FDIC should not have existed in the first place, it is a moral hazard, where bank clients do not pay any attention what the banks do with the money.

Bank runs don't necessarily mean the bank was doing something wrong. It could just mean that depositors are worried that the bank might be doing something wrong. Or they might be worried that other depositors are worried. Or they might be worried about banks in general. The whole point is that self-fulfilling prophecies are even more problematic than actual banking problems, and the only way to prevent them is an insurance scheme.

That would be fine if money was all about flows and units of measure, but there are stocks of money and contracts specifying future flows as well. If one day a sandwich costs a bitcoin and a year later, a sandwich costs a bitbuck, roughly speaking, the value of bitcoin is up by a factor of a billion. That means that if you have a bank account full if bitcoins, you're a billion times richer. It also means that if you owe somebody bitcoins, you're a billion times deeper in debt. Inflation and deflation have real economic effects that go well beyond printing new price sheets.

The failure mode of the FDIC is "everybody stops beliving the FDIC and banks will pay out and pulls their money out of banks all at once." That failure mode can be prevented. It's something you can do with an implicit guarantee of "infinite" tax dollars without actually spending any tax dollars.

Yeah, I haven't quite been sure what to make of the whole gluten free thing. I'm glad that people with real medical problems with gluten have a lot more options, but the the fad side of it strikes me as bizarre. If it suddenly became trendy to roll around in wheelchairs, we'd see a lot more accessibility for the handicapped. That would be a good thing. But seeing an able-bodied hipster giving a business owner shit because they don't have a ramp for his wheelchair would still probably grind my gears. A net win overall, but a very strange one.

If the Creation Museum starts stocking the same selection of beer and cheese that Whole Foods does, I might swing through from time to time if I'm in the neighborhood.

We should start a voucher system. Dump a pair of scissors in the bin? Get a voucher good for one pair of scissors that you can grab from the bin on your way out of your destination airport. Not a perfect replacement, but better than losing it entirely.

Actually, it's worse in terms of cost. In pre1950s America, we weren't required to police the world or otherwise maintain a global military presence.

I think that's a big part of the complaint here. We really don't need to police the world. It's absurdly expensive. We've done it more and more over the past 50 years, and it's hard to see much of a payoff for doing it lately. Part of the reason we do it is because we can. So we're stuck in a circular game: We "must" police the world because we're the only ones powerful enough to do it. We "must" be powerful, because we have to police the world. Sooner or later, we're going to have to question the underlying assumption.

There are more countries today verging on superpower than back when we only had the russians to worry about. At a minimum, there's Russia -and- China, and China has the leg up in both population and economic growth.

That's a very generous definition of the word "superpower." The USSR was a superpower. Modern Russia spends a fraction of what the USSR spent in real terms, and it doesn't seem to be colonizing the world like the USSR did.

China could be a superpower at some point in the future, but they're still well behind us. They also don't seem to be acquiring territory all over the world like the USSR. In any case, China will eventually be a bigger economy than we are, and we're going to have to come to terms with that. If they want to outspend us on military hardware, they'll eventually be able to. They have 4x our population, so they'll reach GDP parity with us as soon as they're 1/4 as productive as we are. We might as well start planning for it. If our only plan is to keep outspending them 2.75:1, we're screwed.

I'd say that playing nicely with others, having a military strong enough to police our territory and core interests, and sitting on enough nuclear weapons to wipe out any aggressor is probably a better long-term strategy than trying to bury everybody else under the sheer weight of our spending.

Using the historical comparison, we should be spending more (or at least the same) than we were then.

Using the historical comparison by what unit of measure? We spend more than twice what China spends and almost six times what Russia spends. And that doesn't even count the amount of hardware we've already amassed over the years of exceeding their spending. How far ahead of the next biggest enemy do we need to stay? Twice as big? Ten times as big? What scenario are we preparing for, exactly, and what are we trading to prepare for it?

Umm, why not? It's far more accurate since it at least partially takes inflation into account.

Because you don't necessarily need more defense spending as you become wealthier. You don't need more defense spending as your population grows. It's like expecting our spending on food to scale with GDP. You need a certain amount of defense and you pay what it costs. If we suddenly had an economic boom that made us all twice as rich, would we need to double the size of the military? Of course not.

The only correlation there is that as we get wealthier, we have to pay our soldiers more. That's reasonable, and I'd bet that if we plotted soldier pay against GDP, we would see a different trend. Why? Because "defense" is a product of capital (hardware) and labor (soldiers). Like most other products, we're better and better at supplying it with more capital and less labor. The amount of capital per soldier these days is enormous compared to what it used to be, and that's good. The cost of that hardware (per unit of military usefulness) has gone down, and we're more efficient than we ever were before, so I'd expect the cost of a unit of defense to be a lot lower than it was in the past. That seems to be true, unless you're suggesting that you'd trade our 2014 military for our 1955 military.

Just as important, the amount of defense you buy should be a function of what threats you're dealing with. 2014 is not the same as World War II. If no other country had any military at all, we could scale down our military drastically. If Iran was a military superpower, we'd likely spend more. That's why the comparison to other countries matters.

Oh really? So are we allowed to do the same with entitlements then? Because I guarantee our ~2 trillion a year dwarfs other countries.

Does comparing the size of our military to the size of the militaries we might fight with really not make sense to you, or are you just playing dumb? Because that seems like basically the most important factor to consider. If you were from Mars and didn't know anything about our geopolitics and I asked you how big our military should be, would you ask me "What's your GDP?" or would you ask me, "How big are the militaries of your enemies?"

I'd be happy to compare entitlements per capita to other countries. That would be very illuminating. But comparing the raw number wouldn't make any sense at all. Mathematical literacy. Yay!

By that definition of "bad", the existance of one very large bank potentially means that the entire banking system is bad. That's not totally unreasonable, but then "bad" isn't a particularly useful term. It's also an explanation of why we don't let catastrophic bank failures happen. If all of the banks always "deserve" to go under because they loaned money to a bank that loaned money to another bank that loaned a lot of money to one particularly bad Kevin Bacon bank, then letting bad banks go under wipes out your financial system by definition. Worse, a run on the money market system can make any bank a "bad" bank simply because people feel like banks as a whole might not be so great.

All this goes back to, "why is it bad to let some banks fail?" I'd have thought that the Lehman collapse would have covered it, but some people need a clearer explanation of the transmission mechanisms.

How exactly would bad banks going out of business be a bad thing? And please don't say "hundreds of millions of people would lose all their money", because that is bull [wikipedia.org].

One bad bank going under isn't a bad thing. Lots of bad banks (or one or two really huge bad banks) going under is a majorly bad thing for a lot of reasons:

1) Like any insurance scheme, the FDIC can't pay out on all of its policies (or even most of its policies) at the same time.
2) Lots of money owed to people by banks is not in the form of insured debt.
3) Banks owe each other a lot of money. If a large enough bank goes down, it can turn another "good" bank into a "bad" bank simply because that bank was holding a lot of paper from the bank that died.
4) Banks borrow on the short market and lend on the long market. A big part of that short market is in uninsured money market funds. If banks start collapsing, people pull out of money markets and effectively "run" on all of the other banks (which is exactly what we saw happening after the Lehman Brothers collapse).

I think that the general "cut the military" position is "cut the military down to what it takes to police our borders and repel an invasion." So we're still talking about having enough of a Navy and Air Force to keep any supply lines from being built up. It doesn't hurt that we have oceans on both sides of us. An attack by China would make no sense and be disastrous for them. Our two world wars show how quickly we can ramp up our military force if there's something really critical going on. Having enough hardware and people to sustain, say, a massive land war in Asia just in case is a colossal waste of resources. There are hardly any nations that could conceivably attack us on our own shores, and doing so would be a military nightmare. Even if it was a reasonable possibility, what could they hope to gain? Nobody has done the experiment, "Push a nuclear superpower to the brink of losing a war for its own survival," and I'm fairly certain that nobody ever will. It's a good way to start a desperate nuclear exchange that gets you wiped off the map.

How are you defining things like "collapse" and "hike" here? From the looks of it, these are numbers that are relatively easy to deal with. I'm simply not seeing where we're getting the notion that these alterations represent untold suffering. There are plenty of other changes to our tax and benfit structures that will be at least as large. As I noted in the earlier link (which is 4 years stale, but probably not too far off these days), you can take a big bite out of it by adjusting the wage cap so that it covers the same percentage of overall wages that it did in the 80's. Sure, it would be nice not to have to do that, but it doesn't exactly represent the rape of the American worker.

Yes, the people retiring today are getting a great deal. They've been getting a great deal for most of their adult lives. They've lived off of the infrastructure their parents built while giving themselves tax cuts, and they're going to balance Social Security on the backs of the generation that comes after them. They're a big voting bloc and they've made the most of it. But even so, Social Security is a worthwhile program and a very solvable problem.

That's not a "shortage." That's supply meeting demand where wage equals marignal product.

Yeah, that seems like a sucker's bet. Maybe he's the one person who isn't running a scam, but you certainly can't tell that from the job description. I'm amazed that anybody responds to the postings.

But not 100% of it. When I get cash back on a credit card, I pay for some if it with higher prices. I'm grateful to people like Charliemopps for paying for the rest of it.