February 7, 2022
Transparency is an absolutely essential component of a free and fair market. The ability to hide fraudulent behavior, manipulate markets, and create excessive risk, complexity, and leverage through the use of swaps and other derivatives has created a systemic risk for the markets and the entire global economy. The outrageous ratio of capital in derivatives to the value of the underlying assets reflects this risk.
This negative exposure extends to not only individual investors and pensioners, but to ordinary income earning people who may not have capital investments, but are affected the state of the economy. This has an adverse impact on everyone apart from those who profit from theses financial deceptions.
For too long, our regulatory swiss cheese system has failed to protect our economy. Fundamental valuations have become meaningless.
Regulatory arbitrage between the securities and commodities markets also needs to be brought under scrutiny. The market categories are dynamic, and unconsolidated separate regulatory institutions and self-regulated financial organizations have created gaping faults that are wider than the fair market itself. Major market crashes are becoming more frequent and more extreme. This cannot continue. As wealth inequality grows, the quality of life for the majority of people diminishes, instability increases, innovation is crushed, and the detrimental effects on society compound.
While bringing transparency and fairness back into the economy may result in a painful correction, it is a necessary action that must be taken. Not doing so is to let a festering wound go untreated until even more extreme measures are required, and more extensive and lasting damage is done.
We have a chance now, while the world is watching, to make the corrective measures that are desperately needed. This is the time that our descendents will look back on and judge the legacies of those who had the power to make change. Transparency is inevitable and good, but there is a lot of room for catastrophic damage before we arrive there. Change needs to happen now.