Questions, Can you be too rich to fail?

Post Reply New Topic

I'm trying to think some things out, would love to hear of thoughts from others. I was thinking about corporations too big to fail but I'm not sure if that is possible. You can look that up on a wikipedia page "To big to fail", what it suggests is that the corporation failing would have too much of a negative impact on US economics, therefor the government bails them out.

How is that so? What corporation would need our government to bail them out, is that just a fraudulent matter or does it actually hold validity? As far as I can think, if one corporation fails, another can step in to replace it, wouldn't it be kinda stupid to ensure that a corporation doesn't fail? The the top share holders who bought in low would be guaranteed to not loose their money even if the corporation they invested in is a failure. Can someone please make sense of this or is it just a fraudulent move on our government?

Also, can an individual or family have too much wealth to fail? Say this individual or family has hundreds of billions, could easily afford the best education and the best education for his or her kids. With the grand amount they have added with being well educated, they could easily invest in many corporations, being top share holders. To narrow it down to a simple example, say you had enough money to be a top share holder in Home Depot & Lowes. If one starts to stomp the other out, you notice the stock value dropping, can you simply pull your money out and collect your share value in the failing one while keeping your money in the one succeeding? Would you have to wait for your shares to sell or can you sell your shares back to they corporation and collect your money?

Then take this to the extreme, playing the stock market wisely, having the money to invest in multiple corporations, can you play it in a way to ensure your wealth safely, mostly grows? I know you will lose out sometimes, if you can just pull your money out you can minimize loss in most cases, while keeping your money in all the corporations you are in that are climbers in stock price.

Thoughts and knowledge please.

"Too big to fail" is not about the amount of money per se but if a corporation goes out business it will cause severe hurt to the entire economy. I can't think of off hand where that is true for any individual money sans their company.

When you hear "too big to fail" think "collectively codependent."

I remember Bernie Sanders wanting to break up the big banks because of this when he was running for President last time. I googled it to make sure I remembered right, and he's still trying to make it happen:

https://thehill.com/policy/finance/4097 ... -big-banks

it's been only ten years since the large banks failed because they were leveraged so that a 6 precent of credits defaulting would render them insolvent. They all failed, and they were all "too big to fail"- because it was all of them at once, and they were not just going broke - they were indebted multiple times their own capital.
It's hard to imagine how anything outside of finance could be that big - simply because nothing that isn't leveraged can fail so hard. If you're a normal company, insolvency is something that occasionally happens. But for a bank, solvency is the business model.

Too big too fail is unlikely to applicable to people in the same way it's not likely to be applicable to non-finance-corporations.
it's not about having money, it's about racking so much debt that you defaulting on it would create havoc.

there's this saying I heard somewhere on the internet: if I owe you a million, you own me. If I owe you a billion, I own you.

I almost think we have created a monster, a very fraudulent monster. A bank to big to fail, don't all banks have investors? Aren't depositors much different from investors? Why look out for investors and ensure they don't loose their money? Normally that's supposed to be the risk of investments, you may win, you may loose. It seems our whole banking system is built to ensure rich people stay rich, A bank is supposed to hold your money for you, not make risky investments with your money.

That would be like me saying I'm a bank, give me all your money and I will keep it safe for you. Then a go around investing in the stock market with your money and loose it all, obviously you shouldn't have trusted me, I did not hold your money for you, I was a prick who used your money to invest for my benefit.

I understand it's nice to be able to get loans, but at what risk? At the risk of ensuring that a company/bank can do questionable things with money, like lending much more than they actually had and making poor investments and failing, then our government, which is all of us, all of our money goes to bail the person out which has very crappy business tactics?

As I have always believed, it's best to save your money then use the money you actually have to do as you wish rather than live a life of credit. It has it's ups, all people do not fail and they may make it with fake money they borrowed, then return that money with interest(the american dream, no capital actually needed). Lending power with a bank is a scam, how can you safely lend what you do not have. If we could all be our individual banks, wouldn't that be great?

It can make business grow faster but only by creating a huge risk for everyone and by risking banking systems which get bailed out by everyone, so we all pay the price for some crappy people having a crappy business strategy. That doesn't seem to fair, you shouldn't be able to loan money you do not have, you should not be able to lie to people and tell them I will keep your money safe for you while they really put it all on the line seeking their fortune.

With the way we have it set up, it seems banking is the way to go, you will be guaranteed to be rich, you can risk all the money in the market and make it big, or you can fail and the US population will make sure you can still survive to continue to risk money in the market. It has it's benefits, but is it really worth all of this?

I may get around to watching that, it's hard to say, I'm watching so much stuff already, guess you could say I'm a late bloomer in politics. What would you call a system where individuals can have all the opportunities in our economy, capitalism, yet cut out the whole fake money aspect. Like if you as and individual has an idea and wishes to form a business, you can seek investments or loans, but a investor actually has to have the money to lend you, no buying power, no lending power. So if it turns out to be a poor investment, the individuals take the fall, not the country.

I'm just strongly against being able to lend fake money, it's fake because it doesn't exit, someone told me how it works once, they claimed a bank can lend out 10 more times than they actually have, thus they make interest off money they never had to begin with. I think capitalism could be separated from that, or maybe it would be called something else? Same business opportunities yet no fake money involved. Banks would be more of a deposit style banking system, the simply charge a fee to store your money, or you can store your own money. It should be very upfront for them to inform you, if they decide to make investments, that they will risk your money in investments, and if they loose, you can potentially loose all your money. Call me crazy, but I don't think people would store their money in a bank if they knew the bank would do that and possibly loose their money, which is why I think there should be banks simply for storing money for a fee. I'm aware that would radically change the system, but as far as I can tell it would be for the better good.

Wouldn't all countries that have a central banking system operate on the same princibles, referring strictly to the banking function of poducing fake money to lend?

If so, that type of system wouldn't necessarily be just a capitalist system would it? I seriously need to do some homework on all these terms, it seems as if alot of them can be different aspects of each country rather than a broad name, like saying a country is just a socialist country or just a capitalist country.

What other terms would you suggest I lean the meaning of. Currently I just know of; capitalism, socialism, communism, nationalism, isolationism, repbublican, conservative, liberal, libertarian, centrist, centralist, democrat, progressive, democracy.

I'm actually going to look up the definition of all these terms and get familiar with them. Any other political words you could suggest I learn?

Me personally, at this state, I also believe the central bank in America is one of the biggest scams ever, it actually goes against our constitution. Congress is to print currency and that currency is to be silver and gold. Bills of credit are against the constitution and legal tender is a fancy name for bill of credit. Article 2 section 8 and around that area it discusses this plain as day.

Neoliberalism
Marxism

But this is not really the right way to go about it, I think...
I recommend the Yale vourse on political philosophy on YouTube, to make yourself familiar with ideas of how to rule countries - because democracy is a very broad term.
But it's important to understand that one can sat democracy and mean something very different - and then I suggest a book on neoliberalism, by a guy called Quinn Slobodian.
I think the title was neoliberalism - the end of empire. Or something.
It was a good book that traces the idea of neoliberalism as a form of government within the broad spectrum of 'capitalism'.

Also: Marx's critique of capitalism is breathtakingly brilliant, but I recommend youtube lectures rather than reading Marx, because he's awful to read. 19th century germans are all awful to read...

Ok, thanks for the suggestions, I honestly learn a lot better by watching videos, hearing people speak versus reading. I have really bad add, my mind tends to wonder off a lot, plus, often I forget the beginning of a sentence by the time I reach the end unless I'may very interested in what I'm reading. I end up having to read each sentence about 3 times, it's a real drag. Yet when someone is speaking I can understand very good, mostly in one shot, though my memory is very selective also. I may have to take notes.

I listened to it on audiobook.
It was a recommendation by Mark Blyth, a political economist at Brown who has some enlightening talks up on YouTube. A leftie, but a capitalist. He's really good at explaining things in an accessible way - maybe check him out, to get an analysis of the last ten years in world economics.
The book on neoliberalism is more focussed on how this system was conceptualized over the course of half a century, and about the ideas that went into it. Maybe not the first thing to start with to get to know the system, in its current shape and effect...