Quote note (#309)

Woah:

On Monday, Trump will meet with John Allison, the former CEO of the bank BB&T and of the libertarian think tank the Cato Institute. […] There have been reports that Allison is being considered for Treasury secretary. […] Trump’s has on the campaign trail questioned the future of the Federal Reserve’s political independence, but Allison takes that rhetoric a step further. While running the the Cato Institute, Allison wrote a paper in support of abolishing the Fed. […] “I would get rid of the Federal Reserve because the volatility in the economy is primarily caused by the Fed,” Allison wrote in 2014 for the Cato Journal, a publication of the institute. […] Allison said that simply allowing the market to regulate itself would be preferable to the Fed harming the stability of the financial system. […] “When the Fed is radically changing the money supply, distorting interest rates, and over-regulating the financial sector, it makes rational economic calculation difficult,” Allison wrote. “Markets do form bubbles, but the Fed makes them worse.”

November 29, 2016admin 15 Comments »
FILED UNDER :Political economy

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15 Responses to this entry

  • Matt C. Says:

    It’s not about gold but simple enforced scarcity:

    https://mises.org/sites/default/files/Money_Bank_Credit_and_Economic_Cycles_De%20Soto.pdf

    http://www.forbes.com/sites/nathanlewis/2013/04/11/the-correlation-between-the-gold-standard-and-stupendous-growth-is-clear/#7937572536a7

    http://www.321gold.com/fed/greenspan/1966.html

    [Reply]

    Artxell Knaphni Reply:

    “When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.”
    (“Gold and Economic Freedom”, by Alan Greenspan [written in 1966])

    {AK}: So it’s basically Britain’s fault.

    [Reply]

    G. Eiríksson Reply:

    To the other readers: is his an accurate re-telling?

    It works very fell for me, but I am but

    a student of Economics

    [Reply]

    Posted on November 29th, 2016 at 3:36 pm Reply | Quote
  • Thales Says:

    Since neither auditors nor compliance officers know how to comply, de-regulation from our current insanity is a no-brainer.

    Capital ratios are more important than reserves, so meh.

    But the specie-backed currency ship has sailed, forget it.

    [Reply]

    Posted on November 29th, 2016 at 7:00 pm Reply | Quote
  • Lucian Says:

    What the hell happened to the last Chaos Patch?

    [Reply]

    admin Reply:

    Chaos Patches are suspended until the world calms down (or I finish the goddamn Bitcoin book, whichever comes first).

    [Reply]

    froth_city Reply:

    this is when chaos patches are needed the most!

    [Reply]

    SVErshov Reply:

    no problem world is already calming … entropy 😉

    [Reply]

    Posted on November 29th, 2016 at 7:20 pm Reply | Quote
  • rec0nciler Says:

    “…the US should go back to a banking system backed by ‘a market standard such as gold.'”

    >”such as”
    >so many interesting possibilities there

    [Reply]

    Posted on November 29th, 2016 at 8:45 pm Reply | Quote
  • Brett Stevens Says:

    Cool. Get rid of the human-intent-based regulators on something that otherwise reflects realism to a greater degree, namely the markets themselves.

    [Reply]

    Posted on November 29th, 2016 at 9:34 pm Reply | Quote
  • Wagner Says:

    Hey Land are the flowers on your page to attract Thiel? Nice touch if so.

    [Reply]

    Posted on November 30th, 2016 at 12:05 am Reply | Quote
  • collen ryan Says:

    The dollar is backed by the worlds largest nuclear arsenal and that is all you need to know

    [Reply]

    FromTheNewWorld Reply:

    That would be the rouble (or rubble, if you prefer) actually, but you’re aiming in the right direction.

    [Reply]

    Posted on November 30th, 2016 at 12:45 am Reply | Quote
  • Whisper33 Says:

    The guy from Goldman Sachs will be the treasure secretary as usual. How stupid you need to be to believe that this guy Trump is gonna change anything important. There will be a significant return to pro-corporate policies and crony capitalism. And that’s about it. What he will really change is the way the president communicates with the public, but he is not gonna touch the entrenched interests of the oligarchy. In the end, they helped him win. Forget about the Russians, alt-right or blue collar workers! Koch brothers – that’s what decisive.

    [Reply]

    Posted on December 1st, 2016 at 9:16 am Reply | Quote
  • This Week in Reaction (2016/12/04) - Social Matter Says:

    […] Land spots an unexpected bit of good news on the Treasury front. Not sure if Allison is an actual candidate or a bargaining position for Trump. But yuge if the […]

    Posted on December 7th, 2016 at 10:47 am Reply | Quote

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