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Talking Points

We've seen in previous chapters how the financial value chain divorced financial value from economic value on a systematic basis for hundreds of Internet companies, selling their shares at inflated values to the public, and that the result was financial disaster for many and badly damaging our economy. If this is to be prevented in the future, financial markets need more effective regulation. The key reasons for this are:

  1. It's necessary to protect the least-sophisticated investors, both for ethical and economic reasons. This is a key role of government, and it has been done particularly poorly in recent years.

  2. Successful financial markets are vitally important to national economies and are best promoted by preserving public trust in them.

  3. Without reforms in regulation, the world economy is going to be subject to a continuing series of economic crises that reduce economic progress and increase human misery.

  4. Since financial markets are already highly regulated, needed reforms can be made without undue disruption of the current functioning of markets. In fact, most of what is needed in the way of regulation to avoid another significant bubble is to reestablish effective regulations which have been eroded by changes in the markets.


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