Reason Writers on The Tube: Anthony Randazzo Talking Banking Reforms on Al Jazeera

The Reason Foundation's Director of Economic Research Anthony Randazzo joins a panel to discuss whether banking reform will avert another crisis on Al Jazeera on December 15, 2009.

Approximately 20 minutes.

Randazzo is a regular contributor to Reason magazine. Read his archive here.

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Comments

[Tapeworm]

There was a crisis on Al Jazeera? Do tell.

[jester]

Mr Randazzo,

That British fellow referred to you as a 'conservative' twice and you didn't slap him upside the head. What's up?

[Justin Rue]

Nice, it actually makes sense when you think about it.

Jess
http://www.isp-snooping.es.tc

[Sean]

Could somebody delete this obviously spambot comment?

[Brendan]

It is bad enough to look at the financial problems from the point of view of the institutions and the current monetary system.

But it is becoming more apparent that the fiat money system creates money by the consumer applying for a loan, not by the banks themselves.
The banks do not lend money, they are merely brokers who birth money into the commercial system. The consumer creates the money himself with his credit application; iow with his autograph on the application.
So, if the bank allows the consumer to create money and then calls that money the principle on the loan and charges interest, consumers are paying way too much interest for the service the banks actually provide.

So, not only are prices inflated by the fiat monetary system, but the debt is grossly inflated as well.

We are looking at a major contraction in the credit card and commercial loan sector next.

[Contemplationist]

Giving aid and comfort to ze terrorischte! Al-Jazeera!

[Fist of Etiquette]

The reason Welch comes across better in these panel spots than the rest of the Reason jokers is because he wears a tie. How tough is it to knot a tie? A knot of credibility!

[R C Dean]

Hear, hear!

Dress like you deserve respect. If it helps, think of dressing well as an opportunity for self-expression. Hell, maybe even shave before you go on an international news broadcast. It can't hurt, and it might even help.

You're not out there to impress people with your laid-back cred. You're out there to project your ideas with credibility.

[josey]

So we have free market theory, which says basically, you oughtn't attempt to regulate, because the mechanism you are working with is inherently unknowable. Additionally, we have controlled market theory, which operates on the assumption that there exists an innate intuition, on the part of the regulator, with regards to which regulations can and should be imposed on the system.

The view of the first is unequivocal, while that of the second is ambiguous.

In the second case, would not the follow-up question necessarily be: since regulators possess such special knowledge of the internals of the system, why then should the market be involved at all? Why not, in this case, allow the regulator to displace the natural system in its entirety? He already knows which changes are necessary to ensure that it functions properly -- why not just let him do the whole job?

If the regulator truly knows best, why not untie his hands, allow him to function to his fullest potential, and adopt a full command economy? If his knowledge is only partial, why should we trust his judgment in any particular instance?

I happen to know a thing or two about the operation of clean and well-designed systems; special case rules are invariably at the root of issues that crop up. And that in systems which are designed from the ground up through human logic and planning; all the more in natural systems, which are not.

Simply put, regulation is always a hack; if there's one thing you can be sure of, it is this: it will always come back round and bite you in the end, in ways which (a) you could never have predicted when you put it in place, and which (b) are completely unresolvable after the fact.

[Sean]

Did it seem to anyone else that Mr. Randazzo was a bit soft on the regulation proposals? Maybe he decided being more civil would help him get through to the audience more effectively. In any case, most of this discussion was in such broad generalities I had a hard time discerning where people really stand.

[Brendan]

If the regulator truly knows best, why not untie his hands, allow him to function to his fullest potential, and adopt a full command economy? If his knowledge is only partial, why should we trust his judgment in any particular instance?

Exactly. Reminds one of the CSPAN broadcast of the forum that featured George Soros, Paul Krugman and Naill Ferguson where Ferguson uttered his excellent remark that You are so worried about not having the 1930's that you are giving us the 1970's

Soros went on and on about how we need more regulators, but of course the right kind of regulators, those who will have the foresight to prevent a new meltdown, but won't stifle the markets, etc.

Whence will come these new superbad regulators?

[R C Dean]

Soros went on and on about how we need more regulators,

Of course he did. Soros has made his money betting on government failure, so the more regulators, the more and bigger government failures, the more money he makes. He's just talking his book here (as always).

[josey]

Soros has made makes his money betting on government failure...

Not to nitpick...but Greece is a potential goldmine, depending on emerging EU bailout policy.

[Bank index]

The recent banking reforms are a total waste of time and will not change the economy. The credit crisis goes way deeper than we think. Most of the blogs on bank index site http://www.dozenbanks.com are saying that the latest reforms will not help us by one dollar.

[Hamilton]

The recent banking reforms are a total waste of time and will not change the economy. The credit crisis goes way deeper than we think. Most of the blogs on bank index site http://www.dozenbanks.com are saying that the latest reforms will not help us by one dollar.

[Hamilton]

The recent banking reforms are a total waste of time and will not change the economy. The credit crisis goes way deeper than we think. Most of the blogs on bank index site http://www.dozenbanks.com are saying that the latest reforms will not help us by one dollar.