Fragile By Design: Understanding World Banking Markets
Columbia University
Overview
More than 100 major banking crises have happened over the previous 50 years, the average severity as determined by the amount money lost averaged 16% of GDP. In the Great Depression, banks only lost about 2.5% of GDP. Why is this? Is the modern banking system, with its crises, by design? And how can we avoid these disasters in the future?
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I wanted to understand the basics of the banking system… and see what he had to say. He expained how the whole thing works but specifically why it doesn’t work fairly. Without being cynical, he lays out the way it is… and that ultimately, you can trace the failures of banks in the U.S. back to the typical answer about government things that don’t make sense — and that is, it’s cronyism… Regulations are made by politicians to help their buddies, not to help the system itself. And all the politicians know this… and THAT is why things are done the way they are. Hearing him lay it out makes total sense.