Bernie Sanders accountability study finds USD16*10^12...

[Terralthra]

As is explained in the actual report, the loans were routine emergency transactions used to cover a bank's cash reserves temporarily. If a bank falls short of mandated reserves it borrows money from the Fed (aka the lender of last resort), holds the money for a day or two until its reserves replenish, then pays back the loan. A loan of $100 billion taken and repaid 10 times in succession does not mean the Fed "gave" the bank $1 trillion dollars, which is the methodology being used to get the $16 trillion figure. The front page of the GAO thread indicates that total outstanding loans peaked at no more than $1 trillion in late 2008, during the worst of the bank crisis and when the alternative was probably a complete collapse of the financial system. The scandal is in how the Fed contracted out management services to private companies on a noncompetitive basis, with a total cost of $659.4 million dollars. The "sixteen trillion dollars" were all paid back and remain in the Fed emergency reserve system.

If you refer to page 131, the page with the gross amounts of loans disbursed, and trace those columns back to earlier pages describing the programs outlined, you will find that only half of the $16 trillion figure quoted were PDCF "overnight" loans. Nearly as much were TAF and TSLF "auctioned loans", with TAF having 28 to 84 day terms (at zero interest) and TSLF had up to 28-day terms (again, zero interest). TSLF transactions weren't loans, exactly, so much as they were trades, where the banks in question deposited bullshit-valued MBS assets in exchange for highly liquid US Treasury bonds. Since said MBS assets were at the time, depreciating rapidly, the banks could "pay off" the loan using only a portion of the treasury bond initially "borrowed."

Since his own website condemns the amendment which produced this report, no, I don't have any problems not associating him with it. Ron Paul is far from the only politician interested in the amounts and recipients of Fed loans and loan guarantees. When his legislation passes, I'll happily associate it with him.

What the hell, are you fucking stupid? Didn't you read the link you posted?

There is a difference between simply criticizing a report and criticizing it for not going far enough. The very page you linked to shows that the Sanders amendment incorporated language from Ron Paul and Alan Grayson's original bill. It then criticizes him for subsequently watering down that amendment due to pressure from Obama.

Yes, I did read it. Regardless of the story of how it got to be where it is, the simple fact of the matter is that right now, Paul doesn't approve of the amendment and doesn't want his name attached to it.

[Lord Zentei]

You don't get my objection.

The issue is that bobalot was dismissive of this comment by Starglider:

Careful, you're getting dangerously close to admitting that Ron Paul might actually have a point.

The fact that Ron Paul isn't happy with the amendment because it doesn't go far enough doesn't warrant the following response:

Instead of posting some vague paultard bullshit (that currently clogs up nearly every fucking orifice of the internet), could you perhaps elaborate?

And regardless of whether or not Ron Paul finds the current bill adequate or not, that doesn't change the fact that in its initial form it was proposed by him and Grayson.

See the context?

[Plushie]

Is Paul proposing to let private banks print money or something? We tried that back in the 1800s; it was a disaster for all sorts of reasons.

Actually, there's about 30 years of studies out there with the essentially theme that that isn't quite true.

And that's just in the US: 'private banks printing money' (what these people call free banking) actually has a rather widespread history. There's a lot of material about free banking or near free banking systems for many countries across the world. Everywhere from Europe, to East Asia, to South America has had experiences with free banking, and there's an ever-increasing library of materials on the subject.

[Surlethe]

God damn, $16 trillion? Why did they stop at $16 trillion? That's what fucked the economy, after all.

[LaCroix]

Actually, there's about 30 years of studies out there with the essentially theme that that isn't quite true.

And that's just in the US: 'private banks printing money' (what these people call free banking) actually has a rather widespread history. There's a lot of material about free banking or near free banking systems for many countries across the world. Everywhere from Europe, to East Asia, to South America has had experiences with free banking, and there's an ever-increasing library of materials on the subject.

Look at your first document, page 10. You see the huge number of banks failing?
The second article (page 23) shows the same abysmal survival rates.
(I ceased after reading these two - tl;dr).

That matches the experience in Scotland and Chile. Banks did occasionally go bankrupt (sometimes by the machinations of other banks that actively tried to fail them), people lost all their money. Also, these notes are no legal tender (or else, free banking wouldn't work at all), which leads to problems like rejection or discounts when using them.

I fail to see how you can claim free banking a successful system that people would prefer over the current.

[Plushie]

Look at your first document, page 10. You see the huge number of banks failing?
The second article (page 23) shows the same abysmal survival rates.
(I ceased after reading these two - tl;dr).

Only reading those two is your mistake, here.

The fourth one goes over the reason for those failures, which is tied directly to the fact that US banking in this period was really free entry banking, rather than actual free banking. The vast majority of failures are linked with declining asset values, namely falls in the prices of particular state bonds that banks were required to hold as reserves in this period. Banks that aren't forced to carry these risky assets don't fail because of them.

Even then, these banks might not necessarily have failed if they had been allowed to branch across state lines, or even at all in some states. Anti-branching laws in existence at the time created a banking industry made up of under-capitalized, over-specialized unit banks. That's a big part of the reason 10,000 some banks in the US failed between 1929 and 1933 (AFTER the Federal Reserve Act, mind) whereas not a single Canadian bank failed in the same period (BEFORE the Bank of Canada was created).

Importantly, actual losses were still very low in this period. Total losses over the whole period from the passage of New York's Free Banking law in the late 1830's to the creation of the National Banking System in 1863 was roughly 2 million dollars, in an economy where yearly GDP was in the range of $1.5 billion (1840) to about $5 billion (1860).

I'm trying to find an un-gated version of 'New Evidence on the Free Banking Era', by Rolnick and Weber.

That matches the experience in Scotland

Strange, Dr White's Free Banking in Britain concludes that the Scottish system was extraordinarily successful, more so even than the English system of the same time period.

and Chile.

Again, Ignacio Briones disagrees with your assessment.

Banks did occasionally go bankrupt

Because that never happens today, right?

(sometimes by the machinations of other banks that actively tried to fail them)

If you have the time, read Dr White's book on Scottish free banking. It contains a description of something called note dueling, where one bank or one group of banks gathers up all as many notes as possible for another bank or group of banks and then presents them all for redemption at once. The idea is to drive the latter bank/group of banks into illiquidity so that the former can steal their circulation while they're clearing their debts.

The Scottish banks actually invented a novel contractual mechanism for avoiding this problem, called an option clause, which successfully halted note duels (until it was banned by the government, that is).

people lost all their money.

As noted above, these losses were no where near as significant as you're making them out to be.

Also, these notes are no legal tender (or else, free banking wouldn't work at all), which leads to problems like rejection or discounts when using them.

Do you have a source as to how common these problems were?

In New York, for instance, the expected value of a randomly selected one dollar note was at more than 99 cents by 1843, and never dipped below that figure.

I fail to see how you can claim free banking a successful system that people would prefer over the current.

By comparing it to flawed real world financial systems instead of a hypothetical perfect one.

George Selgin has an excellent paper examining the record of the Federal Reserve System vis-a-vie the National Banking System that preceded it. And keep in mind that the National Banking System was NOT a free banking system.