Flash Point: Policy Mistakes Leading to the Current Crisis

Niels Jensen writing in The Absolute Return Letter September 2012: How to Unscramble an Egg, lists policy mistakes made in the last decade and a half that have contributed to our current economic crisis. We have referenced this theme in our writings, recognizing Richard Duncan’s excellent discussion in his book The Corruption of Capitalism. Briefly, Jensen’s policy mistakes are:

  1. The repeal of the Glass-Steagall Act: This allowed the unfettered multiplication of credit by the investment banks.
  2. Permitting mercantilism: This created the massive imbalances in trade and capital flows.
  3. The European Monetary Union: The flawed fiscal structure of the EU has lead to the current debt crises.
  4. Austerity misunderstood: The application of austerity at the bottom of an economic cycle has only deepened it.
  5. Ignoring pension liabilities: The failure to address structural problems.
  6. A return to the gold standard: How the gold standard contributed to the problem (read Lords of Finance by Liaquat Ahamed and Barry Eichengreen’s piece from last year called A Critique of Pure Gold).

We list the above references to capture them for a possible future article that looks at policy mistakes and the Second Great Depression.

Powered by WordPress | Designed by: photography charlottesville va | Thanks to ppc software, penny auction and larry goins