The Hand” had to be amputated and replaced by a prosthetic hand that is controlled by the Security and Exchange Commission (SEC) and the International Monetary Fund (IMF).
A term “Invisible Hand of Free Enterprise' was coined by economist Adam Smith in his 1776 book "An Inquiry into the Nature and Causes of the Wealth of Nations".
In his book he states:
"Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
Republicans believe that any government intervention in the economy isn't needed as the invisible hand would best guide the economy. Thus, the invisible hand is essentially a natural phenomenon that guides free markets and capitalism through competition for scarce resources.
However, sometimes the “Invisible Hand” plays with itself as it did on Wall Street. Sometimes the “Invisible Hand” puts its fingers in the wrong place at the wrong time add get mangled as it did during the sub prime mortgage crises.
After the Great Depression, FDR made the “Invisible Hand” follow some rules because the Invisible hand had been naughty. Since then the GOP eliminated most of those rules and the Invisible Hand started running amok particularly after the repeal of the Glass-Steagal Act (1933) in 1999.
Senator Bryon Dorgan was one of a handful of Democratic senators who voted against the repeal and predicted there would be a financial meltdown in about 10 years.
On a bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.
During a brief meeting on April 28, 2004,the SEC also changed the reserve rule for five banks: Merrill Lynch, Lehman Brothers, Morgan Stanley Goldman Sachs and Bank of America. The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr.
Two years later, he left to become Treasury secretary.
An old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments.
In addition, the Reserve rule was changed from 1:12 to 1:40. When the loans stated defaulting, the there were no reserves to cover the defaults and “The Invisible Hand” got kicked, mangled and run over by Mercedes Benzes and BMWs. This is why the hand had to be amputated even though a valiant effort was made to save it.
The “Invisible Hand” will never be the same, but America is now safer. With the SEC and IMF controlling it, it make take many decades before the conservatives can unleash the Invisible Hand again to play with itself.
en.wikipedia.org/wiki/Glass-Steagall_Act
www.nytimes.com/2008/10/03/business/03sec.html
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