Regulators are human beings with the same shortcomings as everyone else. Even if we assume they have the best motives, on what basis do we believe they could possibly know what they need to know to manage a financial industry that is complex beyond conception -- and changing every day in response to new conditions?
Obama speaks as though these facts don't exist. He goes so far as to say, "[W]e're proposing a set of reforms to require regulators to look ... -- for the first time -- at the stability of the financial system as a whole." (Emphasis added.)
That is precisely what no one can do. The financial system isn't a machine. It's people -- a huge number of them -- engaging in countless transactions often on the basis of hunches that are not quantitative and never written down. How is a regulator to keep tabs on -- much less manage -- that?
Free markets and government intrusions are dichotomies. John Stossel explains...
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