Re: Re: <<Vitamin B>>(August 27, 1997) Back to the Future

[Sean Roach <roach_s@alph.swosu.edu>]

At 04:05 PM 8/27/97 -0400, Robert Hettinga wrote:
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>Vitamin B:
>Your Daily Dose of Bionomics
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>August 27, 1997
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>Back to the Future
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>"In the pre-Civil War period, when the general
>ethos of laissez faire severely discouraged
>government intervention in the market economy,
>private regulations arose in the form of a variety
>of institutions, which accomplished much of
>what we endeavor to do today with our elaborate
>system of government rule making and
>supervision. In particular, scholars have noted
>that the period saw the development of private
>measures to help holders of bank notes protect
>themselves from risk. As the notes were not
>legal tender, there was no obligation to accept
>the currency of a suspect bank, or to accept it
>at par value; accordingly, notes often were
>accepted and cleared at less than par. As a
>result, publications--bank note reporters--were
>established to provide current information on
>market rates for notes of different banks based
>on their creditworthiness, reputation, and location,
>as well as to identify counterfeit notes. Bank note
>brokers created a ready market for notes of
>different credit quality. In some areas, private
>clearinghouses were established, which
>provided incentives for self-regulation. "
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>"Banks competed for reputation, and advertised
>high capital ratios to attract depositors. Capital to
>asset ratios in those days often exceeded one-third.
>One must keep in mind that then, as now, a significant
>part of safety and soundness regulations came from
>market forces and institutions. Government regulation
>is an add-on that tries to identify presumed market
>failures and, accordingly, substitute official rules to
>fill in the gaps. "
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>"To be sure, much of what developed in that earlier
>period was primitive and often ineffectual. But the
>financial system itself was just beginning to evolve. "
>...

Your description reminds me of some descriptions of how UNIX has been evolving.
I guess with time and the appropiate types of hackers, any system can become
secure after a few cycles.  It may not be elegant but it gets the job done.