Even in 1928, non-bank sources provided more funds for brokers' loans in the stock
market than did the nation's banks.
The stock market boom in 1922"1929 seems "rational" enough if you take into account
the expansion of the money supply in the same period.
The Articles of Confederation and Perpetual Union (1781) adequately addressed the
free-rider problems by setting up a tax system that required all states to share the costs
of providing national defense, protecting private property rights, regulating commerce
with other countries and across states and upholding a system of laws.
The U.S. economy is not a perfectly competitive market. There are costs associated
with negotiating contracts, enforcing agreements, taxes and less than perfectly
competitive firms. Nevertheless, according to Wallis and North (1986), the U.S.
economy has grown in the presence of these transaction costs and these costs have risen