The free market doesn’t work

Excellent article in the NZ Herald from Bernard Hickey in which he states completely free markets and capital flows is not worth believing in anymore and we must look for other things to believe in and do. We need to consider how monetary policy is administered, the way we allow foreign ownership of assets, the way we encourage savings, the way our financial institutions are regulated and change the things we are aiming for. We should debate more specific controls on who owns what assets, whether monetary policy should still use the Official Cash Rate to focus on inflation alone, and whether banks should still be free to lend however much they want to whomever they want. I particularly like the reference to Nassim Taleb, the author of the Black Swan, who says that financial and capital systems need to have redundancies and inefficiencies built in to cope with shocks, just as Mother Nature does.
Click here for the full article.

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