A lot of it is designed really well but squashing human stupidity on the scale of trillion dollar economies is a perpetual game of whack-a-mole. The message a lot of people got from 2008 that it was the bankers and the system that hurt the little guy and therefore we should no longer trust any of it. And create a new financial parallel universe in which to rediscover why regulation is needed in the first place. Vitalik Buterin today literally suggested an analogue of FDIC insurance for cryptocurrency banks.
My view is that the banks did hugely mess up and did not face enough consequences — and the correct approach is to massively enhance enforcement. (In many ways that actually has happened.) But moreover they preyed on stupidity, just massive massive stupidity that will always be there to contend with. Fraud always looks better than real investments to the marks. People have to overlook the shady parts, and to make them do that a product must offer unrealistic returns. Millions and millions of people are not smart enough to tell when that’s happening to them. As long as the SEC and its ilk let these run, people get hurt and everyone suffers, either personally, or from the inefficiency of fraud generally or the collapse of interlinked financial systems when the fraud gets big enough. Dealing with this is a huge task and often unpopular. If you tell millions of Americans they can’t invest in crypto scams, many of them will be royally pissed off, because they were promised riches! That’s even worse than whack-a-mole — letting frauds off the leash for one minute leaves your hands tied unless you are top of your game and have a lot of built up trust.
That’s why people keep pointing to the lack of arrests as a huge failure of 2008. As mistakes by government go it was much worse than the bailout, which was rather necessary to limit the damage. It meant people thought the government was in on it, or that they didn’t care. Frankly I think Bitcoin would never have taken off if there were a slew of high profile arrests. It would not have seemed necessary.
> We actually have some pretty good regulations in place.
That's only if your basic view of the financial markets is of something legitimate and socially beneficial. I would say that is mostly not the case; and in the past, the US government at times needed to recognize this at least partly, on pain of mass upheaval and system collapse, putting stronger regulation in place, e.g.:
This is all before the complex derivative markets formed which gave rise to the 2008 crash. The housing situation in the US even now seems rather tenuous and volatile, whether through some financial crash or a different form of crisis:
