Searching for Loyalty and Prudence


In his provocative and knowledgeable new book, Other People’s Money: The Real Business of Finance, John Kay considers the complex ways that financial systems operate in between the real savers, on one hand, and the real investments, on the other.

He observes disapprovingly how very large contemporary financial systems have become, how much talent they absorb, how big are the bonuses they pay, how they often have lost sight of their basic fiduciary duty, and especially that “volumes in trading in financial markets have reached absurd levels.”

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Tradition, Technology, and Change in Downton Abbey


Many critics have chalked up the craze for Downton Abbey to nostalgia for a time of simplicity and aristocratic elegance. But Downton Abbey resonates because of present dilemmas, even if they are set in the past.   It relentlessly focuses on a central, if not the central, problem of our time and of modernity in general—how to adapt social norms in ages of ever faster technological change.

Technological transformation is the major theme of Downton Abbey. The landed aristocracy is giving way to a new urban middle class whose wealth comes from industrialization. Because of downsizing, even the marriages of aristocrats must be lived at closer quarters and become more companionate, giving rise to a felt need for closer forms of courtship to assess compatibility.  Last week’s episode introduced the radio, which permits the King to speak to his subjects, but begins the process that Walter Bagehot feared would let light on the “magic of the monarchy” and so dissolve the majestic mystery that preserves the loyalty of the realm.

Major characters in the series embody very different attitudes toward tradition and change.

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A Cheer or a Bronx Cheer for the Fed?

Federal-Reserve-BuildingIn the financial crisis of 2007 through 2009, the Federal Reserve expanded its balance sheet to finance the bust, just as intended by its legislative fathers of a century ago. They did not, of course, intend for their creation to have stoked the housing bubble in the first place. This dramatic action to make up for its own mistakes was not a first—recall the Fed’s celebrated anti-inflation strategy of the early 1980s, a reaction to its 1970s blunders that had created the Great Inflation of that previous time.

The latest crisis has been over for five years, but the Fed’s balance sheet is more bloated than ever. Its much-discussed “taper” only slowed down the rate of bloating.

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Simple Banking Rules for a Complex World

The Bankers’ New Clothes is a book much longer than it needs to be, which expresses several simple ideas, some right, some wrong, which would have made a very interesting and provocative article.

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Friday Roundup, September 6th

"Is the Federal Reserve Constitutional?" Essays in this month's Liberty Forum from Peter Conti-Brown, Richard Timberlake, and Gerard Magliocca consider different aspects of this important question. "The Legal Historian as Entomologist" is this week's review essay of David Rabban's Law's History: American Legal Thought and the Transatlantic Turn to History. John McGinnis' essay concludes that legal history's real work is in probing the historical meaning of fixed texts rather than charting the history of the evolution of the common law. Insofar as originalism continues to gain currency, it makes history directly relevant to current law. But rather than to trace a concept…

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