"...The economy is now too complicated for even the regulators to know when a con or a huge mistake is happening..."
I stopped after this sentence. The economy has always been too complicated for experts to understand. That was the beauty of what Adam Smith identified -- with billions of people, billions of "unseen hands" control the division of labor.
The current crises is the 15th crises since the civil war that involved some sort of mortgage gimmicks. We have fraud and economic panics going back to the 1600s.
Nothing new here to see, Scott. After you blew it with the statement above, you continued to go off the rails with the rest of the article, all because of your belief that economies can be engineered. That's a farce that Smith observed in his day. You'd think that a basic education would take most people beyond that point.
" The economy has always been too complicated for experts to understand."
Adams' thesis doesn't rest upon any assumptions about the complexity of the historic economy. He's simply acknowledging a fact: the economy of today is much faster than it has ever been before. Scammers can effectively hide behind the speed of their actions. That's new.
Once upon a time, regulatory agencies like the SEC had a fighting chance of catching stock scams, because the market was slower. It was still efficient, but because there were fewer players, making fewer plays per billionth of a second, they had a chance of stopping crime. Today, the best that the SEC can do is to (maybe) catch these guys in retrospect -- and there's absolutely no chance that they're catching all of them. Thanks to modern technology, market manipulation can happen at the speed of light.
There are two ways to speed up antiscamming that I can think of. It could become automated, AI-controlled, with a machine capable of pulling the trigger at computer-speed. Or, it could become distributed, one-on-one. The latter seems to me to have better scaling characteristics.
How about this as an idea: suppose somebody starts a financial market which from day one has a system of guarantors. You have to be introduced by a member, who thereby takes full personal responsibility for your bankrupt losses.
You would be able to demand insurance and payment from them as a condition. You could demand they let you audit on zero notice. In the worst case you would be able to revoke their sponsorship and that of their transitive protégées (stopping your losses by cutting off responsibility for any future transactions).
The idea here is to make the risk manifest with the risk-taker, rather than letting it settle by default on their clients.
I know it's the weekly standard, but I thought this article does a good job of talking about market scams and financial panics. I found it more loaded with historical information and it had relatively little current-events politics in it.
I stopped after this sentence. The economy has always been too complicated for experts to understand. That was the beauty of what Adam Smith identified -- with billions of people, billions of "unseen hands" control the division of labor.
The current crises is the 15th crises since the civil war that involved some sort of mortgage gimmicks. We have fraud and economic panics going back to the 1600s.
Nothing new here to see, Scott. After you blew it with the statement above, you continued to go off the rails with the rest of the article, all because of your belief that economies can be engineered. That's a farce that Smith observed in his day. You'd think that a basic education would take most people beyond that point.