Quote of the Day: Financial Engineering

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From Paul Volcker, during a Q&A at the Future of Finance Initiative:

A few years ago I happened to be at a conference of business people, not financial people […] and I found myself sitting next to one of the inventors of financial engineering. I didn’t know him, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity.

Much to my surprise, he leaned over and whispered in my ear that it does nothing — and this was from a leader in the world of financial engineering. I asked him what it did do, and he said that it moves around the rents in the financial system — and besides, it’s a lot of intellectual fun.

It’s funny, but for all the talk that this subject has received, I’ve really heard no one seriously contest this point.1  The inventors of modern financial engineering, far from defending their handiwork, instead seem to be intent on keeping their heads down and hoping that, in the end, Congress loses the desire to do anything serious to stop them.  It’s probably a pretty good strategy.

1Of course, I might have missed something.  Has anyone made a serious, thorough defense of modern financial engineering anywhere?

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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