Don’t Bring Back Glass-Steagall

My latest article for the American Institute for Economic Research is "Don't Bring Back Glass-Steagall."

Just Wondering

Would Bernie Madoff's prospective victims have been better or worse off had they lived in a world with no government oversight of investment matters whatsoever?

TGIF: Financial Regulation and the "Money Power"

In one of his essays criticizing inflationary free-silver proposals in the late nineteenth century, the great laissez-faire champion William Graham Sumner wrote:

"We hear fierce denunciations of what is called the 'money power.' It is spoken of as mighty, demoniacal, dangerous, and schemes are proposed for mastering it which are futile and ridiculous, if it is what it is said to be. Every one of these schemes only opens chances for money-jobbers and financial wreckers to operate upon brokerages and differences while making legitimate finance hazardous and expensive, thereby adding to the cost of commercial operations. The parasites on the industrial system flourish whenever the system is complicated. Confusion, disorder, irregularity, uncertainty are the conditions of their growth. The surest means to kill them is to make the currency absolutely simple and absolutely sound. Is it not childish for simple, honest people to set up a currency system which is full of subtleties and mysteries, and then to suppose that they, and not the men of craft and guile, will get the profits of it?"

It seems to me that this point is entirely applicable to the current debate over stepped-up financial regulation. In the end, it will best serve the insiders, the “money power.”

The rest of TGIF is here.

Abolish This Derivative

The most threatening derivative is overlooked in Washington: the power Big Finance derives from the State.

TGIF: The Washington-Wall Street Kabuki Dance

There’s something eerily ritualistic about the current occupant of the White House berating Wall Street for its irresponsibility and proposing new regulations, while his targets send a swarm of lobbyists to Washington to keep the regulatory overhaul from getting out of hand. (History says they’ll be on good terms with the regulators in any case.)

I’m reminded of journalist and historian Walter Karp’s book Indispensable Enemies. These apparent adversaries need each other.

The rest of TGIF is here.

I'm happy to say that Counterpunch has reposted the article.