We need multiple exclusive currencies and markets so we
can reduce the regulatory burden on the rich. If you have been
paying attention to the recent technical problems with the NASDAQ
exchange, you will hear regulators saying that we need more
regulations to "keep this from happening again." Those who
run the exchanges are equally convinced that this incident was just a
glitch. Let us not over-react, they say. The exchanges are
over-regulated as it is, they say.
We would not need a heavy burden of regulations if the
rich and their managers could resist putting the boot in when the
poor are down. It is not that the poor are better than the rich, it
is just that in any group of people, only some can resist the
temptation to take advantage of weakness. Government has to step in
to protect the "weaker hands."
Rich people, pay attention – we have a way for
you to have your totally unregulated exchanges. You know that you
want it. Your need to avoid regulation is why those "dark
pools" of capital were created. You had to get away from public
scrutiny.
A better way to do it is with multiple exclusive
currencies and markets. Make the separation official and easy to
enforce. Without all those small investors working in the same
markets that you do, there will be no need to protect them.
It does not make any sense to let children on the same
field where the adults are playing. The measures taken to protect
the children from getting hurt will make sure that no one has any
fun.
In a similar way, our financial regulations take a lot
of fun out of our markets. The regulations try to accomplish two
things at the same time. They try to keep the markets open and free,
but at the same time, they try to restrict what he rich do because it
might hurt the poor. That is, our regulations try to promote
opportunity and restrict it at the same time. No wonder they do not
really work.
If we had multiple markets at different levels of
financial competitiveness, separated by firewalls of different and
exclusive currencies, then the regulations for each level could be
rational and focussed to benefit those at that competitive level.
The financial instruments at each level would be denominated in the
currency at that level, limiting the impact of disruptions in other
markets.
Financial services would improve. Small brokers in
less-competitive markets could survive and offer services to small
investors. As it is, the large brokers eat up the small brokers, and
the small investor is ignored. It is just too expensive for large
brokers to take on small accounts because the regulatory costs and
legal risks outweigh any tiny profits they might make from the
accounts.
There are other points we could make, but mainly we
want you to stop and think a bit about the advantages of multiple
exclusive currencies and markets. Many of the rich are reactive
rather than thoughtful about having a single currency that is used in
all the markets. However, maybe the extra complexity of multiple
currencies is justified. Would the cost of any inefficiencies be
worse than the regulatory climate that we have today?
The way capitalism
should be.
Socialism for the
socialists and capitalism for the capitalists.
TheOtherSideOfCapitalism
(admin@tosoc.org)
Copyright
© 2013 TheOtherSideOfCapitalism
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