It was a disappointing but not surprising piece in the NYT today from the man we still regard as the greatest Fed Chairman in history. Paul Volcker’s long and rambling commentary re-states one inoffensive but irrelevant reform proposal and another that would perpetuate the worst in the current system.
The small but irrelevant proposal is to [...]
Stiglitz, smart as he is, is allowing himself to be distracted by the President’s tendency to wander off in to irrelevant details that make good sound bites. Sure, forbid proprietary trading by commercial banks if you like; it won’t hurt. But it was utterly irrelevant to the crisis. Also the rule would tend to extend [...]
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// ]]>The drive to off Bernanke, like 99.9 percent of the stuff we hear coming out of Washington right now is just one [...]
If supporters of free markets are to grapple effectively with the fallout of the late crisis, they need to start by getting one thing clear in their heads: Modern banks, especially the big banks, are not free market institutions. They are agencies of the government.
Creating and maintaining the value of the currency is a core function of government, laid out right in the Constitution (c.f. “and regulate the Value thereof”). In a modern, credit based financial system the mechanism through which dollars are created and their value regulated is the banking system.