The results of a conscious and willful SEC decision...

[vit_r]

Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms.

You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.

Instead, the 2004 exemption -- given only to 5 firms -- allowed them to lever up 30 and even 40 to 1.

Who were the five that received this special exemption? You won't be surprised to learn that they were Goldman, Merrill, Lehman, Bear Stearns, and Morgan Stanley.

How SEC Regulatory Exemptions Helped Lead to Collapse

И опять же цитата из An Austrian Theory of Business Cycles

Austrian analysis asserts that in a world of hard money and free banking, the inflationary forces of credit expansion due to fractional reserve banking would not exist. If banks were warehouses of commodity money -- gold, for example -- then currency would consist of bank notes representing claims on the gold held by a bank.
...
According to Austrian Economists, fractional reserve banking only became possible through the outlawing of private money and the creation of central (ie, government-controlled) banks -- which allowed governments to control money supply and bank credit expansion.

А также

The natural rate of interest plays an extremely important role in the capital structure of an economy. Entrepreneurs/capitalists base decisions on whether to begin long-term capital projects based on interest rates. If interest rates are low, then borrowing to build a new factory, invest in a telecommunications network or assemble the capital goods for a new business venture appears feasible. Supply & demand of loanable funds will respond gradually to adjustments in business activity. If business investment (competition for loanable funds) rises, so too will interest rates -- reducing borrowing for investment.

Central bank control of money & short-term interest-rates in national economies is at the root of contemporary business cycles. ... When central banks artificially lower short-term interest rates below natural market levels, this results in two major distortions in capital markets. First, those who would save money receive less than the natural rate of interest -- and this disincentive to save actually reduces the amount of loanable funds in real (as distinct from nominal) terms. Second, those who would borrow money for large capital projects are paying less than the natural rate of interest -- thus encouraging borrowing investors to believe that capital projects are more sustainable than they really are.

Artificial lowering of interest rates by central banks is thus accompanied by expansion of the money supply -- resulting in an artificial stimulus to spending for both consumer goods and capital goods. This artificial stimulus results in an inflationary boom which is not sustainable. Central banks are ultimately forced to raise short-term interest rates to counteract the inflation, resulting in a bust. Supporters of central bank monetary manipulation justify the practice as a means of leveling-out the business cycle when, in fact, central banker monetary manipulation is the cause of the business cycle!