RE: Do Markets need Regulation?
Very good point, but it's a question of semantics. When I say the market is always correct I mean it, they are always correct, since it's the only way to objectify subjective values.
Now the question should be do the market's always reflect reality? And the answer to that is: absolutely no.
Indeed some market participants are not always up to the news, or over/underreact certain events, this makes the market temporarly inefficient, and leaves room for speculators to make money, and to correct that.
So the market is always correct in the sense that it's the only way to objectively measure a value, and whatever the price is, it is still more accurate, than if 1 person would pull a price out of his backside. Of course the size of the market, the liquidity is another issue. Obviously a bigger market is more accurate than a small one,or if there would be no central bank manipulation, markets would be much more accurate.
However it is still an efficient valuation system, much more efficient, than when the prices were set by communist comissions.
As for maximum accuracy, a huge liquid market, without central bank intervention, is a maximally efficient market.
An efficient market resembles a random walk, the more random the price is, the more efficient it is. You can use econometric tools to measure the efficiency of the market. I do that.
The problem with the "communist commissions", or rather "party committees", as that is what they were, is that they were distanced away from reality of the common people. Planned economy, or rather USSR like, is VERY good at doing rapid industrialization (and other large scale projects), but not so good at anything else. It does lack flexibility, and the feedback is lacking. Besides, they operated under pressure, and a lot of decisions including Nixon Shock, as well as Reagan policies, that resulted in our current predicament, we based on the fear of USSR overtaking the USA, don't you agree?
But after the events of the 2008 crisis, can you say that the market is much better? The situation in the banking sector is sooo distanced from reality that the results of the system are the same for common people. Oh, and this bit:
Would you be so kind to back those claims, please? I agree with your further points, that financial education is really important, and regret that I was so carefree that I started so late on it, apart from some idle curiosity that I've had for years.
By the way, the problem in USSR was not the "communist comissions", but that due to ideological pressure, the mathematical models used to do the planning were very simple. In fact during 60s there was a movement of digitizing all that, but sadly it lost to the hardliner faction. It is doubly a pity, because the only actuall example of planned economy based on cybernetic principles was a great success.
And the working example for such a system was in fact created in Chilie, during Aliende administration. Ever heard of Project Cybersyn? Do look it up, fascinating stuff! In fact, the same technology that we are using, as well as cybernetic principles it may be possible to achieve post scarcity society, now that solar and other alternative energy sources are efficient enough.
In my opinion, the problem in todays world is inefficiency in logistics, partially caused by the fact it is very profitable. :->