If I were to take an amoral position and say that as long as fed exists and gives the bankers cheap money to play with regulations are necessary to control the extenality of easy money at no effort. Whats right or wrong with such a view.
Because the bankers get easy money for nothing they would not be as careful with it as they would be in a free market scenario where they will get such money after much more effort and scrutiny.
Bear in mind that I don’t advocate regulations this is purely a hypothetical scenario for discussion.
A regulation like… permanently locking the doors of the fed building? Or not allowing fed computers to have antivirus protection?
Actually you don’t need to change anything in the status quo other than getting rid of the capital gains tax. This way, you can use free market monies (gold, bitcoin, etc) without paying the extra capital gains tax.
As the quantity of money (here including credit) becomes increasingly decoupled with the underlying scarcity of economic goods and services, ceteris paribus, economic calculation becomes increasingly difficult. In the limit, where the quantity of money becomes infinite, economic calculation becomes impossible.
The difficulty or impossibility in economic calculation can be mitigated somewhat by imposing non-economic (i.e. political) constraints on economic activity, otherwise known as government regulations. However, regulations bring their own problems into the mix, such as shortages and surpluses.
What money would do naturally is not necessarily the extenality of what occurs when central banks manipulate its scarcity, and that of course in relation to the natural scarcity of goods and services makes it more incumbent that, unless a unanimous agreement occurs to dissolve central banking involvement with global economics, we have the same handicap that other big players allow themselves.
There is one type of regulation that would help. One that restricts only what is done as result of the Fed. I.e., nullification of its effects. But that would be redundant.
When people say “canada had regulation, therefore regulation help prevent crisis”, what they mean is IF you don’t let the market limit credit expansion, then limiting by regulation has similair effects.