Martin Wolf: There Will Be Another “Huge” Financial Crisis
Martin Wolf writing in the Financial Times has warned that there will be another financial crisis given the nature of the modern fractional reserve banking and financial system.
Wolf asks whether there will a “another huge financial crisis” and then answers his question by saying that there will be and warns that banks “are designed to fall. So fall they surely will.”
He warns that a system built on making promises it cannot keep is bound to crash, and crash again.
His solution to the dangerous alchemy of the current banking system is to make Central banks pawnbrokers of last resort.
This seems somewhat more prudent than the more dangerous deflationary experiment of bail-ins and confiscating deposits, both individuals and families life savings and indeed SME and corporate deposits above a certain level, in order to bail out failing banks.
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