Put another way, however, that banking systems allowing hedge funds to determine which innovators succeed may not be the best way to promote effective competition.
As regards the economics, one of the major weaknesses in Keynes General Theory was that it failed miserably on the question of innovation. Schumpeter's theory of innovation and business cycles equally failed miserably on the question of credit and banking within a managed economy that has an effective central bank.
Today, economics as a field and central banking as a subset of this field has failed miserably to understand the complex processes of growth, innovation, competition and inflation.
It is no good governments or central banks throwing more credit into a system or doing what is called financial easing. This process of reflation does not help create jobs, nor improve the chances of innovation, nor reduce the risks of inflation. What it does do is take the politicians off the hook. It seems like a solution, but it is a pipe dream of weakly understood economics. We are thrown into a destructive world of economics that the political do not really understand and follow accounting conventions rather than the economics of business cycles under the unsound influence of central bank credit creation weakly understood.
The economic policies during the past decade of Gordon Brown, the Bank of England, and the Federal Reserve Bank were seen in hindsight to have been massively destructive. Rather than money going into job creation money went into the most destructive aspects of capital financing, over-investment in the business of speculation in property and stocks, highly suspect hedge operations that reduced effective competition and forced the closure and relocation of real economic activity much sooner than it would have occurred.
The reality is that credit creation and lax competitive policy spawned by poor understanding of risk financing can accelerate all the negative aspects of an economy at the expense of jobs and security. We see it with the ownership and fortunes of Manchester United football club and Harrods. Do we have to watch the economy micro-self destruct over and over again?
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Will ye no think kindly on those who would be your friends! May the sun shine with your thoughts, today, and happiness grow in your heart! May you allow yourself some peace of mind.
