BROUGHT TO THE FRONT BECAUSE OF THAT COMPLETE CUNT CAMBRIA’S FAILURE TO RETRACT HIS LIES.
“It could work, CL…..” This is so annoying. This idiot Cambria after all this time. Asserting something that CANNOT work can work. And then talking gibber.
In terms of helping the real economy, bank bailouts which replace cash for ponzi-money at a high enough price NOT to be a transfer of wealth to the banks CAN “WORK”.
But any bank bailout that doesn’t reduce debt and replace ponzi-money with cash CANNOT work. And any bank bailout that takes real wealth from main street and gives it to the financial sector CANNOT work.
And this is because it is main street that is in trouble. And the banks that were bloated. The Americans particularly had maybe 20% of people involved in the finance industry when under sound monetary conditions they ought to have had 2 or 3%.
Milton Friedmans work on the so-called “optimal supply of money” and general observations prior to that, established the idea that we need more bank services when there is higher monetary inflation. And that if we had stable growth deflation we would barely fucking need these assclowns at all. So the financial system was bloated, main street was arm-twisted into debt. And stealing off indebted mainstreat to re-bloat the financial sector therefore can NEVER work.
What can work is a program to reduce debt, replace ponzi-money with cash, and charge the banks like buggery for any emergency cash they need.
So it cannot “work” what this idiot Cambria is advocating. By its nature it can never work. Since it wasn’t the financial system that was ever starved of resources. Rather its the newly indebted main street that is.
There is a few things one has to get ones head around.
1. The importance of maintaining SPENDING not LENDING. There is simply no compulsion for us to get into more debt if there are other ways for spending to be maintained.
2. The only spending that it is important to maintain is BUSINESS-TO-BUSINESS spending. Its not the least bit important to maintain government spending, bank lending, consumer spending, or anything but business to business spending. This ought to be stabilised at whatever the previous high was. Or thereabouts.
3. The banks can all fall over and we just throw a party, so long as business-to-business spending is maintained.
4. But it is not possible to release enough cash to maintain business-to-business spending (with all the banks keeling over, or at least under stress) unless you as well institute a reserve asset ratio, to stop these guys pyramiding on the new cash.
5. Its not plausible that we could have a competitive banking system without a reserve asset ratio of at least 40%. A recession is a good time to move in this direction. This implies a lot more cash. But very little more money-supply.