Visiting home for the holidays, it’s amazing to me how certain groups of friends, who I mostly considered in the generic Republicans/conservatives camp, have been wading deeper into the Ron Paul territory. “Abolish the Fed” is one thing, but what surprised me the most was when I was at a Christmas party several people mentioned, fairly out of nowhere, how bad FDIC is for the economy. I think they thought that regular depositors could have done a better job vetting financial institutions than major sophisticated shareholders. When I tried to point out how if there wasn’t FDIC and millions of savings accounts were getting wiped out in ordinary bank runs we’d almost certainly have a wave of turn-of-the-last-century style violence that is hard for us to even imagine now – think bomb throwing anarchist violence – they seemed to be ok with that.
FDIC is actually saving our asses right now by liquidating bad banks and keeping nervous market players from stuffing their money under a mattress. Runs on bank were common before FDIC and the Fed were established, and they created financial havoc. It was a financial panic and run on banks in 1908 that precipitated the creation of the Fed. When's the last we had an actual bank run like that?
Since before the creation of the FDIC, morons.
Seriously, this is where we are now? People are arguing, in all seriousness, that the same people who maxed our their credit cards, took high interest variable loans to purchase houses and used them as credit cards, are the same people who are going to study arcane bank financials to forecast who is more solvent. Is the biggest economic problem we have that we have too many financially savvy people working at the gas stations and McDonalds of this country being held back from joining the billionare club because of FDIC and CRA?