Wild Capitalism

I am writing this because I find myself increasingly unsettled by the growing amount of rhetoric that people seem all too willing to swallow. It feels as though we aren't even aware that we are drifting toward Europe. Perhaps my generation understands the direction, but the older generation certainly doesn't. After all, as one of my old professors used to say, you can't force a horse that has always run left to suddenly gallop right. Consequently, I feel that it hardly matters which party wins which election when so little is actually capable of changing. People complain about a lack of qualified professionals, but what good is expertise when every major decision is dictated solely by the "elites" or those with the deepest pockets?
To illustrate my point, consider a recent statement made by Ivo Sanders: "I am calling upon the banks to extend credit to entrepreneurs just as easily as they grant consumer loans to citizens."
The reality is that Ivo Sanders doesn't need to "call" upon them; he should be directing them. The Federal Reserve is a state institution that wields immense influence over the money supply and sets the guidelines for commercial banks regarding how much credit they can issue and for what purposes. I wouldn't be surprised if Ivo Sanders is attempting to mask massive inflation, or perhaps someone is pulling his strings—or some other questionable arrangement—but I am certain something is fundamentally broken within their inner circles if they cannot even move their own institutions.

It feels to me as though we are simply playing a game of cat and mouse. Let's look at the two systems we've experienced:
1. COMMUNISM: Low standards of living, yet everyone was employed; high inflation, but we could at least afford the basics of life.
2. capitalism: High standards of living paired with high unemployment; low inflation, yet many struggle to put food on the table.

I am not an advocate for either system; rather, I am simply making an objective observation about the current state of my fellow citizens. I happen to be among those who have been fortunate in life, but I still maintain a deep sense of empathy for the rest of our beautiful country's men and women.

Look, man. Communism—or socialism, if you want to get technical—collapsed because it was forced upon people, an inherently unnatural way to exist. It was built on the idea of taking rather than earning. But honestly, there’s already been so much said about that topic that I can't even bring myself to think about it, let alone write a whole essay on it.

Just a little tip for you: go buy, borrow, or hell, just swipe a copy of "technocracy: The New Elite and Life After capitalism"
Trust me, you'll be a lot less stressed once you read it.

Are you kidding me? Since when does Ivo Sanders get to dictate how banks should operate...

Let him try bossing around a bank that he actually owns...

But leave other people's capitalism alone...

coastaldrifter10 said:Ivo Sanders doesn't have anything to call for; he has to issue an order. You see, the Federal Reserve is a state institution that wields significant influence over the total money supply in circulation, and they also set the guidelines for commercial banks regarding how much credit they can issue and for what specific purposes.

The Federal Reserve shouldn't be meddling in that at all.

They dictate things like reserve requirements—which can certainly throttle overall lending—but banks, much like any other corporation, invest wherever the profit margins are highest, specifically where they can capture the best interest rates. What you’re suggesting is akin to walking into a Walmart and ordering them to stock more flour and less chocolate.

If the government actually wants to stimulate credit for the economy, they have their own banking channels to handle that.

The real crisis lies elsewhere entirely—it's the fact that citizens are diving into consumer loans as if those goods were being handed out for free.

goldengull3 said:The Federal Reserve doesn't really have much business meddling in that.

They handle things like reserve requirements (which can indirectly limit total lending capacity), but banks—just like any other corporation—invest where the returns make the most sense, specifically wherever they can snag the highest interest rates. What you're suggesting is a bit like walking into a Walmart and ordering them to stock more flour and less chocolate.

If the government wants to pump more credit into the economy, they have their own institutions to handle that.

The real issue lies elsewhere entirely—it’s the fact that citizens treat consumer loans like they're receiving free gifts.

The Federal Reserve does, however, control and regulate the nation's monetary and credit potential. They set the discount rate, which serves as the basis for how commercial banks borrow from them. They oversee monetary institutions and financial markets, especially the credit capacities of commercial banks, and within that framework, they determine the maximum loan amounts banks can approve for specific purposes and durations.

Therefore, I am quite convinced that the central bank has room to intervene here.

Oh, my dear friend. Even communism and socialism collapsed because they were forced upon society and were, in many ways, unnatural. They were built on the concept of giving rather than earning. But honestly, there is so much already said on that topic that I simply don't have the heart to dwell on it, let alone write about it. Just a small piece of advice: Buy, borrow, or even steal a copy of the book "technocracy - The New Elite, Power, and Life After capitalism." Trust me, you'll find yourself feeling much less agitated.

I am not feeling agitated; rather, I am simply trying to live as high-quality a life as possible in this era we find ourselves in. That is why one can never have enough discussion regarding these matters.😁

coastaldrifter10 said:The Federal Reserve manages and regulates the nation's monetary and credit capacity. They set the discount rate, which serves as the benchmark for how commercial banks borrow from them. Furthermore, they oversee financial institutions and money markets, specifically managing the credit potential of commercial banks; by extension, they dictate the maximum credit limits banks can extend to their clients for specific purposes and durations.

Consequently, I am convinced that the central bank has room to intervene here.

While the Federal Reserve can certainly manage total money supply, they aren't in the business of deciding who gets a specific loan. At the end of the day, a bank operates just like any other private firm. If consumer loans—the kind used to buy designer labels or a $1,000 prom dress—yield the highest interest margins, then the bank is perfectly justified in funneling capital there instead of into entrepreneurship. It is their capital, and they will deploy it wherever the return is greatest.

I personally see nothing wrong with this logic. The President certainly has the right to call on banks to contribute more to the economy—and it was a smart move to do so—but he doesn't have the authority to coerce them. Banks function as private enterprises, and there is nothing problematic about prioritizing profit; they invest where they see the best ROI.

Besides, the government still has Wells Fargo, the Federal Reserve, and plenty of other levers to pull to support economic development.

True, but even if we look at the whole banking system in America, they only control about 5%, if that. I suppose it's hard to see how you could possibly change the entire landscape of this country with just a 5% stake. It seems like a bit of a disaster, I guess.

Instead of playing populist games and throwing shade at the banks, Bill Clinton should have looked inward. The administration needs to lead by example and actually support the small business owners out there trying to get state-sponsored loans. Right now, people can't even get off the ground because they can't secure basic guarantees from government agencies.
You really ought to clean up your own backyard before you start lecturing everyone else.

And this idea that the Federal Reserve should be dictating exactly which customers commercial banks lend to? Let's not be ridiculous.

crimsonhound3 said:Look, buddy. Communism—or socialism, whatever—failed because people tried to force it when it just wasn't natural. It was all about handouts instead of actually earning your way.

You really think those ones with "socialism" in the title were the problem? One country in Sweden actually has more social programs today than America did during its absolute peak.

And it's definitely not true that everyone back then was driving on the left side of the road...😁

Paul Walker8 said:Instead of just playing populist and attacking banks, Sanders should have looked inward at his own administration. Maybe if they actually led by example and helped small business owners get loans through government-sponsored programs—people who can't even get off the ground because they can't get guarantees from federal agencies—things would be different.
You really should clean up your own backyard before you start lecturing everyone else.

Spot on. Any single bank—and I mean ANY bank—would hand out loans without a second thought if the United States actually backed them with guarantees. If the SEC just handed out those guarantees, you'd see credit flowing everywhere.

Best,
Chris Ruiz10

I suppose I hope to see investment funds shifting their focus toward manufacturing rather than just speculation and trading. It’s quite a sad reality here in the US, where most credit seems to be funneled into car loans and retail businesses.

News

Regarding those government guarantees, I find them difficult to wrap my head around. I've heard several times that they can serve as a convenient way to facilitate money laundering.

I wonder why things don't work like they do abroad. In many places, the United States maintains at least a 25% stake in various companies, meaning for every four things I produce, the government effectively owns one. Yet here, we even import foreign sodas for our cafeteria service.

And if only people would actually buy the remaining three pieces.

Ronald Moore8 said:I’m really hoping these funds start putting more money into actual manufacturing instead of just high-frequency trading.

Honestly, Ronald, do you even know what kind of assets BlackRock actually deals with or what rules they have to follow?

slyviper47 said:are you actually talking about the ones mentioned in the title that supposedly had socialism? because there's this one country in Sweden that basically has more socialism today than America ever did during its supposed golden age.

and let's be real, it's just plain wrong to claim everyone back then was driving on the left side of the road...😁

Look, whether it’s in the headline or wherever else you want to find it, everyone knows exactly what people mean when they throw the word "socialism" around.
As for Sweden, their entire economic engine is built on pure capitalism—we're talking market economies, capital markets, private ownership, the whole nine yards—so all you can really talk about is their "social welfare state," which I'll grant you is a pretty big deal for them.

goranshams said:I’m not getting worked up, I’m just trying to live as well as possible given the era we’ve been dropped into, which is why I think we can never have enough debate about this topic.😁

sorry, but your opening post reeks of pure frustration.

Paul Walker8 said:Hey Ronald Moore8, do you happen to know what kind of assets BlackRock actually invests in and what rules they follow?

I suppose we don't really have any other choice. I think there might be a positive side to it, though. In my view, this represents true capitalism—essentially just connecting people who have capital with those who have the expertise, all with the goal of driving productivity.

BlackRock does take on risks, I believe. I remember attending a lecture at university regarding this subject once. It seems to me that the investment regulations are largely a matter of negotiation.

I imagine BlackRock invests across almost every sector of the economy, so I am curious as to what specifically you had in mind?

Ronald Moore8 meant that BlackRock invests solely to turn a profit—that's their bottom line. It doesn't matter if they're in manufacturing or retail.

Paul Walker8, feel free to correct me if I've missed the mark.

Look, BlackRock and the rest aren't doing this out of the goodness of their hearts; they're in it for the profit.
Ronald Moore8 keeps bringing up negotiation tactics as if they're part of the core investment rules, which introduces a whole different dynamic here.

My point is that actual rules definitely exist, and they're baked right into the Investment Company Act. They’re pretty restrictive, mostly focusing on portfolio investments in securities (though they have opened the door to real estate more recently). Then you have other—equally limiting—options involving issuing securities or commercial paper. Honestly, I don't think manufacturers or traders, whether domestic or foreign, will ever see that money because our legal framework and the very nature of these investments just rule it out.

Since Ronald Moore8 is linking to mutual funds and news about growing assets under management, he’s clearly (and incorrectly) thinking of Sequoia Capital-style venture funds that can bet on individual startups. Under the current Investment Company Act, that kind of framework simply doesn't exist here. It might happen one day, but not now.

Take Škegrin Quaestus, for example. They operate as an asset management firm, but we aren't talking about a fund in the traditional sense. They manage assets structured under ZTD, which means they deal with a completely different set of investment restrictions than what BlackRock faces.

To wrap this up, Ronald Moore8, that money won't be going toward the things you're talking about. Zero chance.

Paul Walker8 said:To wrap things up, Ronald Moore8, I suppose that money you're mentioning won't actually amount to anything useful in the long run.

If that's the case, I guess I have to admit my mistake. I was listening to a speaker from a Sequoia Capital type fund during a lecture at college once, and I think I just mistakenly assumed we had a much better entrepreneurial climate here.

Paul Walker8 said:To wrap this up, Ronald Moore8, that capital you're talking about won't yield a single cent toward your goals.

In theory—though reality rarely aligns—a city or municipality issues municipal bonds to fund local economic development projects within its jurisdiction...

I'm dying to know if anyone actually included a platform like that in their campaign promises for the local elections this Sunday. 🙂

Sure, there are other ways to raise capital—like issuing securities or commercial paper—but they’re just as restrictive.
That’s exactly what I was getting at. If that kind of money flows toward IFs, you can bet banks will still be the primary subscribers, leaving the IFs to pick up whatever's left over.

Anyway, that's my two cents.