Thursday, January 6, 2011
When Will All The Investment Frauds of Our System Disappear?
So, there is a shake up in the White House. Perhaps this is a good thing, but unless the new people can see beyond the present and the past, then there is not much hope that the rules of the game will change. Financial reform is, in my opinion, a significant piece of the reform of our economic system. Borrowing is just the flip side of investing. While the financial reforms are necessary, they are only one of many pieces to the economic puzzle. I still believe that monetary policy needs to include what happens to everyone that is part of the monetary system and not just commercial/investment banks. Since the Glass-Steagall Act is now dead and relegated to a footnote of 20th century American Economic history, I guess it is no longer necessary to differentiate between commercial banks and investment banks. I guess now since the investment bankers have access to the Federal Reserve Bank to borrow and bail themselves out if they have no liquidity, there really isn't any difference between them.
I think the Chairman of the Fed, Ben Bernanke, is most likely a very bright, capable and decent man, but if he accepts the flawed way in which monetary policy is practiced in the United States, then there is little hope that strategy, or the way the investment game is played from Wall Street is going to change. Investing under the present monetary system and policies is not a choice, but rather a necessity for financial survival. Unfortunately, the game is compromised time and again, as first the small investors, and more recently the large public pension funds and other institutional investors saw their funds decimated by the frauds that are permitted to control the investment game.
Wall Street has tremendous financial influence in Washington among the Congress, The White House and our central bank - The Federal Reserve Bank. Positive change, as I would define it, is going to take place over many years, and, it will not happen in a straight line. But, as more people become aware as to why it is in their best interests to make the investing game clean, then the frauds that appear far too often will ultimately disappear, for the most part.