2 questions: Regulation and the national debt

[Dax552]

I can't think of a smarter bunch of people to direct my questions to, so here goes:

Ron Paul is always saying that among other reasons such as too much borrowing, too much spending, and over inflating, that one reason we are in this financial mess is due to over regulation. Can someone give me a good explanation as to why? All I'm hearing at work is, "why were those companies allowed to get away with this? We need MORE regulation!".

And my second question has to do with the Ron Paul House of Cards video. In it there's a quote about having over 3 trillion dollars in foreign debt, and how we need to borrow 3 billion dollars each business day just to maintain our extravagant spending. But isn't the national debt more like 10 trillion? Is the quote outdated or is there another kind of debt other than foreign debt that goes into our national debt?

Thanks in advance.

 

[Dax552]

Anyone?

 

[Dax552]

Seriously? Nothing?

 

[satchelmcqueen]

last i heard the national debt was 9 trillion about 4 months ago.

 

[Dax552]

I thought if anything I'd get too many answers to my questions...

 

[JaylieWoW]

Well how about the CRA for "over-regulation". FORCING banks to give loans they never would have given. Of course the sad thing is once they realized that they could actually make money off the sub-prime they all gleefully joined in the bloodbath.

 

[ghengis86]

I can't think of a smarter bunch of people to direct my questions to, so here goes:

Ron Paul is always saying that among other reasons such as too much borrowing, too much spending, and over inflating, that one reason we are in this financial mess is due to over regulation. Can someone give me a good explanation as to why? All I'm hearing at work is, "why were those companies allowed to get away with this? We need MORE regulation!".

And my second question has to do with the Ron Paul House of Cards video. In it there's a quote about having over 3 trillion dollars in foreign debt, and how we need to borrow 3 billion dollars each business day just to maintain our extravagant spending. But isn't the national debt more like 10 trillion? Is the quote outdated or is there another kind of debt other than foreign debt that goes into our national debt?

Thanks in advance.

1. Regulation.
1977 Community Reinvestment Act, and the 1995 overhaul, required banks to make a certain percentage of loans to sub-prime borrowers (they could even use welfare checks as income!). well, actually, the CRA placed regulations on banking operations (mergers, acquisitions, access to federal funds) so that only the banks that made a certain percentage of subprime loans would be allowed to do these things. it was a de facto reg. to force banks to make bad loans. Following Enron, Sarbanes-Oxley was passed to 'regulate' accounting practices in all sorts of financial institutions. There is a massive burden on businesses to comply with this reg, mainly monetarily. As such, since its passing, S-O has driven lots of major financial firms overseas, or prevented them from making the U.S. their base of operations. not to mention that the regs are cumbersome and involve new bearuacracies that eat away profits/capital. There are many other regualtions that have stifled businesses and forced capital to be allocated in the least effective operations. And with Freddie and Fannie, they had the equivalent of a blank check from unlce sam that would back up any asset/liability that went south. so these institutions could attract business at much better terms than competitors, since the government would back them up should the investments fail. now you have no reason for a bank to not try and make the most money possible, when the U.S. gov says it will foot the bill of the risky investments.

Its far more detailed than this, but hopefully this is a starting place.

2. National debt has just been raised to ~12 Trillion (bailout legislation lifted the debt ceiling). The 3 trillion figure i think refers to debt held be soverign wealth funds (foreign subsidized company funds). They buy up U.S. debt in the form of securities and other debt instruments. The interest we must pay on this debt is 3 billion a day.

i know there is somebody out there that can explain this more quickly and succinctly, but i tried.

 

[micahnelson]

Through the Federal Reserve, the Congress has given banks the ability to loan out astronomical amounts of money, collect oppressive interest, and socialize losses.

The primary intervention came with the advent of legal tender laws- ie, when the government forced us to use Federal Reserve Notes.

To say we have had a free market since the rise of the Federal Reserve is laughable. The last remnants died with the Nixon Shock.

Yes, better regulation could have helped perpetuate this fraud longer. Restraint on the part of the con man can keep a ponzi scheme afloat longer, as well.

Since Congress created this beast, they had the obligation to keep it on a short leash. Of course, we know the leash goes both ways with the Bankers and Congress.

Yes, lower debt, tighter lending laws, restrictions on bailouts- all of this would have kept the dollar alive longer. The whole point is that given the opportunity to fabricate wealth, government will not show restraint.

The answer is not to elect angels among men with uncorrupted values to manage a fiat currency- but to create an incorruptible currency and allow competition in the market for units of exchange.