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| Sep 21, 2009 5:16 pm |
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re: Reforming the banking system? |
Thomas Holford
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A somewhat meandering and opaque analysis of the banking industry, but at the end of the day I agree that:
"If these suspicions are even just partially on target, it would seem that one should look for a different strategy than just pushing for ‘regulations’ -- that will surely be so tainted by compromoise as to be rather painless to the institutions in question and their expectations of profiting from the public coming and going."
However, the suggested solutions just sounds like more complicated 'regulations':
"How about encouraging the foundation of banks or credit unions that explicitly commit themselves to guidelines designed to avoid the recurrence of the bubble-bursting calamities. Such commitments might include a system of ‘ante’ payments or accounts put up by top decision-makers which not only specify the extent of bonuses they can earn for successful performance, but also what they will forfeit if their actions prove to be damaging to depositors, investors, and the public"
I think the solution is ultimately a strong, vigorous free market monetary system and corresponding free market banking system.
Unfortuately, with the political establishment's and the publics's apparent strong commitment to the "Federal Reserve" banking system and unwillingness to examine other more market oriented approaches, I would say that we are light years from any meaningful or effective reform of the banking system.
Prepare yourself for more calamities, more regulations, more crony-ism, more crises, more of the same.
T. HolfordPrivate Reply to Thomas Holford (new win) |
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