In a message dated 4/4/01 6:23:14 PM, firstname.lastname@example.org writes:
>Free market banks would see immediate losses (in reserves
>or profits) for failures to act or bad actions.
No; not immediate at all. It typically takes years to recognize a bad loan.
Because of this, banks don't "count" profits right away either (really, they
don't get the profit till the loans is paid off anyway). There's a huge lag
Partly due to this, and partly due to psychology, banks have a nasty "herd
mentality". If you look at banking, on a gold standard, prior to central
you still see wild volatility. It isn't immediately obvious whether
or relatively apolitical central banking will generate the "better" result.
This archive was generated by hypermail 2b30 : Mon May 28 2001 - 09:59:44 MDT