The Promise of Financial Democracy
The key to the subprime solution, to preventing future crises like the current one, as well as mitigating its aftereffects, is democratizing finance—extending the application of sound financial principles to a larger and larger segment of society, and using all the modern technology at our disposal to achieve that goal.
Doing this will reduce the long-run incidence of speculative bubbles like the housing bubble that we have just experienced. And to the extent that such bubbles still occur, it will establish a rational context for responding to them, instead of the after-the-fact scurrying for quick fixes that we have seen since the onset of the subprime crisis in 2007.
There used to be tremendous instability in the banking sector. For example, there were severe U.S. banking