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Response to Spitfire of ATJ (Reply #4)

Fri Oct 23, 2015, 02:49 PM

14. John Reed talked about that . . .

No, not the one who wrote about the Bolshevik Revolution; I'm talking about the last chairman of Citibank before it turned into Citicorp. Some years after shepherding through the transformation of Citi from mere bank to integrated financial services behemoth (and making a shit-ton of money), Reed realized that "too big to fail" financial institutions and so-called free market concepts were not good for the economy.

In introducing the concept, he asked, "Why does a car have brakes?" The obvious answer is to stop the car, but that's not really true. A car has brakes so that you can go fast. To illustrate, Reed asked how fast would you go in a car that didn't have any brakes? Or would you even get in a car that didn't have brakes? The same concept holds true for a healthy economy. The financial sector must have a strong regulatory framework (the brakes on the car) to provide stability and predictability, and to slow things down so they don't get out of control. If investors don't trust the system to work, they won't put their money into it, and that will strangle the economy.

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grahamhgreen Oct 2015 OP
PatrickforO Oct 2015 #1
delrem Oct 2015 #2
SleeplessinSoCal Oct 2015 #6
Iliyah Oct 2015 #3
Spitfire of ATJ Oct 2015 #4
dreamnightwind Oct 2015 #5
99th_Monkey Oct 2015 #7
dreamnightwind Oct 2015 #11
Spitfire of ATJ Oct 2015 #15
grahamhgreen Oct 2015 #13
LineLineNew Reply John Reed talked about that . . .
gratuitous Oct 2015 #14
azurnoir Oct 2015 #8
mmonk Oct 2015 #9
safeinOhio Oct 2015 #10
frizzled Oct 2015 #12
airplaneman Oct 2015 #16
grahamhgreen Oct 2015 #17
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