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"Tougher regulation" is just a codeword for putting more onerous burdens on the competitors to the TBTF. If banking is a necessary function in modern society (which IMHO is), then even if all existing banks failed, new banks would emerge very quickly. People's lives are much more dependent on supermarkets and grocery stores (for food!), yet is there any doubt that new supermarkets/grocery stores would emerge to serve a community that needs food if the old badly run one fails? Keeping that old badly run one around actually forces consumers drive out of town to do their grocery shopping. Just look at Zimbabwe's experience in the last decade: their fiat money system killed the economy through hyperinflation . . . all banks essentially failed. Yet the economy (division of labor through mutually willing exchanges) recovered very quickly and the store shelves became full again after gold and US-Dollar became de facto currency.
posted by 76.118.39...
, Thu, 5 May 2011 19:17:20
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