The Early Days of a Better Nation

Monday, September 17, 2007

Anarchist bankers

At a Libertarian Alliance conference a few years ago, I heard an anarcho-capitalist economics lecturer explain that financial regulation was no big deal because the speculators were always one step ahead of the regulators - as soon as the regulators had one financial instrument tied up in red tape, the financial services industry came up with another instrument even more complicated and opaque than the one before, and by the time the regulators had caught up with that one ... and so on.

Britain has now had a run on a bank.


Paul Krugman agrees.

But I don't. In the USA, regulation worked for about 50 years, 1930-1980; then the scam artists captured the regulatory apparatus. It took about 25 years to fail completely, but fail it finally has, and we are living with the results. The really scary part, though, is international banking regulation, which is near to non-existent. We now have neo-mercantilism implemented via currency manipulation. See, and in particular, China, but any country can play.

Early days of a Great Depression?

What's new?

You know, financial crises have always been an unfortunate part of capitalism. However, unlike the alternatives to capitalism, the effects have been getting more and more minor as time goes on. Despite both 9/11 AND the bubble popping close together, the US economy didn't even go into recession. Alot of us just became construction workers instead of programmers, hardly a horror. Sorry, charles, no depression here.

I predict we won't even see a recession.

Yeah, and Krug's such a wizard. He predicted multiple depressions projected to start years ago. Hmm, they haven't showed, somehow. Care to explain the alleged neo-mercantilism? Are you annoyed alot more Chinese can afford education and decent housing now? Or that Britons have lost factory jobs they can now do better than?

The reason there's no depression is that every time a speculative bubble pops, (a) large amounts of cheap credit are dumped onto the market and central banks slash interest rates, (b), the super-rich get another tax cut, and (c) ordinary people have to take larger and larger wage cuts, higher taxes, etc to pay for it all.

That's my take on it anyway.

I thought the "minor" effects were the result of actions of central banks, i.e. us taxpayers paying to keep the system working.

As for computer programmers to building site workers, has that actually been happening in an actually important way? It sounds more like someones (not mine) ideal world, where anyone can do any job, and never mind that you don't like it.

I predict we won't even see a recession.


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