Sunday 29 July 2012

Deposit insurance is bad for the people

The government and the people are against each other because the government treats banks differently from the rest of the economy. There is a kind of economic apartheid because banks have deposit insurance and the rest of the economy does not have this advantage. Having deposit insurance means that banks cannot fail. It is not in the interests of the people for banks to be immune from failure because (in effect) this means that banks can print money since government liabilities are money. The existence of deposit insurance shows that the government is antithetical to the interests of the people. Government is hurting people if there is deposit insurance.

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