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Walter Bagehot: the revered Victorian who got almost everything wrong
- dang 7y agohttps://news.ycombinator.com/item?id=20518332 https://news.ycombinator.com/item?id=20518332 points to another recent (and much nicer) review.
- coldtea 7y agoErr, so he thought Lincoln would lose the war, and he was in favor of bailing-out a bank (who 8 years later went bust). That's hardly enough to warrant the "who got almost everything wrong" title. In general the article is just bad writing...
- cafard 7y agoParticularly if one is citing Gladstone as a candidate for greatest Victorian. Gladstone caused quite an uproar in saying that Jefferson Davis was making a nation--this was very much the opinion of much of the British ruling class, but Gladstone was in the Cabinet.
- asdfman123 7y agoThey write faster than anyone who writes better.
- asplake 7y agoReaders of The Economist might suspect that it’s The Spectator having fun at a rival’s expense (the former has a Bagehot column)
- jhbadger 7y agoAnd the reason for that column was that Bagehot wrote for The Economist and was the son-in-law of its founder, James Wilson.
- Balanceinfinity 7y agoBagehot's dictum: During a financial panic, the central bank should lend freely against good collateral to solvent firms at a penalty rate. The moral hazard arises because as the lender of last resort, the central bank is inevitably providing funds at a below market rate. This could encourage investment by those who can hope for a bailout and not face the full negative effects of the risk they've undertaken. However, so long as there's a penalty rate, this should control (if not completely overcome) the relevant moral hazard that might arise from the loans and (if you look at the system as a whole and the costs of the panic), the moral hazard is often worth enduring.