workers are more likely to have underwater mortgages because of particularly large declines in housing prices. a second factor, the one most often cited in support of the structural unemployment hypothesis, is skills mismatch. while it is quite plausible that certain features of the current labor market reflect some skills mismatch contributing to a rise in structural unemployment during the recession, closer examination reveals that they explain less of this increase than might first appear. one such labor market feature is the sharp reduction in employment in sectors related to the housing bubble, such as residential construction and some parts of financial services. the contention is that the skills of workers in these sectors do not readily transfer to other sectors, and thus they will have a particularly difficult time finding new jobs. but in every recession, certain industries and occupations are hit particularly hard, resulting in significant permanent job losses. yet previous recessions do not seem to have been accompanied by notable increases in structural unemployment. thus, those who believe the mismatch problem specifically created by the recession – as distinguished from more - secular trends – is either more prevalent or more persistent now than in the past would need to identify some additional source of rigidity that has further hampered labor market adjustment. some have also pointed to the high level of long - term unemployment as evidence that mismatch is a major factor keeping the unemployment rate high. the claim is that those without the skills sought by employers will take longer, on average, to find new employment. however, the data do not back this claim, at least to date. if high unemployment durations were the result of mismatch, the probability of finding a new job should have declined proportionately more for the long - term unemployed than for the recently unemployed. in fact, reemployment probabilities during the recession fell by similar amounts for all durations of unemployment and have edged up by similar increments in the recovery. again, this pattern is more consistent with weak aggregate demand being the most important cause of high unemployment. another argument for the structural unemployment hypothesis is that the relationship between job vacancies and unemployment has recently changed. generally, job vacancies bear an inverse relationship to the unemployment rate ; that is, when the unemployment rate is low, vacancies are relatively plentiful, and when unemployment is high, vacancies are scarce. the pattern of these changes over time has been plotted on what is commonly referred to as the beveridge curve. a stylized interpretation is that movements

losses of investors with limited resources, and to limit the spread of financial stress. 8 the desire for a backstop can emerge even in an isolated failure — to say nothing of a systemwide event — when uncertainty or private information moves stress from one asset class to others. by definition, those financial externalities — which central banks, including the fed, monitor closely — can create losses that innocent parties never signed up for and couldn ’ t have controlled. 9 those are the kinds of losses that the public often gets asked to cover — and when they do, very often, the public also asks for new oversight and regulations, so the same mistakes don ’ t happen again. in summary, financial regulation is typically demanded ( 1 ) by financial intermediaries as a form of liability protection and ( 2 ) by the taxpayer to prevent socialization of individual losses. it does not arise to protect sophisticated, experienced, well - informed investors. on the contrary : large - scale losses can easily occur even if these investors are getting the information they need to make decisions and are otherwise following the rules. if we want to allow broad access to the crypto ecosystem, then the question isn ’ t about what experienced users of that ecosystem want — it ’ s about what the rest of the public needs to have confidence in the ecosystem ’ s safety, and for see, e. g., alexander osipovich and caitlin ostroff, “ terrausd crash led to vanished savings, shattered dreams, ” wall street journal, may 27, 2022, https : / / www. wsj. com / articles / terrausd - crash - led - to - vanished - savingsshattered - dreams - 11653649201 ; taylor locke, “ ethereum co - founder says every ‘ average smallholder ’ impacted by terra ’ s stablecoin crash should be made whole, cites fdic ’ s $ 250, 000 as ‘ precedent, ’ ” yahoo! news, may 15, 2022, https : / / www. yahoo. com / video / ethereum - co - founder - says - every - 215033542. html. david andolfatto makes this argument for other cases than crypto in his paper “ a theory of inalienable property rights ” journal of political economy, vol. 110 ( 2 ), ( april 2002 ) : 382 - 93. board of governors of the federal reserve system, financial stability report ( washington : board of