I believe that the solution is very simple.November 8 2008 at 8:28 AM
|noob (Login huskerdu2)|
Response to Wall Street Lays Another Egg
However, likely not politically feasible.
An economy is "healthy" when it is based on equity. As money flows, equity (or value) is transferring from one entity to another.
As money flows the "flow" itself begins to have some level of equity. THis is when the bankers & invenstment brokers (legalized "bookies", in another reference) jump on top of the "equity of the flow" and begin to create "pseudo-equity" by playing with interest rates and the "time value of money". From junk-bonds, to countless other "high-risk" investment schemes (much like pyramid schemes) bankers can create these things that "appear" as equity, but really aren't. And investors with "real equity" that would like to "make a buck" trade what was of value to something that only has "potential value".
When the flow stops, all the "potential value" is lost. People that end up holding the "pseudo equity" are simply out of luck, and the people with the "real equity" still have their money.
What creates such an environment? Deficit spending, printing money just to increase the money flow, persistent inflation (the text-book definition, not the layman's definition) - which are all the money policies set by the government. And both Republicans and Democrats play their game with the problem, and neither will really address the problem.
The solution - stronger regulation on non-equity based investments (which is banking, futures markets, and brokerages houses, et. al.) In theory, anyway. In practice, it could never be made to work because of the amount of wealth that exists that is not based on equity in anything - it's simply manufactured.
My 2 cents, anyway.
|This message has been edited by huskerdu2 on Nov 8, 2008 8:31 AM|
- I agree - Vince on Nov 8, 2008, 8:27 PM