[ExI] A world drowning in excess savings

Bill Hibbard hibbard at wisc.edu
Wed Feb 19 15:22:31 UTC 2020

> In 2008 when everything popped, it was really hard on my family.
> But why exactly? What really changed. Like the tulip bubble ...
> nothing changed except for perception.

Here's what happened, IMO:

Glass-Steagall Act repealed. This had kept federally-insured
commercial banking seperate from speculative investment
banking. Repeal during the Clinton admin gave federal insurance
to speculators. Note both Bill and Hillary had strong political
support from the banking industry.

On the advice of Robert Rubin, Clinton refused to let the feds
regulate the market for credit default swaps. In particular
this made that market non-transparent. No one knew the ability
of their counter-parties to pay.

Failure of regulation to keep pace with the evolving housing
credit market.

This is all down to the political influence of the banking
industry. And if you didn't like that, wait until you see what
the political influence of the AI industry gives us.

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