I have always noticed that Monetary policy seems to lack performance, ever since Milton Friedman first proposed its major elements. The Fed purchase of Treasuries produced only a 67 DayLoop in long-term Interest rates. The long-term object of providing the funding for Growth itself seems too often punctuated with undesirable Inflation; this may rightly be that this struggle for funding by Production sets the proper Production Costs under competition, a Subject not to get me on because I quickly ascend into the Ozone. Milton Friedman was a brilliant Economist with a brilliant theory, yet the theory possessed the same limitations as Milton himself–no real Testing of the practical environment. Economists today should advocate such theories in recessionary times as can possess some proven validity; an idea that Ben Bernanke may be reaching a greater appreciation. We got TARP, but We still received the Unemployment and lack of loans. We have the Fed buying Treasuries, but still have medium-range Interest rates. We have massive federal spending, but realistically have only arrived at the same drop of Production, but with a massive disruption of the federal funding apparatus. Is it Time to start doing Nothing?
It is the common paradigm that small men in the modern environment seek to change the Rules of the Game to make themselves feel important. Here is a very good example. They generally fail to attain prominence of any kind, and their drivel most often presents Us with more confusion than correction. Instead of writing vast reams of regulatory powers (inevitably nonexistent because of being unread and unworkable), I would simply establish a Standing Grand Jury to investigate malfeasance in financial transactions, with replacement of Jurors every Three months. U.S. Attorneys would know they had to prove their Case to the Jury within that Time, and the Justice Dept. could assign as many Attorneys as necessary to answer all Public and Private charges against any practice or financial institution. It would probably hold more financial Feet to the Fire than any Regulation ever designed.
This Post discusses where the Rave mentality on the push for Regulation is coming from, and who is responsible both for it, and for its containment. Simon Johnson obviously believes this Push is focused behind some Individual, while I think it is only the incoherent roar of a mob; with rare venting of a coaxial regulatory Concept by some momentary lucid member of the mob. Geithner and Summers obviously belong to the Security services of the financial world, and are trying to suppress the more outrageous constraint of the financial world, while Writing the actual regulations so loose so that they can be safely ignored, or successfully defended against by financial institutions. The Mob should understand their goals are bound for Defeat, as Impulse cannot stay the Course against systematic design of Special Interests. lgl