In this paper the implications of the two eras of financial transformation in the 20th century—that of the 1930s and that of the 1980s and 1990s—for urban growth and inequality in Southern California are examined. It is argued that financial structures have profound effects on the pace and distributional consequences of urban growth, in large part because urban development is characterized by widespread spatial spillover effects. The contemporary era of financial transformation has widened gaps between urban communities and banking customer markets. Banking markets that were once segmented by regulation are now segmented by market dynamics. In consequence, a financial system which once facilitated wealth building for households and communities now deepens social inequality and spatial separation. In this paper the historical and contemporary experience of Los Angeles is used to both develop and illustrate the arguments made.

Loan repudiations and property confiscations were common between medieval kings and individuals. Traditional accounts of these confiscations focus on factors affecting the kings, ignoring the motivations of the victims. This deficiency may be remedied by considering the problems faced on both sides of any agreement between a king and a group of citizens. A model is presented which explains the timing and the form of repudiations and confiscations without resorting to an assumption of irrationality by either party. It is general enough to address a persistent problem in the property rights view of government: How can an individual protect himself from abuses by his protector?

All induction is blind, so long as the deduction of causal connections is left out of account; and all deduction is barren, so long as it does not start from observation. John Neville Keynes 1890, 164

This paper uses a flexible least squares (FLS) time-varying linear regression technique to investigate coefficient stability for the Goldfeld U.S. money demand model over the period 1959:Q2 to 1985:Q3. Time-paths traced out by the FLS coefficient estimates exhibit shifts in 1974 and 1983; but these shifts are small relative to a persistent downward trend in the estimated coefficient for the inflation rate, indicating potential model misspecification. The FLS estimates also indicate that the "unit root" nonstationarity problem reported by OLS money demand studies disappears if the coefficient estimates are allowed to exhibit even small amounts of time-variation.

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