Debate On Financial Innovation: Scholes And Putnam's Reyonlds Vs. Grantham And Bookstaber; Innovation Loses
By now you have certainly heard the opinion of one Paul Volcker who claims that the only useful financial innovation over the past 20 years has been the ATM machine. Now please indulge this video, in which Jeremy Grantham and Rick Bookstaber debate popular opinion that financial innovation boosts economic growth, as defended by Myron Scholes and Putnam's Robert Reynolds, and support the case (judged by a popular vote before and after the debate) that financial innovation in recent decades has done nothing but make the financial sector become a "large, heavy, and growing bloodsucker on the economy's back." (and yes, such brilliant developments as HFT, Flash trading, and all other "market efficiency and liquidity enhancing" gimmicks most certainly fall under the innovation umbrella).
Must watch video.