Voelker clearly attacks the Casino Economy. He asked an inventor of financial engineering
who won a Nobel Prize, "What all the financial engineering does for the economy
and what it does for productivity." He said that "it does nothing."
It "moves around the rents in the financial system--and besides,
it's a lot of intellectual fun." Rent seeking is economist-speaking
for doing something that exploits rules, bureaucracy or the financial
law. And in the
words of Wikipedia, it is NOT "production of added
wealth.
He cited the statistics that the financial sector generates fourty
percent of all the profits in the country, rising quickly of
2.5 percent to 6.5% of the GNP
Yet, Volcker says that the commercial banks do provide
a real service, and run the payment system. I will
address whether there are not more efficient alternatives.
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