Financial Innovation

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Ben Bernanke gave a speech on Friday praising financial innovation and warning that we shouldn’t be too hasty in dismantling the progress of the past few decades.  Ryan Avent comments:

According to Bernanke, no one, “wants to go back to the 1970s,” but neither could Bernanke point to a truly helpful piece of financial innovation developed after that decade. His examples of successful financial products? Credit cards, for one, which date from the 1950s. Policies facilitating the flow of credit to lower income borrowers was another, for which he credited the Community Reinvestment Act of 1977. And, of course, securitization and the secondary mortgage markets developed by Fannie Mae and Freddie Mac in…the 1970s.

In fact, the only post-70s innovation Bernanke pointed to was the rise of subprime mortgage financing, which, Ryan points out, might not be quite the compelling example he thinks it is.  So what has financial innovation gotten us, aside from massive profits for clever bankers?

Beats me.  I remember that Dani Rodrik asked this question a few months ago, and I also remember that he didn’t really get an awful lot of persuasive replies.  The broad answer usually boils down to “easier access to credit,” but in hindsight, that wasn’t necessarily such a terrific innovation after all, was it?  The innovation crowd probably ought to take another crack at this.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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