By William K. Black
(Cross posted at Benzinga.com)
Glass-Steagall prevented a classic conflict of interest that we know frequently arises in the real world. Commercial banks are subsidized through federal deposit insurance. Most economists support providing deposit insurance to commercial banks for relatively smaller depositors. I am not aware of any economists who support federal “deposit” insurance for the customers of investment banks or the creditors of non-financial businesses.
By Rohan Grey
[Part I] [Part II] [Part III] [Part IV] [Part V]
As will be clear to anyone who watches the entire thing, there was very little clash by the end of the debate on the operational mechanics of the modern monetary system:
Murphy: In particular, what makes the Austrians different from other schools of thought, even other nominally free market schools like the Chicago economists – Milton Friedman, guys like that – the Austrians have a very particular view of what interest rates do.
So the Austrians say “look, the interest rate is a price, and in that respect it is like any other price – it communicates information about the real world. It’s not an arbitrary number – it really means something – and if the market interest rate is supposed to be 7 percent and the Federal Reserve makes it 0.25 percent, that’s going to screw things up.
Posted in Guest Blogger
Tagged austrian economics, debate, MMT, Modern Monetary Theory, rohan grey
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