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I get the impression that Rushkoff does not know much about Economics, nor Finance. I do agree that Wall Street was making way too much money and that this new

by Rod 18y ago

I get the impression that Rushkoff does not know much about Economics, nor Finance. I do agree that Wall Street was making way too much money and that this new gilded age had to end sooner or later. However, I do NOT agree that the collapse of the financial services industry would benefit the United States. The truth is that the U.S. needs the financial services industry to serve as the economy's lubricant. Ultimately, an efficient marketplace benefits us all.

kiba 18y ago
You can't have profit without loss. It is the twin engine of capitalism that make the economy run. When these companies failed, their asset get liquatated. Those assets that got liquatated will hopefully end up in companies that were sound, financially and bottom line wise. That is the purpose of the bust, to clean out unprofitable activity and correct the misallocation of resource. If you subscribe to the Austrian business cycle theory, than you also realize that these booms and bust are not natural, and are largely due to the nature of the federal reserve. For example, if you lower the interest, you're signalling lot of resources are availiable because of the high saving rate. But since the feds control the banking system, the interest its mandate are unnatural and not based on real market condition. This cause a chain reaction in the market(as people are tricked that there are more resources availiable) in which a number of factors lined up perfectly to cause a spectuative boom and than a market correction, thus creating a large cluster of entrepeneural errors. That is not to say that there won't be a boom and bust. It will probably happen in a true free market as entrepeneurs are fooled, but it will happen less. Entrepneurs will make mistakes, but not in such large clusters to cause such a crazy business cycle, which by the way the federal reserves was supposed to protect us against. For some reason, the federal reserves fails to prevent business cycles from happening.
- kiba 18y ago
  Ok, people have voted down my comment. Can people point out why they disagree with my assesement?

by Rod 18y ago

kiba 18y ago

You can't have profit without loss. It is the twin engine of capitalism that make the economy run. When these companies failed, their asset get liquatated. Those assets that got liquatated will hopefully end up in companies that were sound, financially and bottom line wise. That is the purpose of the bust, to clean out unprofitable activity and correct the misallocation of resource. If you subscribe to the Austrian business cycle theory, than you also realize that these booms and bust are not natural, and are largely due to the nature of the federal reserve. For example, if you lower the interest, you're signalling lot of resources are availiable because of the high saving rate. But since the feds control the banking system, the interest its mandate are unnatural and not based on real market condition. This cause a chain reaction in the market(as people are tricked that there are more resources availiable) in which a number of factors lined up perfectly to cause a spectuative boom and than a market correction, thus creating a large cluster of entrepeneural errors. That is not to say that there won't be a boom and bust. It will probably happen in a true free market as entrepeneurs are fooled, but it will happen less. Entrepneurs will make mistakes, but not in such large clusters to cause such a crazy business cycle, which by the way the federal reserves was supposed to protect us against. For some reason, the federal reserves fails to prevent business cycles from happening.

kiba 18y ago
Ok, people have voted down my comment. Can people point out why they disagree with my assesement?