Subject: The Futility of the Volcker Rule
Date: Tue, 8 May 2012 20:49:02 -0400
Re: Progress Is Seen in Advancing a Final Volcker Rule
The proposed Volcker Rule to restrict so-called risky trading by banks is futile. It was central bank credit expansion that caused the banks to misallocate credit, and the same dynamic is at work once again. Zero interest rates insure more malinvestment into different areas not prohibited by the Volcker Rule. The money must go somewhere! Since credit expansion helps the government fund its trillion and a half dollar annual budget deficit, it dare not allow interest rates to reflect the true state of the market. Therefore, through propagandistic exercises such as this, it tries to maintain the fiction that it can adopt rules that will prevent the inevitable malinvestment that accompanies such expansion. This is impossible.