Word: centralizes
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...what extent do you think it's possible to prevent financial collapse - as opposed to just dealing with it after it arrives? In 1926, the central bankers in your book were already worrying about many of the things that would eventually lead to the Great Depression. They saw it coming but didn't stop...
...thing about the central bankers of the time is that you read their letters to each other, and they really were very worried in a way; I don't think Greenspan was worried enough two years ago. But they had these intellectual blinders on and basically were so rigidly tied to the gold standard that they had almost given up almost all degrees of freedom. They didn't do anything but agonize...
...also wonder how much power central bankers ultimately have to prevent massive problems like this. You write about how in 1929, when the Fed cracked down on banks lending to brokers selling stock on margin, money flooded in from other sources...
...power in the hands of people like Alan Greenspan and saying, 'We'll just trust you because you said it's O.K.' - I don't think anyone is going to do that for another 50 years, until we forget about this mistake. All of the people who were running central banks allowed the financial system to become so large and leverage to become so pervasive. That they allowed banks in Iceland to become 850% of GDP is crazy. The Royal Bank of Scotland had the largest balance sheet in the world for a while. That made no sense...
...Central bankers in the 1930s and '40s were not important people. Government basically told them what to do. This whole mystique of, Just give it to this élite group of men to run the world economy - I don't think we're going to allow that to happen again for a while...