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The Judge Explains the Difference between Capitalism and Free Markets

http://video.foxbusiness....

I can no longer watch his show on TV, so am missing Ron (live) but this is an excellent explanation he gave, Friday, if you are not certain of the difference:.

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Fact for The Day

Franklin Delano Roosevelt issued Executive Order 6102 on April 5, 1933, "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States". The order criminalized the possession of monetary gold by any individual, partnership, association or corporation.

There are two major flaws in

There are two major flaws in Napolitano's thinking. One is very obvious.

He says early on, that just after the rebellion, we had a free market. Yeah, except for the thousands of enslaved Africans, taken and bound against their will. Or how about the rigid social laws enacted by many societies (free marketers always say that you cannot have a free market without a free society).

Look, I know that the Judge didn't mean anything by it. But you have to understand, that a lot of Americans are frustrated with this attitude that "we just have to go back to the 1700s or the 1800s"...because there was a segment of the population that did HORRIBLY during that time, and whites like the Judge just aren't aware of it. It doesn't even cross their mind.

Secondly, his depiction of the housing crisis is flawed. He says the government forced the banks to make loans. So the government forced the bank to make profit? Because the bankers made tons of profit from those loans...the government removed barriers to those loans (by letting them leverage their capital), removed regulation that was intended to prevent predatory lending, gave tax breaks to banks that gave low-income families loans...but the banks had the choice to take advantage of those things.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

"the government removed

"the government removed barriers to those loans (by letting them leverage their capital), removed regulation that was intended to prevent predatory lending, gave tax breaks to banks that gave low-income families loans...but the banks had the choice to take advantage of those things"

and the most important part you are forgetting to mention, the govt gave them a conduit to DUMP all the bad loans on the public in the form of Freddie and Fannie. This incestuous relationship between Big Business, Central Bankers and the Federal Govt has gone on FAR too long and we can see the results of govt intervention into the marketplace.

If there were no central bank doling out credit on the cheap, nor a federal govt butting its nose into the economy telling the bankers who they would have to loan money to or creating a garbage hopper to dump all the bad loans in via Fannie/Freddie the bankers would have never even MADE the loans. It wouldn't be in their best interests and greed would steer them away from doing that sort of stuff. To try and deny the MAJOR role the govt had in all of this is just hogwash.

Remember, Fannie and Freddie

Remember, Fannie and Freddie were private corporations. Chartered by the government, but privately owned. There was actually no legal guarantee by the US to back loans purchased by those private corporations.

People say that the government bailed out Fannie and Freddie because they had been government chartered, but I think the fact that both companies had so many loans (30+% of subprime mortgage loans IIRC) was much more compelling.

For a comparison, what if 30% of America's water consumption came from a single reservoir operated by XYZ. One day, there is a huge disaster and billions in damages happen to the reservoir. The only option is to give money to XYZ to fix the reservoir. Maybe we should let XYZ fail, and let the market correct itself. But the fact that 30% of the water comes from XYZ; how much is the government's fault, and much of it is just the market?

Yes, the government did bail out those bad loans. But without the goverment, those loans still would have been made. Before everything crashed, those fraudsters were making a ton of money. Fannie and Freddie attracted business by guaranteeing loans in exchange for a fee...the lure of their guarantee, however fradulent (remember, no legal federal guarantee), attracted a lot of business, and F&F shareholders and executives raked in the profit short-term. When the bubble burst, those guys were already rich.

"If there were no central bank doling out credit on the cheap, nor a federal govt butting its nose into the economy telling the bankers who they would have to loan money to or creating a garbage hopper to dump all the bad loans in via Fannie/Freddie the bankers would have never even MADE the loans"

For sure, the government setting the interest rates to lower than what the market demanded contributed to bad decision making. However, the federal government told no one that they had to make loans. They did things like prevent discriminatory lending, regulate interest rates, etc. For example, the feds would say that if you make a loan to a minority, it can't be more than X rate. The banks still have the choice of making the loan or not, and they made the loans (still at terribly high interest rates).

And the ironic thing is, Bill Clinton and Jimmy Carter enacted a lot of regulation that allowed banks to make loans unfettered. Before, home loaning was much lower, because federal regulations reigned in the risk banks could take. Whether it was separating commercial and financial banks, mandating the banks have more thorough credit checks, putting more onus on banks to inform the consumer, or limiting predatory lending practices, all these things stimulated more home buying at the cost of the future.

A lot of acts that removed the cumbersome regulatory practices on the financial industry was a severe cause of the crisis, without question.

Look at things like the CFMA of 2000 to see how government regulation has been stripped away.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

May I ask for a clarification?

When I read your post, I thought, hey, how does the govt actually get the money that was generated from the housing bubble and use it to finance a war or two? Is this what you are asking? I don't really know the answer to that myself but somehow money travels and I wonder how it goes?

Regarding the society, I admit I did not think of slavery when he mentioned the time frame. It reminds me of a song from the Proclaimers that has a line like this, "what are you gonna do when minority is you?" I would not like to live in the past at any time period.

Thanks for posting because I will be more attentive when thinking or listening to discussions about this.

LivingTheDream

Murray Rothbard explains very

Murray Rothbard explains very well (in the Case Against the Fed) that in a true free market banks would not exist in the shape and form they're in now. The "regulation" that you talk about that prevented banks from leveraging so much was there to limit the scope of fraud banks are already in, and the fraud is called fractional reserve banking.
If you remove the Glass-Steagall Act and you get rid of the Federal Reserve, banks would be hard-pressed to leverage as much as they did in 2008. However, since they have the Fed on their side they can always get bailed out. And that's exactly what happened.
If there was no Fed and no Glass-Steagall and banks spread themselves as thin, a lot of people would have lost their money but these bankers would be in jail now. And you watch if the next banker will do the same.
Rothbard explains very well why fractional reserve banking is a fraud and not acceptable in a free society and free markets.
In reality, banks, in today's shape and form, do not provide any tangible benefit to society, the only thing they cause is assets to artificially go up or down in price. Now, investors are different matter. They provide capital.
Yes, banks provide capital as well, but the capital is non-existent, the banks created it out of thin air, out of franctional banking. But the money really isn't there.

My main contention to this

My main contention to this kind of argument is as follows.

Government helps big business capture the market and bring us all to ruin.

However, big business does not need big government. They can do it fine on their own.

A bank could very easily ask a depositor "hey, I want to invest this money in the stock market. I will give you a great interest rate if you do this. Capice? The average person is not informed. He won't know how dangerous it is he will do it, and will get absolutely burned. Even after that happens, the cycle will happen all over again. Big business owns the airwarys; they will make people believe what they want to believe.

Same with having bank deposits backed by the federal reserve. Before guaranteed desposits, people still put their money in banks. It was still susceptible to the whims of bankers. The only thing is, they did it with the consent of the people.

Wouldn't you agree that not informing the customer of the facts is fraud?

A free market only works when there is informed consent, and that is very difficult to get since the banks can even legitimately control the information streams. In fact, they do it now.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

You bring up interesting

You bring up interesting points, one especially that has always plagued me. That is, of course, the owning of slaves by the very people who decreed all men are created equal. I don't see, really, how they could have rationalized that.

As for the banks..maybe they did "profit" but many seemed to fail, so I do not know what went on. I do know they were indeed forced to take that deal. The government told them they HAD to..I remember at the time.

Judge a man by the age he lives in.

Just remember that slavery existed for all of human history. It ended about 100 years after the founding of this country. The main reason is the same as why child labor ended in this country. The industrial revolution made it unnessasary.

There are plenty of things we do today that in a 100 years are going to look as bad as slavery.

Flawless Victory

The Judge and the Southern Avenger represent the two greatest orators that the Liberty movement has.

I, for one, eagerly anticipate campaigning for Paul/Napalitano 2012!

There is no higher end than the total liberation of the human being: mind, body and spirit.

Thanks again, Crickett

His parting shot was great, but the part where he points out how we've moved to a socialist style of market should hopefully awaken a few more.

As always, Dead on perfect segment by the Judge

Napolitano for VP

PAUL / NAPOLITANO 2012

I like it

I sure like how this was put

"capitalism does not require and sometimes does not prefer a free market its called Crony Capitalism or corporatism "

I really believe that if we

I really believe that if we presented our thinking about this way around 'free-market' versus 'capitalism' it would persuade people even more.

That's now a link to something about a homeless guy

Do you have the direct link to the video you mentioned? I can't seem to find it on the site.

Is this it?

http://video.foxbusiness.com/v/1178817730001/karl-marxs-warning

reedr3v's picture

The link does work, and automatically

many excellent segments play; a later part refers to the homeless man who was murdered by the police in Orange County CA.

No, when I clicked the link it went straight to the homeless

guy segment. I tried it three times.

I had to start watching videos and guess which one it was to find it. (a title might have helped, but no biggie)

But, I found it anyhow, and it's embedded now, so it's a moot point.

edit:

the ORIGINAL link in the OP was NOT the specific link that is there now. It was the general link to the Judge's video page. (thus why it most likely went to the most current upload - aka the homeless segment). It seems since the video was embedded, the link in the OP was updated to be a specific direct link.

Well, sorry..it was when I

Well, sorry..it was when I linked it..I dunno what happened. Glad someone fixed it. I think it is good. :)

Thaks for embedding the video!

.

Excellent explanation by the

Excellent explanation by the judge.

What luck for the rulers that men do not think. - Adolph Hitler
Those who falsely believe that they are free, are the most enslaved. - Goethe