Financial Times/ Gillian Tett/3-25-2023
“Thus, the best way to prevent a big banking crisis is not to try to prevent all bank failures and create an aura of permanent stability, least of all with endless infusions of easy money. Instead, a better route is to allow small, regular shocks that remind everyone of the need to monitor risks.”
USAGOLD note: In this opinion piece, Tett comes close to embracing the idea of creative destruction. She reminds us of Nicholas Taleb’s observation “when people or governments try to maintain stability at all costs, they tend to suppress problems that create bigger explosions further down the road.” Some would argue that the bigger explosion is already rumbling through the banking system – and only the most optiimisitc would call it minor.