Because Schumpeter underestimated the importance of legal changes, he could not adequately account for the ‘clusters of entrepreneurs’ which he believed were the cause of long economic cycles. It has been suggested, however, that changes in the laws protecting information offer a persuasive explanation for these. His Business Cycles discussed technologies rather than money, but it is now clear that there have been two financial long waves, one leading up to the 1929 crash and the other which has recently ended. Both of these reflect relaxation of legal constraints on bankers. Traditionally, those who dealt in money had unlimited liability, meaning that their whole fortunes were at stake in their transactions, and they were correspondingly risk-averse. Once they were granted the privilege of limited liability, they naturally became less cautious, which led to the bank failures of the 1920s. Revival of legislative curbs on banking was replaced by bureaucratic regulation as a result of massive lobbying. This has been a complete failure, mainly due to the motivational imbalance between bankers and civil servants. Under it, financial innovations and reckless lending multiplied their importance in economies. As in so many other areas, if we do not get the laws right, intervention cannot work. Since it is now clear that bankers only listen to laws, restoring economic health must include the target of re-imposing unlimited liability on financial dealings, even if this can only be approached gradually. The attraction of investment in technology could be increased by protecting innovation directly, instead of indirectly as at present through spillover from inventions. The developed theory for this already exists, and it now has powerful empirical support from the results of Orphan Drug protection in the United States, which even include lowered death rates. Matching these improvements in other technologies could deliver a new Schumpeterian forward thrust.