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Triple fail

by on February 18, 2014

Our system hasn’t just failed.
It failed and failed again.
Then it missed a chance to stop failing.

Failed…
Recurring crises.

…failed again…
Left with no way to get real money to real people, we create central-bank reserves through QE and OMT.

…then missed a chance to stop failing!
The old regulation had to do with reserves. So the new starts there, too. However, because central-bank money by definition remains stuck inside bubbles, this is like solving homelessness by claiming the hotels are full.

“Five days before its bankruptcy Lehman Brothers boasted a Tier 1 capital ratio of 11%, almost three times the regulatory minimum,” said The Economist in 2010. Alas, it goes on to denigrate Glass-Steagall as “depression-era” and “complicated” (translation: less feeding at the trough.)
In NYU Journal of Law & Business, regulators’ efforts are even described as “tactics”, “blatant”, and “arm-twisting”. The record bail-out on the other hand is taken as a given. That was Fall 2011. Next: all-time high.

In a nutshell: “Money good, regulation bad.”

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