Home > Predictions > AFR contemplates how to “regulate” embezzling Charles Ponzi

AFR contemplates how to “regulate” embezzling Charles Ponzi

In today’s editorial the Australian Financial Review, propaganda arm of the RBA and big banks, puzzles over how to balance the need to regulate and supervise systemically important financial institutions with the need to allow innovation and competitiveness in all institutions that are involved in maturity transformation (that borrow short and lend long).

It’s a delicate balance.  Because the task is impossible. 

In modern interconnected world markets, no financial institution is free from systemic implications.  Therefore, potentially, they are all too big to fail.  That’s why non-bank insurer AIG had to be bailed out.  That’s why Fannie had to be bailed out.  That’s why Freddie had to be bailed out.  That’s why every stinking bank in Australia had to have its deposits guaranteed by the Oz govt.  In a systemic crisis, one crack and the whole crystal glass edifice collapses.

I have a better idea.

Free banking and a free market in money.  Let any and every bank go under, but every and any bank innovate.  Let the people transact in gold, silver or tobacco if they want to avoid the paper Ponzis.

The AFR is right to puzzle over the problem.  Because there is no way of regulating an embezzling Ponzi scheme and making it work sustainably over the long term.

It ends in Depression or Currency Collapse.  Always. 

Ask John Law.  He would tell you, if he were alive today.

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