The buying and selling of dollars is usually a dull piece of the world’s financial plumbing, but in the past few weeks dollar has behaved like it did during the 2008 financial crisis and the 2011 Greek default.
Well because, as Mr. Mackintosh squarely says:
“This time there is no crisis—except, perhaps, one of legitimacy. Back in 2008 and 2011 there was a global shortage of dollars because banks weren’t willing to take the risk of lending, and governments and central banks had to step in to help. This month there is a shortage of dollars because governments and central banks have set arbitrary targets for bank capital, and like every bad manager in a bad company, they got what they asked for—and a lot they didn’t.” [Emphasis mine]
It is unfathomable to me that more people don’t see this regulation — of a fundamental aspect of banking — for what it is: pure socialism.
There’s nothing competitive about this structure. Nothing entrepreneurial. Nothing creative – except perhaps how to skirt the law.
It is simply an attempt through centralized planning to “control” the banking industry, or more likely provide another barrier to competition between banks, or some other detente between all the pretty shiny people in D.C. and their counterparts in the banking industry.
I acknowledge that this may be a little caustic because I’m not sure of the particulars, but I am sure this is not competitive, not in the best interest of customers, and it is surely is not capitalism …not to be confused with crony capitalism which is more like a kissing cousin to fascism.
What is an entrepreneur to do?
Note: The views expressed are solely the opinion of the author.
Conceptual and title source: Wall Street Journal by James Mackintosh
Media source: Wall Street Journal