Toasters, Televisions, and Regulation Q

           Over the last half century, regulation of banks has generally diminished as governments have shed the controls implemented during the Great Depression. In the United States, as elsewhere, banking used to be a very staid business with its workings dictated more often by regulation than by competitive dynamics. Indeed, for decades, the interest rates paid

America’s Land Bubble

           In the history of financial bubbles, the assets at the center of attention have varied from equity and debt securities to commodities like tulips, indigo, and gold to real estate and land. The last of these was the object of great speculation in the early history of the United States. Indeed, it was a land

Quant Quake

           Though it may seem unusual, not all market crashes are obvious at first sight. True, when investors bet a particular investment will appreciate and come to find out they are wrong, the result is usually plainly visible in the price of that investment. However, not all investment strategies are bets that a particular security, or

Hamilton and the Panic of 1792

           In the early 1790s, the United States was still in the midst of its first presidential administration and still establishing new governing institutions. This process was interrupted briefly by a financial panic in 1792. In a country then just a few years old, expectations for a strong response might not have been high. However, the

Caesars Palace and Speculative Credit

           Speculative credit fills a void in capital markets between safe lending to investment grade governments and companies and equity capital which has the last claim in bankruptcy. Speculative credit was also a market neglected by large investors until attitudes towards the asset class changed, especially in the 1980s. Once this happened, risky ventures found a

Funding Canada’s Nation-Building Railroad

           Projects of immediate national significance, even when privately owned, are infrequently left to their own management and their own devices. Acceptance of government regulation in exchange for subsidies or other concessions usually constitutes the manner in which such projects get off the ground, especially for those that attempt something never done before. Private entrepreneurship, critical

Section 13(3), the Fed’s Emergency Provision

           In the last two decades, the Federal Reserve has intervened extensively in American financial markets in the face of relatively unique crises. Its reaction to these crises included the deployment of new programs which were markedly distinct in their scope from the Fed’s day-to-day operations.            Few public institutions are able to operate as quickly and

Fracking and Finance

           In 2008, the United States produced 18 trillion cubic feet of natural gas. Just over ten years later, this had grown to 34 trillion cubic feet. An even more spectacular rise took place in oil production over those years. Much of this growth was the result of new production techniques, namely hydraulic fracturing, that made

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