Paul Krugman opines today
True, the proposed new Consumer Financial Protection Agency would help control abusive lending. And the proposal that lenders be required to hold on to 5 percent of their loans, rather than selling everything off to be repackaged, would provide some incentive to lend responsibly.
But 5 percent isn’t enough to deter much risky lending, given the huge rewards to financial executives who book short-term profits. So what should be done about those rewards?
Here’s a better solution Professor. How about 100 percent reserves. If banks actually had to hold on to 100 percent of their loans, then wouldn’t that make all those ridiculously risky loans and such impossible?
Of course, the good Professor overlooks the most important bank, in fact the only one, that needs regulation. Sadly he puts his trust in the Fed, the one bank that has complete monopolistic control over the money supply. And like any monopoly…yes, another graph.
Look at what the fed has done to our money.
And while we’re at it, why not just go the full monty and return to the gold standard. Really simple solution now isn’t it? But that’s the problem, it is THAT easy. All that wild banking was the RESULT OF, not the cause of, worthless paper money printed with reckless abandon.
Eliminate the source of the problem. But that would require less government. And we know where he stands on that one…