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Core Problem Is Too Much Centralization … In Both Government AND the Private Sector

Posted by
August 9, 2012
in Blog

Although, is banking in America even a private sector anymore?

Submitted by George Washington

Nobel prize winning economist Ed Prescott has previously said that we have to break up the big banks.

Prescott notes in a new interview that centralization – of either government or banking – is a core problem:

[Question] Brussels is using this crisis to grab more powers from governments.  How does that make things even worse? 

[Prescott] Dangerous centralization.

China … From 1,000 to 1,300[A.D.] was the richest country, the most advanced. They had done much better than Europe, and they were by far the leader.

But then – under the Ming Dynasty – they got centralized, and they started preserving the status quo. The provinces lost their power.

[The Ming Dynasty got rid of the “press”.] 

And technological regression set in there.  People from the other end of the Euro-Asia land mass came and humbled that great empire. 

[Question] Why is the U.S. economy doomed to fail and what will happen?

[Prescott] They haven’t gotten rid of the too big to fail problem.

They get real big … people know who led to these financial institutes, know that they will be bailed out, will expect it, and therefore the institutes can borrow at a lower rate. So they gamble…

Government likes to get favors out to certain people and then big contributions …. 

 

Dr. Prescott is right …

Numerous studies show that big banks are less efficient than smaller banks.

The New York Times notes: …

Continue reading at Zerohedge.com…

image: flickr.com/teknokool