In his Aug. 17 op-ed, “Team Biden wants an economic revolution,” Robert B. Zoellick wrote, “National security adviser Jake Sullivan has argued that reliance on private businesses and markets has resulted in major economic and social failures. The Biden administration instead relies on state direction in areas of the economy far beyond infrastructure, R&D and education.” That might be so, but such a revolution has already been going on for 35 years.
Former Federal Reserve chairman Paul A. Volcker, in his 2018 memoir, “Keeping at It,” co-written with Christine Harper, wrote that assets for which bank capital and equity requirements were nonexistent were what had the most political support, sovereign debt. A leverage ratio discouraged holding low-return government securities.
That referred to Basel I’s 1988 risk-weighted bank capital requirements with decreed risk weights:…
