States are desperate for money and will be trying just about anything to get it, even if it means trying things that have already been tried and failed. But they’ll keep doing it until the courts slap injunctions on them. It’s a sorry state of affairs we have. Restoration of Constitutional order is the only answer to this because going out of bounds is what brought us down.
Back in January 2001, the financial regulatory structure amended the recourse rule in Basel I to reduce the reserve requirements for government bonds and securities purchased from the GSEs to zero, making it much cheaper for financial institutions to invest in those than many other kinds of investments that would have likely gone to the private sector instead. Of course the effects of redirecting investment money to securities from the GSEs is quite obvious, but the other is now starting to become quite clear.
Not only was the private sector starved of money and terms like “outsourcing” and “off shoring” entered into pop culture, but governemnts gobbled up the money by the truck load. And since government doesn’t produce wealth, we are all the poorer for it when it’s time to start repaying it all with interest because we took all that potentially productive capital and didn’t do productive things with it.
And the politicians have the nerve to tell us that lack of regulation caused all this. What a crock of crap.
I did not know this. By GSEs, do you mean Fannie and Freddie?