The Cycle of Financial Crisis

Financial crises show up every 10–15 years, but they haven’t always. According to Elizabeth Warren (who ought to know), regulations enacted in the wake of the Great Depression effectively smoothed out the markets for 50 years, and prevented the sort of crisis we’re recovering from, and paved the way for healthy economic growth. When we de-regulated the markets in the 80s, we returned to the cycle of financial crises every 10–15 years, ultimately leading to the Great Recession.

In the first minute of this video, Warren explains the cycle, how America stopped it, and how we dove back into the cycle of financial crises:


So is the solution as simple as reinstating the repealed provisions of the Glass-Steagall Act? Probably not, but that’s why I hope Warren ends up in Congress. She has the knowledge and expertise to craft the kind of smart regulations that can restore sanity to the markets.

We need expertise like Warren’s, because Wall Street is like a designer drug lab, constantly innovating new ways to manipulate the markets. “Smart” regulation means getting ahead of the Wall Street quants with regulations broad enough to cover future investment schemes without stifling positive innovation.

We can do it; it’s just a question of will. The current Congress does not have the will to strengthen America’s economy. Fortunately, there’s an election right around the corner.