Did removing the Glass-Steagall act cause bubbles?

[TheAnswerTo1984is1776]

I hear that all the time that when we removed it that it actually caused all kinds of nasty bubbles and rising oil prices.

 

[hugolp]

It did not caused the bubbles for sure. Glass-Steagal may or may have not made the bubble go slower, but it certainly did not caused it. Money printing causes the bubbles.

I asked about the Glass Steagal as well: http://www.ronpaulforums.com/showthread.php?t=246747

 

[WaltM]

No, at worst it allowed more average Joes to be exposed to the bubbles even if they were not directly involved in the investment process.

Bubbles are caused by several other things, money manipulation (inflation/deflation), hype, political situation (war, tax breaks, ..etc).

 

[AlexMerced]

Glass Stiegal in itself wasn't terribly dangerous legislation, it's just bad in principle int he sense people should be able to start businesses they want, in terms of the moral hazard created byt he federal reserve and deposit insurance it did help reduce the magnitutde of the damage... but again, when you remove natural risk, you end up having to play a constant balancing game which is why I think you shouldn't have to do it in the meantime.

Personally, if the government stays involved creating the moral hazard it does, Glass Steagle at least dampens the damage of the moral hazard... it doesn't make it right, it's coercive, and only a response to other government intervention, but the coe problem is central banking and government provided deposit insurance

 

[Fox McCloud]

The only issue with the repeal of Glass-Steagal is that it put taxpayers on the hook for bailing out stupid/careless behavior...other than that, it's fine.

 

[EddieG]

This is an argument I see all the time, and it obscures the real problem. The real problem is fiat money and the existence of the Central Bank. All banking regulations are just attempts to put band-aids on a corrupt, criminal system, and these regulations are put in place by the same corrupt politicians who benefit from the system.

All you need to understand when it comes to banking is this: End the Fed, repeal legal tender laws, stop gov't control of the money supply, and stop all moral hazards (not only the Fed, which is a giant moral hazard, but also the FDIC, Fannie, Freddie, etc.). Then all regulations can be repealed, except arguably to prohibit fractional reserve banking.

 

[akforme]

I see it as a symptom to the problem. Remove the problem and there aren't the symptoms anymore.

This is what our government is all about, addressing symptoms while ignoring causes... because it's the cause that allows them the upper hand.