It is Time for Reinstatement of the Glass-Steagall Act

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If there is easy money to be made within securities markets, there is less pressure to lend to businesses most in need of debt financing.

This of course is illustration of ‘bad’ essence of bank holding companies.

These studies are Stiglitz (1972), Jensen and Long (1972), and Leland (1973).

Unrestrained value maximization induces risk levels that ultimately are sub-optimal for society, resulting in cycles of booms and busts, as opposed to steady, sustainable growth.

Booms and busts induced by trading in securities tend to be more severe than booms and busts induced within real sectors of an economy.

If the political will is there, it is time for reinstatement of the Glass-Steagall Act.

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Educator and Researcher, Believer in Spirituality, Life is serious business, but we all are pilgrims so I write about important stuff with empathy and ethos

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