The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope

18The Cure for the Banking Industry: Systematically Move Toward Pure Capitalism

 

THE FUNDAMENTAL ISSUE UNDERLYING THE BOOM-AND-BUST CYCLE in the financial industry is the lack of sound money. Unfortunately, the Fed is constantly manipulating the value of the dollar. The Fed is charged with two goals, controlling the price level and maintaining full employment. In practice, the full-employment goal almost always has priority. This is because the Fed is a political institution (despite its theoretical independence), and because Congress cares more about full employment than about price levels. (Ironically, a debased dollar will ultimately undermine the Fed’s full-employment policy goal.)

The most fundamental cure for this crisis and future financial ...