[tryptophan]

> Fwiw in hindsight it appears that structural regulation like Glass-Steagal is what stabilizes the banking system.

This is not at all clear.

> Separating banking, investment banking, and insurance into separate legal entities and preventing the banks from consolidating into mega-banks prevented another a Great Depression for ~70years. Then roughly 8yrs after we repealed all that, we unsurprisingly had another Great Depression level financial crisis.

Are we forgetting the inflationary period in the 70s? How the gold standard was lost during this time? All the emerging market crises? How the USD has lost 98% of its value since the 70s? How inequality is sky high due to interest rate suppression causing asset price inflation? How we have a massive trade defect leading to an extremely large negative net-foreign-investment balance? Does it makes sense to you that countries that are much "poorer" than us are lending us money?

> The Fed’s lending support, along with govt stimulus, prevented the actual depression from happening, so you could argue that the Central Bank does have some impact on banking system stability. But it was only necessary because we removed the structural regulation that had maintained a stable banking system for over half a century.

We trade depression for inflation then. Is this good? Bad? Not sure. We are living in that experiment though. One day this excessive debt and money printing will catch up with us. It has happened to every single fiat currency in history.

[SkyMarshal]

> Are we forgetting the inflationary period in the 70s? How the gold standard was lost during this time? All the emerging market crises? How the USD has lost 98% of its value since the 70s? How inequality is sky high due to interest rate suppression causing asset price inflation? How we have a massive trade defect leading to an extremely large negative net-foreign-investment balance? Does it makes sense to you that countries that are much "poorer" than us are lending us money

You’re conflating a bunch of unrelated things. The single most economically devastating type of event in a banking system is a credit crisis or credit collapse [1]. That’s what both the Great Depression and the Global Financial Crisis were.

All these other things you reference pale by comparison in the level of harm they can inflict on society. Are they bad? Sure. Are they remotely in the same league of harm as the GD or GFC? No.

The point of structural banking system regulation is to prevent this worst case scenario, not to solve every single problem with the banking system. If you can prevent credit collapses from occurring then you’ve significantly improved the stability of the banking system.

[1]: https://www.investopedia.com/terms/c/credit-crisis.asp

[pessimizer]

> How we have a massive trade defect leading to an extremely large negative net-foreign-investment balance? Does it makes sense to you that countries that are much "poorer" than us are lending us money?

If you're against this, what you want is more inflation, not less. This is the entirely intentional result of the strong dollar policy.

[CrazyStat]

>How the USD has lost 98% of its value since the 70s?

By what metric has the USD lost 98% of its value since the 70s?

[pessimizer]

It's hyperbole referring to how much US dollars stored in a mattress 50 years ago would be worth now. If, instead, you earned money from wages and/or invested in stocks/bonds/real estate/comic books, nothing of the sort happened.

[sgerenser]

Even if “the 70s” means 1970, it’s still not 98%, more like about 86% according to: https://www.usinflationcalculator.com/

[pessimizer]

That's why I said "hyperbole." I should have said "mild hyperbole," but I didn't bother to look up the actual numbers.

[CrazyStat]

86% vs. 98% isn't mild hyperbole, in one case the dollar is worth 7x as much as the other case.

[Supermancho]

> 86% vs. 98% isn't mild hyperbole

you're splitting hairs. 7x .02 doesn't change the trend.