Economic Reforms America Needs Now


Here comes the debate about regulating Wall Street, right on schedule. Three great problems exist. First, the rule-making is tardy. We’re locking the barn door after the herd has been rustled and shipped to other shores. Second, we’ve learned that the watchdogs in regulatory agencies and securities rating organizations are wolves. Instead of running them off we’ll see to it that they have their usual positions of influence when the next chapter of Wall Street unfolds. Third, we need a few good macro-level changes instead of an avalanche of micro-management rules. Nevertheless, you better don your snow gear: Washington is loading its avalanche guns.

What should go at the top of a wish list for fundamental reforms to our financial system? Unquestionably, we need a constitutional amendment that prohibits new federal government debt unless our country is invaded by foreign armies. Along with that we need a requirement to start paying down debt, even though a recession would result. Happily, there are recession management tools that stimulate productivity, efficiency and infrastructure refurbishment so as to mitigate some of the hardships. But the tools require moral judgments about the honorable use of money — judgments that a libertarian society has been reluctant to develop in its capital gains tax laws.

Several other changes are desirable. There should be a reasonable limit on bank and hedge fund leverage, especially leverage applied to speculative purposes. The U.S. Congress should supply a revised directive to the FED, instructing the nation’s central bank to manage the money supply for sustainability and the common good, not for economic growth. Importantly, we need a mandate that Wall Street’s work be subdivided and distributed to businesses in the respective states, effectively ending the Manhattan Island monopoly over the engine of capitalism. These fundamental changes along with a dozen others would do more for the financial health of America than any “Financial Security” bureaucracy that regulators might dream up.

Reformers will never fix what ails us until they understand that the Wall Street culture is beyond repair. Fast money becomes an addiction that changes men’s souls. Once in the blood the ‘lust-for-plunder’ drug is more addictive than heroin. The people of Manhattan Island will insinuate loopholes into the new regulations because they cannot exist without the piracy drug. Real reform will never be meaningful as long as Wall Street is the capitol of the world’s capital.

Decent people want to merit their prosperity through worthy contributions. Good people are content to accumulate wealth slowly and in conjunction with the progress of their fellow citizens. But Wall Street declared war on decent people when it chose to leverage its collateral, pump and dump, create strategic rotation initiatives, and play other money games as its means of growing its share of the national wealth. Make no mistake about it: Wall Street’s gains eventually equate to relatively less purchasing power for people who build this society by means other than gambling with paper assets.

Now that we understand that financial elites expropriated the prosperity that belongs in the public domain, what should we do? We should demand reparations and a full recovery of the public’s fair share of the national wealth. We should insist that our next president give us a Teddy Roosevelt style presidency! Every corner of the nation should be searched to take back what soiled hands have filched. The effort should go global, too. The war on Islamic terrorism should be replaced by a war on financial terrorism, for this is the far greater danger!

The good character of Americans would be suspect if we allowed the vile and the abhorrent who have violated all reasonable standards of human decency to make off with the nation’s bounty. Benevolence calls us to uphold the honorable public interest and make sure that those who merit prosperity are the ones who attain it.