I guess we can require that the financial companies reveal everything that’s on their balance sheets. I guess it’s hard, though, to prevent them from finding new ways to hide assets and liabilities. It’s like cops and robbers, right? It never ends. The robbers are always finding new ways of operating, and the cops are always finding new ways of apprehending the robbers.
Thomas R. Keene, CFA, hosts Bloomberg on the Economy weekdays at 6 p.m. on WBBR 1130 AM in New York. Type BBR <Go> for archived audio and podcasts of the show. ‘We need a financial sector that’s willing to take some risks,’ Phelps says.
This is a game of cops and robbers that—when it’s played the right way—has lots of benefits for workers and investors and consumers and, really, everybody. We’ve had a lot of innovation from the capitalist system. We don’t want to put everybody in jail now and close the system down.
How high might unemployment go? For a long time, I was surprised at how slowly it was rising. I thought, What’s going on here? Then suddenly it speeded up. It’s like a virus. It just exploded in the past few months. You’d be foolish to think it’s going to stop at 8 percent. It’s rising so rapidly now that there seems to be enough momentum to carry it well beyond 8 percent.
Have we thrown enough money at this crisis? There’s been a tremendous increase in the various measures of the money supply. I’m skeptical that there hasn’t been enough money. In any case, to say that is to suggest that the only problem or the main problem is an insufficiency of money, which can be solved by borrowing a quick auto title loan. Well, I think the main problem is structural. We’ve got asset prices that are terribly depressed, so nobody can make any money producing capital goods or hiring new workers or finding a new customer. That’s really the problem.