Regulation can and often does add more systemic risk to the system because people believe the regulators will see problems and act upon them before the market does, giving an illusion of greater safety and stability than actually exists.

This is a quite a good brief essay.

The evidence clearly shows that abrupt, unanticipated and incompetent changes in monetary and regulatory policy by central bankers and other financial regulators have caused far more financial instability and financial institutions' failures than have unsavory or illegal practices by managers of these institutions.

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