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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (107150)	2/28/2008 12:17:20 PM
From: neolib	Read Replies (1) \| Respond to of 306849

I hope I'm incorrect in construing that you took undue offense to my comments. Not in the least. I was just trying to correct my lack of making the point I had intended to make. In fact, my point is in excellent agreement with what you mention regarding derivatives. These are just another example of how private parties have created financial instruments, which they saw utility in, but which are largely outside of the reach of our current monetary system. In that sense, they are no different from what people like myself have done with private notes for a very long time. Indeed, even in a gold based system, I have not heard of private notes being outlawed. As such, a gold based system is still not 100% gold based, and never has been. Unless some system has been tried where 100% of all transactions are in fact transacted in gold. I've never heard of such. So, the point I would like to convey is that financial panics occur because of overspeculation and excessive expansion occur without appropriate regulation and oversight. But who is to decide what constitutes a bubble? That's hard to determine, and it places enormous power in the hands of a relatively few people. Few people recognize a bubble until after it's burst. And maybe that's because they're too busy trying to make money as they whistle past the economic graveyard, hoping the animal spirits don't attack them before they can get a chance to make a bundle. I'm in complete agreement. The interesting thing is that this appears to be a case where a collective regulated system is better than a free market system. Hence my comment before about stability risks. I'd call a system based on free market debt notes a Libertarian monetary system, while one based on a central Government's control of currency and liquidity a Socialist monetary system, and I'd further guess that the Socialist system is better than the Libertarian system. Just to use terms that are designed to punch buttons, but do in fact have some basis in fact. I'd further guess that the above Libertarian monetary system is a high gain but less stable system, while the Socialist monetary system is low gain, higher stability one. Of course if Mugabe is at the controls of the Socialist system, it is not stable either. Think back to Phil V. instead. BTW, your comments regarding excess & regulation are the same as my comments about system gain and stability. Just different language.