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|User Info||Rebuttal To Mish: FRL; entered at 2009-05-07 10:18:58|
"IF you fail then your bank is insolvent AND MUST BE SEIZED IMMEDIATELY."|
Seized by whom, and with whose money? The taxpayers?
If you fail you should be hung from a lamppost on High street, like in the old days.
The existence of a central bank creates moral hazard. The existence of FRL enhances moral hazard. Ceasing those two does not end moral hazard, but reduces it dramatically.
Banks can, and should, be places where money is put for safekeeping. If I want my money lent out, I can make a time deposit and agree to a share in the proceeds of the loan.