high of a percentage of wealth, are making bets like this is vegas, when insurance agencies like AIG have to start paying on CountryWide style predatory mortgages, not only are fake bets turning into real liquid cash, but it becomes a situation of investor theft. It becomes a situation where banks don't have your money because they have traded it fifteen times over.

    In the future, it will likely result in a freeze in credit and wiping out of credit for currency holders. Another major threat is if international investers flee because of our inabilty to pay for our future debt obligations (Source: USdebtclock.org) as well as a better investment haven such as "B.R.I.C.S." (Brazil, Russia, India, China, South America currency agreement), the situation can turn into people not getting having money worth trading, bank runs, and runs on store necessties as our currency collapses. And one or two weeks later, the grocery store has no groceries.

    That's what the issue was. An overburdened financial system not held in check by ANY regulations. Medicare? Medicare didn't cause one $#@!ing stitch of the collapse in 07.
    basically im trying to get someone to see the big picture and and how less regulation/goverment would help...with a liberal minded econ major...
    ^My view.
    Last edited by Athan; 06-27-2012 at 12:36 PM.
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  24. #21
    Derivatives should not be in natural resources that are in LAND. This is Common Wealth. e.g., copper, iron, etc. Oh and LAND itself.

    Speculating on LAND and its resources cause great hardship and world-wide crashes.
    “I have made speeches by the yard on the subject
    of land-value taxation, and you know what a supporter
    I am of that policy.”

    - Winston Churchill


    The only war Winston Churchill ever lost was
    against the British landlords.

    - Fred Harrison (economic writer)

  25. #22
    [QUOTE=jpoole23;4513572]
    Derivates, mortgage backed securities, poison pill mortgage, all of these things are specific issues that didn't just exacerbate a financial meltdown, they caused a TOTAL collapse. When mortgage firms and banks, which hold that high of a percentage of wealth, are making bets like this is vegas, when insurance agencies like AIG have to start paying on CountryWide style predatory mortgages, not only are fake bets turning into real liquid cash, but it becomes a situation of investor panic. It becomes a situation where banks don't have your money because they have traded it fifteen times over.

    It becomes a freeze on credit. It becomes people not getting their money out of the bank when there is a run on it. It is EVERYTHING collapsing. And it doesn't discriminate. And two weeks later, the grocery store has no milk.

    That's what the issue was. An overburdened financial system not held in check by ANY regulations. Medicare? Medicare didn't cause one $#@!ing stitch of the collapse in 07.
    Alright, here's the short version:

    In 1933, the government passed the Glass-Steagall Act, which created the FDIC. This was a federal insurance program, which banks pay in to, which bails out depositors to banks if the bank gets in trouble. There was an implicit guarantee that, if the FDIC didn't have enough funds to cover a depositor bailout, the government (or Federal Reserve) would step in and back the FDIC. The idea was to stop bank runs by making people believe their money was always safe, because it was guaranteed by the government. Part of the deal was that banks could not take on certain investment risks. This was to prevent moral hazard - banks taking on excessive risk because they knew they would be bailed out by the government.

    In 1999, the Gramm-Leach-Bliley Act repealed the part of Glass-Steagall. The idea was to create stability - people pulled money out of banks and put money into investments when times were good, and pulled money out of investments and put it in savings banks when times were bad. If one company could do both (and insurance was thrown in, too), the companies should be more stable. The problem was, it created moral hazard by keeping the FDIC and implied government bailout. Some banks, knowing that they would be bailed out if they ever got in trouble, proceeded to take on stupid amounts of risk. Most of this involved subprime mortgages derivatives.

    (Some of these mortgage derivatives were designed to fail. For an explanation of this read the sections of this article title "You Can’t Recover What Doesn’t Exist" and "The Tranche Problem" http://www.counterpunch.org/2010/10/08/a-massive-fraud/ )

    All of these companies had financial transactions intertwined to such an extent that a massive counter-party risk formed - if one company went bankrupt, so many transactions might be defaulted on that other companies might also be toppled. Additionally, no company knew exactly what any other company's risk exposure was (or even their own risk exposure, if you read that article). So they all stopped dealing with each other. They stopped lending each other money. Because a few companies exploited the moral hazard provided by the government, and then had dealings with companies that did not have the worst class of subprime mortgage derivatives, the government believed there was systemic risk to the entire system and bailed out everyone.

    The point is: the old regulations kind of worked, although it stifled growth and companies were less stable than they would have been without government involvement. Repealing all government involvement also would have worked, because without the benefit of bailouts, they would not have taken on excessive risk. What doesn't work at all is no regulations plus implied bailouts. That's a recipe for disaster.
    Last edited by enoch150; 06-28-2012 at 04:50 AM.

  26. #23
    Quote Originally Posted by jpoole23 View Post
    and this...

    I can't let that slide read the clock Medicare liabilities are at $82 trillion, backed by traced transfer payments and very regulated. Derivatives are at $730 trillion, 20% did you actually look at the debt clock?
    Medicare liabilities are at $82 trillion when taken to the infinite horizon. It will likely collapse long before then. I have no idea what "backed by traced transfer payments" means. The only thing that backs it is the taxpayers.

  27. #24
    I blame fiat money. This is why Ron Paul wants to audit the Fed and allow SOUND MONEY like gold and silver. The PONZI scheme of derivatives doesn't work so well in reverse.



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  29. #25
    Quote Originally Posted by jpoole23 View Post
    It was about goverment debt...my argue was there was too many regulations...his argument was it was the 'de-regulated' derivative market that holds and is responsible for the American debt.
    Whoever says this has NO idea what he is talking about. None. Zero. Zilch. Nada. Nichts. Nyichevo. Semmi. Nuttin'. Tween.

    You tell them I said so.
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  30. #26
    his argument was it was the 'de-regulated' derivative market that holds and is responsible for the American debt.
    He's right. The problem is that the financial market is simultaneously deregulated and government-insured. If anything goes wrong (and with derivatives it's very very likely something will go wrong), the government is there to bail them out, which means the taxpayers are bailing them out.

    And they sort of *have* to be bailed out, because they're too big to fail (currently the biggest banks are taking up 77% of the banking market). You could re-regulate them, but that hurts the economy and we're in a recession. The only sane option is to take away the government insurance -- but that means if they collapsed, they'd take the rest of the economy with them.

    If we just concede to bailing them out when they inevitably $#@! up a risky endeavor, then it either comes out of the taxpayer's pocket ($#@!ing up the economy), or puts the country further into debt.

    It's a catch-22 really.

  31. #27
    But no, as other posters have said, it's not the sole cause of the US national debt, nor was it the sole cause of the financial crisis of 2008.

  32. #28
    Quote Originally Posted by Xhin View Post
    But no, as other posters have said, it's not the sole cause of the US national debt, nor was it the sole cause of the financial crisis of 2008.
    People constantly drone on about the symptoms. The land market was the root cause. Solve the root not the symptoms.

    Economist Fred Harrison....

    "Any good economist will tell you, as people's real disposable incomes rise, that money ends up in one place, and one place only, the LAND MARKET. As there is growth land values rise, and it should rise. Except, the problem occurred when that increase in value went into private pockets instead of going into services: highways, hospitals, schools and so on, that created that value in the first place"
    ..
    ..
    "This is the sources of our problem, not bankers, big bonuses, sub-prime mortgages in America and the other excuses they have. This is the heart of the problem of the market economy, we have to address it. There has to be political consensus, there has to be consensus, with nobody playing party politics"
    The above is at. 3 min 35 secs

    Last edited by EcoWarrier; 07-02-2012 at 04:05 AM.
    “I have made speeches by the yard on the subject
    of land-value taxation, and you know what a supporter
    I am of that policy.”

    - Winston Churchill


    The only war Winston Churchill ever lost was
    against the British landlords.

    - Fred Harrison (economic writer)

  33. #29
    Quote Originally Posted by Xhin View Post
    But no, as other posters have said, it's not the sole cause of the US national debt, nor was it the sole cause of the financial crisis of 2008.
    Derivatives in LAND and its RESOURCES fuel the root problem of harmful speculation in the LAND MARKET. When there is speculation in LAND and its RESOURCES world-wide crashes occur. Common sense says get speculation out of LAND and its RESOURCES. There are simple and painless ways of doing that, that will greatly improve the economy & enterprise as great side effects and give economic justice.
    Last edited by EcoWarrier; 06-30-2012 at 04:40 AM.
    “I have made speeches by the yard on the subject
    of land-value taxation, and you know what a supporter
    I am of that policy.”

    - Winston Churchill


    The only war Winston Churchill ever lost was
    against the British landlords.

    - Fred Harrison (economic writer)

  34. #30
    Speculation isn't the issue. It's one piece of the puzzle, but you're missing the piece where the federal reserve *created* the bubble (by trying to fix another bubble) and the piece where the government provides insurance to keep stupid banks from failing.

    It's impossible to take anyone seriously when they say "Oh this was the sole cause" when they're ignoring the bigger picture. Strangely those people are always on the Left.

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