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The Ultimate Regulatory Reform: Abolish Fractional Reserve Banking!

Convocation of the Clueless

The Trump Administration has presented the first part of its plan to overhaul a number of Wall Street financial regulations, many of which were enacted in the wake of the 2008 financial crisis.  The report is in response to Executive Order 13772 in which the US Treasury Department is to provide findings “examining the United States’ financial regulatory system and detailing executive actions and regulatory changes that can be immediately undertaken to provide much-needed relief.”*

Neo gets a dose of financial system red-pilling. [PT]

In release of the first phase of the report, Treasury Secretary Steven T. Mnuchin stated:

“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy.  We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products – while ensuring taxpayer-funded bailouts are truly a thing of the past.”**

Some of its highlights include:

Community financial institutions – banks and credit unions – are critically important to serve many Americans
Capital, liquidity and leverage rules can be simplified to increase the flow of credit
We must ensure our banks are globally competitive
Improving market liquidity is critical for the U.S. economy
The Consumer Financial Protection Bureau must be reformed
Regulations need to be better tailored, more efficient and effective
Congress should review the organization and mandates of the independent banking regulators to improve accountability***

Not surprisingly, most of the banking industry expressed support for the report, critics (mostly Democrats) pointed out that it would lead to the type of practices that produced the 2008 panic in the first place. Both opponents and those in favor as well as the clueless financial press fail to grasp the underlying cause of not only the recent crisis, but the majority of those which have occurred for the past century.

The broad true US money supply since 1988. Clearly, there is not enough inflation just yet… still, don’t you feel richer already looking at this? There is this huge pile of money, which has increased by 332% since the year 2000 alone. Some people are probably wondering where it all came from, and who has got it. And what does “getting” any of it even mean when there is now 4.32 times as much money in the economy than existed 17 years ago? Of course, only deplorables would think of such petty questions… the most important thing is that the banking system is hale and hearty again! As Hank Paulson said in July of 2008 (right after Indymac Bank failed): “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”  And sure enough, all it took was a little bit of fudging with accounting rules and pressing the “Ctrl. Print” key combination – with the appropriate regulatory verve. [PT] – click to enlarge.

A Ruinous Practice

Quite simply: the …read more