Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (111970)	5/24/2010 8:03:32 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 116555

Deficit spending can only occur with a fiat system. That's a fallacy.. And the historical financial record supports the fact that many various kingdoms would borrow money in order to finance their wars, palaces, and internal infrastructure. Spending more than you collect from tax revenues is defined as deficit spending, regardless of whether you have borrowed Fiat or actual gold. It's still debt. We've had gold backing our currency up until the Civil War, when the greenback was issued. Yet, we have a history over and over again of bank runs. en.wikipedia.org en.wikipedia.org You're not going to find disagreement from me that deficit spending is a serious issue, especially when the taxpayer dollars are not properly invested to promote future economic growth. But gold isn't going to prevent financial panics, nor is it going to prevent savings from being lost in financial panics (unless they keep it buried in the backyard, or in their own safe, wherein they have to worry about weapons to defend their money bin.. ;0) We have to go back to where banks carry loans on their books and don't sell them off as securitized assets. At least there has to be a limit. The whole purpose of having local regional banks is because who is better prepared to gauge the credit-worthiness of the borrower other than the local banker? The foundation of our financial system is the social stigma that is associated with not honoring your obligations. The farther removed the borrower becomes from the lender, the more likely non-credit worthy individuals are able to borrow money and put a financial institution at risk. The proximity of the lender to the borrower, with Federal oversight and enforcement of standards in lending, is critical to controlling excessive money creation and indebtedness. Hawk