Bi-Weekly Discussion - Do Our Banks Need Reform... Or A Revolution?

Details

We're currently hosting our discussions at Café Walnut, near the corner of 7th & Walnut in Olde City, just across the street from Washington Square Park. The cafe's entrance is below street level down some stairs, which can be confusing if it's your first time. Our group meets in the large room upstairs.

Since we're using the cafe's space, they ask that each person attending the meetup at least purchase a drink or snack. Please don't bring any food or drinks from outside.

The cafe is fairly easy to get to if you're using public transit. With SEPTA, take the Market-Frankford Line & get off at the 5th Street Station (corner of 5th & Market), and walk 2 blocks south on 5th and then turn right on Walnut Street and walk 2 blocks west. With PATCO, just get off at the 9th-10th & Locust stop and walk 3 blocks east & 1 block north. For those who are driving, I'd suggest parking in the Washington Square parking deck at 249 S 6th Street which is just a half block away.

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DO OUR BANKS NEED REFORM... OUR A REVOLUTION?

ANALYZING THE DEBATES OVER FIAT CURRENCIES, THE FEDERAL RESERVE, FRACTIONAL RESERVE BANKING & "TOO BIG TO FAIL" BANKS

INTRODUCTION:

The 2008 financial crisis & the political divisions over the TARP bailouts and multiple rounds of economic stimulus deeply damaged many Americans' faith in the banking system. Even though a decade has passed and the economy has mostly recovered, the anger & mistrust that the crisis engendered have continued to influence politics in successive waves, starting with the rise of the Tea Party in 2009, then the Occupy Wall Street movement in 2011, then the dueling populisms of Bernie Sanders & Donald Trump in the 2016 election both of whom promised radical banking reforms, and now in the recent Democratic presidential debates where several candidates - namely Bernie Sanders & Elizabeth Warren - have promised renewed action to reign in the power of Wall Street and reduce the risk of another financial crisis.

When the financial crisis hit in 2008 and 57% of Americans said the "Troubled Asset Relief Program" (TARP) was the right thing to do. However, by 2012, public opinion shifted so that 52% of Americans thought bailing out the banks through TARP was the wrong thing to do. By 2013, sizable majorities said government policies have helped large banks, large corporations and wealthy people, while roughly seven-in-ten said government policies did little or nothing to help the poor, the middle class and small businesses.
https://www.pewresearch.org/fact-tank/2013/09/20/majority-of-americans-say-banks-large-corporations-benefitted-most-from-u-s-economic-policies/

Interestingly, polling within the last 2 years shows that both the Democratic & Republican party coalitions are divided on impact of banks & financial institutions. Within each party, it appears that people with more "populist" views have lower trust in banks and financial institutions, and that's true internationally as well.
https://www.people-press.org/2017/10/24/4-governments-role-and-performance-views-of-national-institutions-expertise/4-3-2/
https://www.pewresearch.org/global/2018/07/12/populist-groups-across-the-ideological-spectrum-have-low-trust-in-institutions/pg_2018-07-12_westerneuropepolitics-5-03/

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RELEVANT MATERIAL FROM PAST MEETUPS:

In October of 2018, the Skeptics had a meetup entitled "Globalization & Conspiracy Theories" and in the 2nd & 3rd sections they discussed Naomi Klein's book "The Shock Doctrine" and John Perkins' book "Confessions of an Economic Hitman" which made a lot of allegations about unethical & illegal activities by investment banks in the Third World:
https://www.meetup.com/Philly-Skeptics/events/255269097/

Later in October of 2018, the Skeptics had a meetup entitled "Do Bankers Rule the World" where we examined how political enmities & widespread financial illiteracy has given rise to conspiracy theories about the Rothschilds, J.P. Morgan, the gold standard, and Goldman Sachs. The Skeptics will resists this topic later today with a slightly altered discussion outline that addresses misconceptions about the Federal Reserve instead of the gold standard. Here's a link to the 2 discussion outlines:
https://www.meetup.com/Philly-Skeptics/events/255695734/
https://www.meetup.com/Philly-Skeptics/events/rgrhxqyznbjb/

Back in June of 2019, the Skeptics had a meetup entitled "Neoliberals, Neocons & NWO 2.0" and in the 1st & 2nd sections they discussed Bill Clinton's "Third Way" economic policies - including the repeal of the Glass-Steagall Act - and role of the World Economic Forum at Davos at promoting "neoliberal" economic policies internationally.
https://www.meetup.com/Philly-Skeptics/events/nfbkqqyzhbjc/

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DIRECTIONS ON HOW TO PREPARE FOR OUR DISCUSSION:

The videos & articles you see linked below are intended to give you a basic overview of some of the major debates over banking policies. As usual, I certainly don't expect you to read all the articles & watch all the videos prior to attending our discussion. The easiest way to prepare for our discussion is to just watch the numbered videos linked under each section - the videos come to about about 48 minutes total. The articles marked with asterisks are just there to supply additional details. You can browse and look at whichever ones you want, but don't worry - we'll cover the stuff you missed in our discussion.

In terms of the discussion format, my general idea is that we'll address the topics in the order presented here. I figure we'll spend about 30 minutes on each section.

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I. THE DEBATE OVER COMMODITY CURRENCIES VS FIAT CURRENCIES & THE RISE OF CRYPTOCURRENCIES:

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1a) Scott Sumner vs Larry White, "Econ Duel: Fiat Money vs. the Gold Standard" (video - 9:58 min.)
https://www.youtube.com/watch?v=FbDZ0ObRXfE

1b) PBS Above the Noise, "Cryptocurrency: The Future of Money?" (video - 8:06 min.)
https://www.youtube.com/watch?v=ng7xdsWR3N4

IGM Experts, "Gold Standard"
http://www.igmchicago.org/surveys/gold-standard
IGM Experts, "The Dollar"
http://www.igmchicago.org/surveys/the-dollar
IGM Experts, "Bitcoin" (Apr. 2013)
http://www.igmchicago.org/surveys/bitcoin
IGM Experts, "Bitcoin II" (Dec. 2017)
http://www.igmchicago.org/surveys/bitcoin-ii
Euro. IGM Experts, "Bitcoins" (May 2018)
http://www.igmchicago.org/surveys/bitcoins
Barry Eichengreen, "A return to the gold standard will not win Trump's trade war: The president’s nominee for the Fed [Judy Shelton] believes pegged exchange rates will fix the US trade deficit. Not so..."
https://www.theguardian.com/business/2019/aug/15/trump-foolish-think-gold-standard-age-fed-nominee-pegged-rates
John H. Cochrane, "Forget the Gold Standard and Make the Dollar Stable Again: Precious metals no longer make sense as a store of value. Instead, peg money to goods and services."
https://www.wsj.com/articles/forget-the-gold-standard-and-make-the-dollar-stable-again-11563404235
Panos Mourdoukoutas, "What Will It Take For Bitcoin To Replace The Dollar In Everyday Transactions"
https://www.forbes.com/sites/panosmourdoukoutas/2018/02/23/what-will-it-take-for-bitcoin-to-replace-the-dollar-in-everyday-transactions/#10e2122263db
Kinsey Grant, "Cryptocurrencies Will Never Replace the Dollar - Fed's Kashkari Explains Why - Bitcoin's bulls say the cryptocurrency is immune to inflation, but this Fed leader disagrees."
https://www.thestreet.com/story/14444820/1/cryptocurrencies-will-never-replace-the-dollar-fed-s-kashkari-explains-why.html

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II. THE DEBATE OVER CENTRAL BANKING VS FREE BANKING & THE FEDERAL RESERVE'S MONETARY POLICIES:

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2a) Jacob Clifford & Adrienne Hill, "Crash Course Economics: Monetary Policy and the Federal Reserve" (video - 9:24 min.)
https://www.youtube.com/watch?v=1dq7mMort9o

2b) Larry White, "What Is Free Banking, And Why Should I Care?" (video - 3:21 min.)
https://www.youtube.com/watch?v=lVK-kgSQMPs

IGM Experts, "Fed Policy"
http://www.igmchicago.org/surveys/fed-policy

IGM Experts, "Congress and Monetary Policy"
http://www.igmchicago.org/surveys/congress-and-monetary-policy

IGM Experts, "Inequality and Monetary Policy"
http://www.igmchicago.org/surveys/inequality-and-monetary-policy

IGM Experts, "Inflation Target"
http://www.igmchicago.org/surveys/inflation-target
IGM Experts, "Central Banks and Productivity"
http://www.igmchicago.org/surveys/central-banks-and-productivity
European IGM Experts, "Central Banks and Productivity"
http://www.igmchicago.org/surveys/central-banks-and-productivity-2
European IGM Experts, "European Fiscal and Monetary Policy"
http://www.igmchicago.org/surveys/european-fiscal-and-monetary-policy
Gerald P. O'Driscoll Jr., "Why Do We Have a Central Bank?"
https://www.cato.org/publications/commentary/why-do-we-have-central-bank
Sarah Foster, "8 misconceptions about the Federal Reserve — debunked"
https://www.bankrate.com/banking/federal-reserve/federal-reserve-misconceptions/
Robert E. Litan, "What ‘audit the Fed’ really means – and threatens"
https://www.brookings.edu/opinions/what-audit-the-fed-really-means-and-threatens/
John Cassidy, "The High-Stakes Battle Between Donald Trump and the Federal Reserve"
https://www.newyorker.com/news/our-columnists/the-high-stakes-battle-between-donald-trump-and-the-fed

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III. THE DEBATE OVER FRACTIONAL RESERVE BANKING VS FULL RESERVE BANKING & LEVERAGE RATIOS:

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3a) Alex Tabbarock, "[Fractional Reserve Banking and] The Money Multiplier" (video - 6:55 min.)
https://www.youtube.com/watch?v=93_Va7I7Lgg

3b) Bloomberg w/ Dan Alpert, "Capitalization Key to Stemming Bank Risk" (video - 4:57 min.)
https://www.youtube.com/watch?v=z8-KIF9o-L8

Thorsten Polleit, "The Faults of Fractional-Reserve Banking"
https://mises.org/library/faults-fractional-reserve-banking
Wendy McElroy, "Fractional-Reserve Banking: Not Fraud, Not Folly"
https://dailyanarchist.com/2013/05/13/fractional-reserve-banking-not-fraud-not-folly/
James R. Barth & Stephen Matteo Miller, "Benefits and Costs of a Higher Bank Leverage Ratio"
https://www.mercatus.org/publications/financial-markets/benefits-and-costs-higher-bank-leverage-ratio
Paul H. Kupiec, "The major flaw in big banks’ argument against the leverage ratio"
http://www.aei.org/publication/the-major-flaw-in-big-banks-argument-against-the-leverage-ratio/
John Glover, "Loose Leveraged Lending Is Storing Up Economic Trouble, BIS Says"
https://www.bloomberg.com/news/articles/2018-09-23/loose-leveraged-lending-is-storing-up-economic-trouble-bis-says

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IV. THE DEBATES OVER UNIVERSAL BANKING VS COMMERCIAL/ INVESTMENT BANKING SEPARATION & BREAKING UP "TOO BIG TO FAIL" BANKS:

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4a) Marketplace APM, "How did banks get 'too big to fail'?" (video - 4:05 min.)
https://www.youtube.com/watch?v=-xjAmbqjePo

4b) Glenn Hubbard, "Why Glass-Steagall Shouldn't Be Reinstated" (video - 4:52 min.)
https://www.youtube.com/watch?v=4GC8XhChJNQ

4c) The Atlantic, "Why Trump Wants to Make Banks Risky Again [by repealing Dodd-Frank Act]" (video - 4:00 min.)
https://www.youtube.com/watch?v=jjRYwE_0POY

IGM Experts, "Too Big To Fail"
http://www.igmchicago.org/surveys/too-big-to-fail
IGM Experts, "Big Banks"
http://www.igmchicago.org/surveys/big-banks
IGM Experts, "Breaking Up Banks"
http://www.igmchicago.org/surveys/breaking-up-banks
John Reed, "We were wrong about universal banking: Few cost efficiencies come from merging many functions in a single bank"
https://www.ft.com/content/255fafee-8872-11e5-90de-f44762bf9896
Scott Sumner, "Why does the Fed oppose narrow banking?"
https://www.econlib.org/why-does-the-fed-oppose-narrow-banking/
David Shirreff, "What Would Breaking Up the Banks Even Look Like? The phrase 'break up the banks' is often tossed around as though it’s some sort of abstraction. Here’s a sensible approach to how it could work in practice."
https://www.theatlantic.com/business/archive/2016/03/breaking-up-banks/473295/
Nathan Schneider, "Breaking up the banks might make things worse. Instead, let's take ownership: Some of the country’s biggest financial institutions would still need public bailouts if they failed. But it’s not their size that’s the problem, it’s how they’re run."
https://www.theguardian.com/commentisfree/2016/apr/14/breaking-up-banks-public-bailouts-ownership
Jim Zarroli, "Fact Check: Did Glass-Steagall Cause The 2008 Financial Crisis?"
https://www.npr.org/sections/thetwo-way/2015/10/14/448685233/fact-check-did-glass-steagall-cause-the-2008-financial-crisis
John Berlau & Daniel Press, "Why Wall Street Loves Glass-Steagall: Reviving Depression-Era Banking Law Would Shatter Community Banks and Main Street Businesses"
https://cei.org/content/why-wall-street-loves-glass-steagall
Aaron Klein, "No, Dodd-Frank was neither repealed nor gutted. Here’s what really happened"
https://www.brookings.edu/research/no-dodd-frank-was-neither-repealed-nor-gutted-heres-what-really-happened/

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Philadelphia Political Agnostics

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Philadelphia Political Agnostics

Sunday, October 6, 2019
1:00 PM to 3:00 PM EDT

Cafe Walnut

703 Walnut Street · Philadelphia, PA

Philadelphia Political Agnostics

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Bi-Weekly Discussion - Do Our Banks Need Reform... Or A Revolution?