The past 25 years have witnessed an unprecedented explosion in the number and variety of financial instruments available routinely to the suppliers and demanders of investment capital. Together with advances in information-processing technologies, the development of such instruments as options, financial futures, options on futures, options on indexes, and countless kinds of bonds, loans, funds, and swaps have enormously increased the liquidity and efficiency of world capital markets. But what impact has this extraordinary innovative surge had on the volatility of these markets, and what is the appropriate role of regulatory interventions, particularly in attempting to prevent a recurrence of the Crash of 1987?In this book, Nobel Laureate Merton Miller presents a sustained attack on the popular view that modern financial innovations have created excessive market volatility to the detriment of individual savers and business investors, and that regulation is essential in such forms as higher margin requirements, taxes on trading, and perhaps even closing down the future's market. Analyzing the reasons for the acceleration of financial innovation, the empirical evidence on market volatility, theories on the causes of the Crash, and the effects of regulatory policy, he argues that , like King Canute, unable to invoke his royal powers to control the tides, regulators who seek to use the power of the state to control the tide of financial innovation will prove unsuccessful. Those whose regulations discourage innovation and drive up the cost of trading in their domestic markets, will suffer the consequences of globalization and the intense competition in the financial markets of the world. Built around a series of non-technical papers delivered over the past five years, the book concludes with a reflection on the development of the academic field of finance, an intellectual endeavor important for its contribution to both economic analysis and financial practice, and duly recognized in 1990 with the award of the Nobel Prize for Economics to Merton Miller and his fellow founding fathers, Harry Markowitz and Bill Sharpe.