ProPublica and This American Life have broken an expose of sorts about the spinelessness of the New York Fed in relation to the Wall Street banks which it is enjoined to supervise, specifically Goldman Sachs (which is basically the apotheosis of a Wall Street bank). But this is really all style and no substance: as Daniel Gross points out the New York Fed has always been a creature of Wall Street, there to do its bidding. The reason that this story is worth reporting on is that a whistle-blower recorded some of the meetings between Fed officials and Goldman Sachs, and therefore highlighted just how clear it is that the latter calls the shots for all practical purposes. But we all knew that after 2008. Wall Street socialized its losses, and came roaring back, privatizing the gains which accrued from the easy money doled out by the Fed, as well as the now explicit back-stop of the American government. They know we know, and they know we won’t do a thing about it. Basically it’s like Wall Street punched us in the face, and then sent us a bill for the injury. Also, they demand an apology whenever we besmirch their honor.

There will always be winners and losers, the high and mighty and the low. The key is that it is optimal for the many when the great gain honor through actions which spill over into the public good. The ‘innovations’ of the financial sector, and the bloat that has occurred in ‘inter-mediation’, do not fall into that category. There are only so many gains on the margin of improved allocation of capital. At some point the proliferation of professions meant to smooth the institutions of an advanced society end up devolving into a zero-sum game for finite resources. This is true with bankers and lawyers. Both these are honorable and necessary professions, but when there is a surfeit of both you know that society has gone sclerotic.

This is why I put my hope in Silicon Valley, and in particular men such as Elon Musk. Musk is as much a megalomaniac as a Wall Street “master of the universe,” but his ambitions and greed for glory drive him to found firms which aim to change the fundamental rules of our civilization. And for the better. It’s not a zero-sum game he is playing; he wants to explode the pie and grab a huge chunk of it. A high-risk high-reward endeavor.

Ultimately to fend off sharks you need killer whales. Our civilization is premised on capitalism, and growth. Without growth elite over-production leads to the rise of zero-sum competition for resources, and the brutal games of greed which led in part to the financial crisis of 2008. The hope is that Silicon Valley and other genuinely innovation sectors of society can hoover in enough talent, creativity, and ego, to change the rules so that the crass an Byzantine machinations that are on display in the activities of the New York Fed become blips upon our near term historical trajectory. In contrast, if we stagnate, except the games to get bloodier and more desperate.