The Financial Explosion
AbstractCredit where credit is due. For a long time now we have been harping in this space on the theme of a monetary system out of control; of the wild proliferation of new financial institutions, instruments, and markets; of the unchecked spread of a speculative fever certainly more pervasive and perhaps even more virulent than any recorded in the long history of capitalism's get-rich-quick obsessions. With few exceptions, accredited economists, as is their wont, have ignored these bizarre goings-on: they are not part of the way the economy is supposed to operate and are hence unworthy of "scientific" attention. The media, on the other hand, especially the serious business press, have reported the facts as they have unfolded—the rapid growth of options and futures markets, the near bankruptcy and rescue by the government of one of the country's largest banks, etc., etc.—but have generally steered clear of any attempt to put these discrete developments into a coherent account of an enormously powerful dynamic process rooted in the nature of the economic system and loaded with implications for the country's future.
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