PANEL 4: A PROGRAM FOR MONETARY FREEDOM
Moderator: Alan Reynolds
Senior Fellow, Cato Institute
Stimulus: money away from productive uses and toward the goverment and other unproductive bits of malinvestment like autos and homes.
Editor, Grant’s Interest Rate Observer
The cumulative effect of history
Problem in banking not a shortage of capital, but a shortage of capitalism. Must allow banks to fail. In old days, unlimited liability made banks more cautious.
Deutsche Bank vs JP Morgan Chase
- 15% capital-to-risk-weighted assets
- Leverage — also identical
- But DB 42x vs JPM 13x assets/equity
- 60x vs 17x — tangible assets /tangible equity
- JPM has less callable liabilities
1842 New Orleans — divide bank balance sheet in two; movement: self-liquidating loans and gold against deposits. Deadweight: surplus — could invest anywhere. Worked for a generation.
Clarity, simplicity and elegance
Visiting Professor, Cass School of Business
Bailouts just another profit center for banks.
Liquidation would have been better than the bailouts — mentions Mellon
Low interest rates just create another bubble. DM: Hair of the dog
Confidence only comes from strong balance sheets.
Quotes Jackson regarding the Second Bank of the United States
Solution is to eliminate the Fed
Endgames: Monetize the debt, or watch interest rates rise.
Solutions? Gold standard, End Fed, personal liability for bankers. Constitutional settlement because governments and money don’t mix. Prohibit bailouts, and intergenerational transfer schemes.
Senior Fellow, Center for Financial Stability
Competitive vs Monopoly issue of currency — why the shift?
Easy way for the Government to make money through seniorage.
Four places today where parallel issuance of notes goes on today: Scotland, Northern Ireland, Hong Kong, and Macau. 100% segregation of assets in reserves at the central banks, generally.
Where might issuance of competitive notes be legal? Mostly teensy places, with the exception of the US & Japan (they aren’t sure) and the 4 mentioned above.
Raising interest rates to improve matters? Where to invest?
Gold, silver, TBT
Currency transfer schemes talk, no question
DM: There are lots of these schemes around