Naked Capitalism has the article Randy Wray: The Rise of Monetary Cranks and Fixing What Ain’t Broke. If I give you the conclusion, I run the risk that you won’t read the article. However, at least you may have the seed of the idea planted in your head. I assure you that you will learn a lot more by reading the whole article. For instance you will learn why things that are bad when done to excess might be quite necessary when done in moderation.
The Role of Monetary Cranks
Yes, the rotting fish on Wall Street and in London stinks. We need downsizing. We need reform—not only of the financial system that exists, but also of the crisis response that we will need when the system fails next time. You can be sure there will be a next time.
This is the time for monetary cranks.
No good ideas will come out of the mainstream. They never saw the crisis coming, indeed, their advice in the speculative run-up made the crash not only inevitable but much worse than it would have been. They were behind the bail-outs of Wall Street and London. Their rescue of the banksters will hasten and deepen the next crisis. Do not listen to them.
We need to remember two things, however, as we assess the proposals of our cranks.
First, there is no final solution. There is no magic reform that will prevent another crisis. As Minsky said, “stability is destabilizing”. Any successful reform will lead to the recreation of instability that will lead to another crisis.
Second, it is essential that the reform proposal is based on a coherent and valid theoretical framework.
One way to judge the monetary cranks that are proposing reforms is to ask: “Where were you a decade ago?” Did you see “it” (the crisis) coming? Did you have a coherent theory which explained why a financial crisis would occur? Is your proposal consistent with that theoretical framework? What the heck is your monetary framework?
I have seen the term “bankster” in many of the writings of William K. Black. Until this article pointed it out, I never got the intended similarity between “banksters” and “gangsters”.