Matthew C Klein, Columnist

Will We Miss the Banks When They're Dead?

It isn't obvious much would be lost if we killed the banks.Â

March 28, 2013 at 1:42 PM UTC

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

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In a previous post, I argued that banks are inherently unstable. Then I presented some ways to make them -- and the rest of us -- safer.

Some people think that this is the wrong objective. Risk and financial panics sound bad, the argument goes, but without them we would never invest in new technologies and infrastructure that improve our standard of living. Their counterintuitive conclusion is that distortive subsidies and devastating crises are the price we pay for civilization.