Hyper Inflation

Originally Posted by Cannon Shell

This isnt exactly true. The govt (which is to blame for much of the core banking problems via Fannie Mae and Freddy Mac and their support of the lending to unqualified groups 1.and individuals for political reasons) has imposed draconian rules and regulations on banks and the banks simply are afraid of them and quite frankly as i was told by a banker this week, arent completely sure what the bank rgulators want. So they are being very cautious with lending and are imposing harsh terms on the consumer in order to be in compliance. 2.Banks dont make money unless they lend.

1. Not exactly true either according to what I read. Banks were making loans to more than just unqualified. And the loans made to the unqualified were made to balloon up. The investment banks were the idiots that made the most complicated financial instruments ever conceived to lump many diff types of loans together so no one knew what the hell they were buying. This exacerbated the bad loan problem.

2. No they dont. But they can certainly clean up their balance sheets with government money instead of using government money to make loans. Maybe your friend works for a smaller bank that stuck to what they were always successful with and now they have become a part of what was not their problem. (Make loans they are comfortable with because the consumer they loan to will be good for it... maybe not loans to another bank trying to get out of trouble because of unfettered greed)

The problem I have with all these "ancedotes" is everyone seems to look for evidence that supports their political leaning instead of looking at the whole body of work. I just read a little bit of Paul Krugman (a liberal), the Nobel Prize winning economist, and of course his take is very different than the above (he also thinks that deflation is a more likely problem in the near future). He says it is a lesson that free-markets need to be regulated. The lesson above is dont let the government get involved in pushing loans to help less affluent indiviuals. Everyone looks for evidence that supports their own line. But in reality it looks much more complex than that. Its almost like an avalanche. It started with some fairly small economic factors in housing, which uncovered a whole lot of skirting rules and pure greed. Which then revealed the government's inept nature (Securities and Exchange Comm.) in regulation... yada yada yada.

I still have yet to get a tale that sets up events
without some sort of political intervention to
highlight a belief. It is amazing how problems
are immediately made political to prove a political
position. Real problems are not solved this way...
In Science anyway. If you ignore data because
it does not fit your model, you get bad answers.

With all due respect to Democrats and Republicans,
liberals and conservatives.