Markets Can’t Rule Themselves

Too simplistic, expatincebu. Way too simplistic. The fact is that first economy you are talking about would cause a lot of problems, with countries that because of geographic location, etc. do not have access to those 'gold and silver' deposits. That is the main reason why we moved away from those things: because we realized that relying on standards that give preference to some countries.... is just ASKING for another world war, and a nuclear world war.
Now, the printing of money should be taken away from the private central reserve bank and be controlled ONLY by the government or an elected body like Congress. That I actually agree with... but I don't see it happening anywhere in the near or not-so-near future.

"Oversight!"...... That would stop the economy from being able to robustly respond! - Repukians around the country quoted here.
The fact is that capitalism is a bad system that only becomes anywhere near even a MODERATELY good system with proper oversight in order to prevent: price-fixing, speculation, etc.

The writer is a typical Chicago school neo liberal idiot. The policies he espouses are exactly what created the evolving greater depression we are in now.

For example, "Europe's current slowdown is due in part to the fact that while the European Central Bank spent the past year focusing on inflation, the United States was (rightly) focusing on the impending recession." Cheap credit is what causes these bubbles. More cheap credit to hold off the effects of the last bubble creates greater and greater bubbles until the whole house of cards collapses. This guys (and that fool Bernanke) is more of the same.

Compare the following two economies, which would you prefer?
Money based strictly and gold and silver controlled by Congress and not a private central bank that profits from inflation. Jobs built around production. Investment built around savings and put into creating greater production. Saving encouraged, debt discouraged.
or?
Money based on nothing that the government can devalue and print at will ( a secret tax). A private central bank that profits from public indebtedness. Productions discouraged and consumption paid for with debt encouraged. savings discouraged and speculation encouraged.

Which is a healthy economy?

.



For a Nobel laureate in economics, this proposition is blindingly pie-in-the-sky.

Where is the call for transparency in the domestic real estate market, the undisputed apex of the current crisis? Real estate transactions and valuations are cloaked in the secrecry espoused and rabidly defended by the MLS system and its brokers. Let's begin by making real estate the same as any other market: free and open with robust competition.

Secondly, calling for an international monetary cop is fraught with complications. It would effectively create a financial cartel and would be to international finance what OPEC is to the oil industry. EVen within OPEC, member nations do not always follow the rules and often continue oil production at high levels when the cartel has called for reductions. We happily turn the other way and consume the oil. How will a financial cartel behave any differently? As long as humans are involved, there will always be rogue agents pressing self-interests. Any economist should know this.

Third, the author calls for a commission that "could help decide which products were safe for institutions to use, and for what purposes". Is he kidding? To this day, in the midst of our quagmire, no one clearly understands how credit default swaps or collateralized debt obligations really work. We are witnessing their impact first hand, but no one understands them. How is a multi-national commission to fare any better?

Four, the author himself points out that middle east nations have no incentive to fund the IMF. What makes him believe a new international central bank will be any different? And how are we to convince China to cooperate? As of today, no one has been able to convince the Chinese to allow their currency to float so that their products can be properly valued and their citizens paid a fair wage.

This article, like most, ignores the fact that this fiasco was caused by none other than Ben Bernanke and the Fed when they started raising rates in 2005 in their paranoia about inflation. This is the same pin prick that burst the dot com bubble when the effect Greenspan's rate increases coincided with the realization that internet traffic was not doubling monthly. A bad situation was made worse by the Fed then just as it is now. Bernanke's 2005 increases lit the fuse on ARM mortgages and pulled tight the strings of the financial markets, leading directly to today's crisis. While rate increases may have been called for, the fact that they were implemented blindly without considering the consequences, illustrates how staggeringly ingorant everyone was about the situation.

I agree much more oversight is needed. However, we should begin with a rock solid underlying premise, one that will remain constant throughout time and is immutable: greed. If we regulate with the premise that everyone, every nation, is greed driven and will act in its own best interests, we stand a legitimate chance of averting a crisis in the future.



.