Sancho
Both sides of politics are unanimous in their support of the current central banking kleptocracy.

Either the parties to a transaction can decide the price, or the government can. There is no other possibility. But if there is, what is it?

How are regulators going to lower interest rates without stealing from savers? How are regulators going to regulate the price of money without it turning into a fraudulent kleptocracy? How are regulators going to determine the difference between what the price of money is, and what it should be? How is any given government intervention not going to favour one party to each transaction?

Those who allege under-regulation never answer these questions, because they can't. Their interventions can only produce results that are more unsatisfactory, even from their own point of view.

Tell you what, Jefferson K. Jardine. Drop the sock puppet account and argue your case from one username and we can have a discussion.

Running multiple accounts to prop up an argument hardly screams confidence.

Ken McKay egregiously misrepresents both my article and my reasons for writing it. I am an economist; I have never been a 'banker', and while I did work for a bank for almost 14 years I no longer do. My purpose in writing the article to which he refers was not to defend bankers in general, nor to suggest that (some) bankers do not bear some responsibility for the damage inflicted by the global financial crisis.

On the contrary, I explicitly wrote that one of the consequences of interest rates being held too low for too long in most Western countries (other than Australia) in years preceding the GFC was that it prompted the 'supply side of the financial services sector' to come up with 'an ever-growing range of increasingly risky investment products cater to the growing demand for them – products whose risk characteristics neither their creators nor regulators fully comprehended', in order to cater to the demand from investors for rates of return that could no longer be obtained from low-risk investments in an environment of inappropriately low interest rates.

Ken McKay quotes that passage, but seems entirely to have missed the point that it is a criticism of bankers.

Nowwhere did I say in this article, nor have I said anywhere else, that there should not be increased regulation of the financial system in the aftermath of the GFC.

(to be continued)

(continued from previous post ...)

McKay, like many others (including on at least one occasion John Howard), seems to think that banks like high interest rates, and implies that anyone arguing that interest rates are inappropriately low is somehow motivated by a desire to enrich bankers. One of the things I did learn while working for a bank is that banks make their money out of the spread between borrowing and lending rates, and that these spreads tend to widen when rates are going down, not when rates are going up. Moreover the securities which banks hold on their books tend to increase in value when interest rates are going down, and to decline in value when rates are going up.

In short, banks don't like high interest rates any more than anyone else (except depositors). And that's why most countries have independent central banks, so that interest rates can be set free of political interference and pandering to populist prejudices of the sort on display in McKay's last paragraph. Fortunately for Australians, our central bankers have discharged their responsibilities rather better than many of their peers.

Saul I find your circular logic disturbing, you argue that we need monetary policy determined by independant technocrats free of populist political views
Yet argue these so called independant technocrats (US Reserve) kept rates too low so fuelling the irrational economic behaviour of consumer and manufacturers of financial products.
If the technocrats get it wrong according to Saul who corrects their error?
Saul and the champions of letting the "experts" decide are in fact without even knowing it advocating fascism.
We must get back to the people through their elected representatives being in control of both monetary and fiscal policy.
The abdication of responsibility for monetary policy has defacto led to fiscal policy becoming inactive because the political elites can continue to blame the technocrats but are not expected to act to preempt their errors.
We cannot let populist views (wishes of the people) to interfere with the dogma and religious fervour of economists

"We must get back to the people through their elected representatives being in control of both monetary and fiscal policy."

Slasher
Why would the people have more control of interest rates if politicians set them, than if the people themselves set them through their actions in buying or selling, or abstaining from buying or selling?

Government control of the money supply is based on a false pretence of knowledge that no single person, or government authority, knows, nor ever can know.

None of the advocates of government control of the money supply will answer this question: *how* are the politicians, or the bureaucrats, or the central bankers, going to know what the price of money should be?

So... how?