Re: Money Supply, Credit Supply

From: smithaa02 (asdf_at_asdf.net)
Date: 06/18/04 

Date: Thu, 17 Jun 2004 20:38:01 -0500

Michael Vilkin <mikevilkin@mail.com> wrote in message
news:e658a41d.0406171452.5099f14a@posting.google.com...
> "smithaa02" <asdf@asdf.net> wrote in message
news:<40d0f4c6_2@newspeer2.tds.net>...
>
> > Michael Vilkin <mikevilkin@mail.com> wrote in message
> > news:e658a41d.0406161724.64ef0974@posting.google.com...
>
> <snip>
>
> > > Corporate welfare? Why is that?
>
> > If banks could have gotten those 1% loans from the market, then they
would
> > have. Therefore government by offering something the market is not
> > offering, is offering a gift. It could be in lower interest rates, or
lower
> > risk premiums. The difference in interest rates is a gift. Gifts to
> > businessmen are 'corporate welfare'.
>
> I agree, it's a corporate welfare.

Don't you see a problem giving money to institutions whose only goal is to
make as much money as possible?

> But I believe this would be good
> for the country, to borrow at 1% and to lend at 5%.

Only if you define country as the banker class.

> But there will be competition. Some banks might offer home mortgages
> at, say, 4% interest.
> So profit margin will not be exessive, if you agree with me.

But the government won't hand out infinite 1% loans to banks, right? So
where there exist scarcity with loans, there exist profits on top of such
scarcity. Furthermore the facts that banks are profit seeking
intermediaries guarenties their profit.

> And bankers also have to earn living, otherwise we will have to
> collect taxes and pay there salaries out of taxes.

Why do bankers have to earn a living?

> > > A construction company would never pay more than 7% interest on the
> > > construction loan.
> > > But, guess what? Interest it pays is a cost of doing business.
> > > The more it pays the more you pay when you will buy the house.
>
> > If you insist on government giving out these loans, then why not bypass
the
> > middleman and go straight to the public?
>
> I agree again. In theory, at least, it's possible to have a single
> monopoly bank which would be regulated by government and which would
> offer home mortgages at 5% max, business loans at 7% max, and credit
> card loans at 10% max. You can take commercial banks out.

Why do home loans get 5% and not 10%? Why not 4.922288%? What about risk?
What about defaults? It's all subjective nonsense...

> The only problem is that in this case that will be a government-owned
> giant monopoly bank. You still need loan officers, and they will have
> to be paid out of taxpayers' money.
>
> If you like this, we can discuss it as a theoretical exercise.
>
> --Michael Vilkin

Why insist that we can only transact but through loans?

Relevant Pages

  • NBC: A Bad Bank Rescue; By Sebastian Mallaby
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  • Re: OT~Just how dumb is a liberal? Heres the sad answer...
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  • Dear President Obama, Please Fix Your Fix!
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  • Re: OT~Just how dumb is a liberal? Heres the sad answer...
    ... easing the credit requirements on loans that it will purchase from ... banks and other lenders. ... Fannie Mae officials say they hope to make it a nationwide ... But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. ...
    (rec.outdoors.rv-travel)