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I like this discussion a lot, because I agree that the regulations are pretty dumb, but I can't imagine a world without regulations that yields superior outcomes.

What kinds of improvements would improve the state of banking today that don't also throw the baby out with the bathwater?

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The biggest improvement they could make would be to create a class of accounts intended to never have a large enough account balance to be capable of incurring severe losses, and then waive most of the regulations for those accounts. Then you use the regulated accounts for your retirement savings, but keep a hundred bucks in an unregulated one to use for buying stuff on the internet, which could then be completely anonymous and have minimal transaction fees.

And what's to stop me creating thousands of these anonymous unregulated accounts to launder money? There are a lot of aspects to regulating the financial industry that have to account for the many different scenarios involved. The regulations for the finance industry aren't perfect but it is an incredibly difficult balance to strike.

What stops you from doing the same thing with cash and cash businesses? Nothing, why is why AML rules are pointless and should be abandoned because they're doing dramatically more harm than good.

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