Ron Paul Says The Big Economic Collapse is Close Finance News, Most of the e-ink spilled on financial reform is focused on regulations to prevent failures. The criterion upon which Congress is basing its reform is reducing risks to taxpayers.
These are the wrong emphases, distracting both from understanding the problem and fashioning an appropriate solution.
The major problem is not that an institution fails. Failure is inherent in all human activity, market economics being no exception.
It is the devastating “collateral” (i.e., other than to its shareholders and creditors) damage to the rest of the economy — you and me — that a big bank failure causes that should be absolutely prevented. That is much bigger than the cost to us as taxpayers.
The energy, effort and political capital should be spent on reducing the permitted size of banks to the level that its failure causes no collateral damage.
Financial people like to make their world seem complex, so that others believe there is something special or magic about it, and thus keep their hands off of it.
It is really quite simple.,