WEBVTT

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<v Speaker 1>Though radical fundamental principles of freedom, rational self interest, and

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<v Speaker 1>individual rights.

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<v Speaker 2>This is the ran Brook Show. All right, everybody, welcome

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<v Speaker 2>to here on book show on this Saturday, December twenty First,

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<v Speaker 2>we're inching towards itching, inching, inching.

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<v Speaker 3>Getting closer to Christmas.

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<v Speaker 2>So Merry Christmas. Christmas just a few days away. Hopefully, Uh,

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<v Speaker 2>you guys are getting ready buying presents, last minute, last

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<v Speaker 2>minute shopping stuff like that. Hopefully you're having a great weekend.

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<v Speaker 2>All right, Today we're going to talk about this will

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<v Speaker 2>be your first and I guess a series that we're

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<v Speaker 2>going to do on how do you how do you

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<v Speaker 2>approach rationally, approach moving from where we are today towards

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<v Speaker 2>freedom in a particular in a particular area. So today

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<v Speaker 2>we're going to do a finance, We're going to do

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<v Speaker 2>healthcare at some point, We're going to do immigration at

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<v Speaker 2>some point, and we'll probably do us relationship.

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<v Speaker 3>With China at some point.

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<v Speaker 2>Right as as how do we move from where we

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<v Speaker 2>are today towards towards freedom, towards what a rational free market, uh,

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<v Speaker 2>constitutional rights respecting, properly rights respecting government would do. And

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<v Speaker 2>as I said, today, we're gonna sell with finance. Alexis

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<v Speaker 2>sponsored the show. He's on with us Live. That's great.

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<v Speaker 2>Feel free all of you to ask questions as we

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<v Speaker 2>go along, and you know, let's see, let's see how

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<v Speaker 2>this goes. You know, let me just note that that's

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<v Speaker 2>him Alexis, that that's him on the chat anyway. Let

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<v Speaker 2>me note that I don't know if we're gonna be

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<v Speaker 2>able to do any of these in one show. I'm

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<v Speaker 2>gonna try. But complexity, there's massive amounts of complexity associated

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<v Speaker 2>with regulation and as a consequences, massive amount of complexity

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<v Speaker 2>associate deregulation. I'll get to why that is. Why you

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<v Speaker 2>can't just wipe them all out. Why can't we just

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<v Speaker 2>go somebody asked, somebody put this up on some comments

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<v Speaker 2>to some way. Why can't you just cancel all the

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<v Speaker 2>regulations somehow we'll just be free and I'll be it.

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<v Speaker 3>We'll have freedom. That's great, We'll be done. So we'll

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<v Speaker 3>get to that.

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<v Speaker 2>We'll get to that in the in the context of

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<v Speaker 2>finance in a minute, why you have to do it

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<v Speaker 2>step by step? Why you have to do it in

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<v Speaker 2>a in a kind of a rational way. Now, I'm

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<v Speaker 2>not going to give you all the steps because the

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<v Speaker 2>reality is that this is going to have to be

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<v Speaker 2>major work that somebody's gonna have to do. This is

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<v Speaker 2>a book length treatment of how to do this. When

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<v Speaker 2>it comes to the details, the amount of regulations that

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<v Speaker 2>apply to finance is so extensive that unwaning them is

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<v Speaker 2>going to be a massive project that people are going

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<v Speaker 2>to have to really figure out and and do over

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<v Speaker 2>my guesses several years, and they're going to have to

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<v Speaker 2>find solutions to a idea of different problems. And it's

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<v Speaker 2>going to be great when it happens, but it's going

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<v Speaker 2>to be a lot of work. It's going to be complicated,

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<v Speaker 2>and so I'm going to give their principles, some examples,

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<v Speaker 2>some examples of why it's complicated, you know, as we

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<v Speaker 2>go through this, and of course feel free to ask

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<v Speaker 2>about specific examples as they as you think of them,

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<v Speaker 2>as you come up with new examples, please ask about them.

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<v Speaker 2>But there's a lot here. You know, we're talking about

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<v Speaker 2>numerous regulatory agencies at the federal level, six or seven

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<v Speaker 2>or eight, and we're talking about regulatory agencies at the

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<v Speaker 2>state level. Every state has significant regulations of finance. So

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<v Speaker 2>there's state regulations, there's federal regulations, and there are multiple

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<v Speaker 2>agencies that are responsible for these regulations. All of these

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<v Speaker 2>need to be phased out and replaced with appropriate rights

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<v Speaker 2>respecting rights protecting laws, and we'll talk about how we

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<v Speaker 2>would think about all of that today. So that's what

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<v Speaker 2>the show is going to be today. Again, feel free

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<v Speaker 2>to ask questions about this. I guess you can ask

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<v Speaker 2>questions about anything else if you want, we'll get to

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<v Speaker 2>them last. But if any questions about finance, any questions

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<v Speaker 2>about financial deregulation, or any question about finance broadly, we'll

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<v Speaker 2>get priority today on the superchat. Don't forget the super chat.

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<v Speaker 2>We still have to do a superchat. We still have

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<v Speaker 2>to fund the shows, funding from listeners like you. Value

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<v Speaker 2>for value, all right, So let's get started with finance.

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<v Speaker 2>And I think the first thing to note about finance

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<v Speaker 2>and what I'll do with these shows is lay out

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<v Speaker 2>the lay of the landers as exist today approximately, so

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<v Speaker 2>that we know what we're dealing with. First, finance is

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<v Speaker 2>the most regulated industry in the world in the United States.

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<v Speaker 2>Finance is the first industry to really get regulated in

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<v Speaker 2>the United States. Other countries were better than the US

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<v Speaker 2>in finance in terms of regulations. So from the very

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<v Speaker 2>beginning of the Republic. Banks in particular, finance more broadly

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<v Speaker 2>was regulated by primarily state regulations. The founders, particularly particularly Jefferson,

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<v Speaker 2>very suspicious of financial enterprises and particularly large financial enterprises

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<v Speaker 2>with a lot of financial and political power. And as

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<v Speaker 2>a consequence, the nature banking early on was to be

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<v Speaker 2>fragmented and small.

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<v Speaker 3>And you know, so we'll get to that in a minute.

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<v Speaker 2>So the first thing to remember is finance is the

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<v Speaker 2>area that's been most regulated throughout history. Right. So if

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<v Speaker 2>food regulations of food started in the don't I think

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<v Speaker 2>the nineteen the teens, financial regulations started, you know, with

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<v Speaker 2>the establishment of the United States. If environmental regulations are

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<v Speaker 2>really a phenomena of the nineteen seventies, financial regulations are

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<v Speaker 2>phenomena that goes back to the eighteenth century. And by

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<v Speaker 2>the way, we're heavily, heavily, heavily part of fd attempts

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<v Speaker 2>to completely restructure and change the US economy. So you

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<v Speaker 2>have under FDR, you have the nineteen thirty three Act,

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<v Speaker 2>You've got the Security and Exchange Actor in nineteen thirty four,

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<v Speaker 2>and you've got the Investment Company Act of nineteen forty,

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<v Speaker 2>which is still three of the forty five major regulatory

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<v Speaker 2>bills that dominate finance this day. I'd add to those

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<v Speaker 2>dot Frank of twenty twenty ten. I think twenty ten

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<v Speaker 2>is basically the four big regulatory acts that by which

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<v Speaker 2>that government basically modern finance. There have been some changes

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<v Speaker 2>to them, There've been some pieces of them that have

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<v Speaker 2>been deregulated, but for the most part, these bills, these

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<v Speaker 2>regulatory bills from the nineteen thirties, nineteen forty and twenty

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<v Speaker 2>ten basically are what run the financial world today, and

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<v Speaker 2>they're what needs to be unwound if we're going to

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<v Speaker 2>if we're going to deregulate finance. But as I said,

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<v Speaker 2>state regulations, some federal regulations date back to the eighteenth century,

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<v Speaker 2>so finance, they've had a lot of time to regulate,

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<v Speaker 2>to control, to manipulate, to change. Finance, of all of

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<v Speaker 2>them has some of the deepest regulations going to every

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<v Speaker 2>aspect of the business. In many respects, American banks are

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<v Speaker 2>branches of the US government, the extensions of the US government.

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<v Speaker 2>And it's not an accident that banks also benefit from

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<v Speaker 2>massive bailouts and to fail, and financial institutions do. In

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<v Speaker 2>banks in particular, and all of that stuff, although now

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<v Speaker 2>it's not just banks, it's financial institutions. More broadly, you

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<v Speaker 2>don't have that so length of time and complexity. Finance

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<v Speaker 2>is a complex field. It deals with a lot of

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<v Speaker 2>different things. Banks, traditional banks, corner that you have in

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<v Speaker 2>the corner of the town, investment banks and deal in

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<v Speaker 2>securities and underwriting securities and complex financial transactions. You've got

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<v Speaker 2>derivatives trading, You've got security exchanges in trading. You've got

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<v Speaker 2>financial variety of differential financial markets, insurance companies, not just banks,

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<v Speaker 2>but insurance companies, mortgage banks, mortgage securitization, and we could

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<v Speaker 2>go on and on and on and on and on

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<v Speaker 2>and on and on. I mean, auto loans have their

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<v Speaker 2>own kind of little financial institutions, and the securitized and

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<v Speaker 2>there's just no end to the number of different types

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<v Speaker 2>of financial institutions, different types of financial products. And again,

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<v Speaker 2>every single one of those hedge funds, private equity funds,

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<v Speaker 2>venture capital funds, every one of those has its own set.

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<v Speaker 3>Of regulations that apply to it.

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<v Speaker 2>So we are talking about a vast array, complex array

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<v Speaker 2>of regulations. And when you talk about deregulations, we're going

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<v Speaker 2>to have to separate, separate a few things out because

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<v Speaker 2>deregulation will look differently if we're talking about banks, it

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<v Speaker 2>would look differently if we're talking about securities markets, stock

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<v Speaker 2>market and the trading in stock markets, and hedge funds,

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<v Speaker 2>mutual funds and other kind of funds, and the raising

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<v Speaker 2>of money. That is the whole idea of a company

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<v Speaker 2>going out there, issuing shares and raising money that is

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<v Speaker 2>heavily regulated. That, by the way, is regulated by what's

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<v Speaker 2>called Blue Sky law. A lot of that is regulated

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<v Speaker 2>at the state level, and if you want to go public,

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<v Speaker 2>you have to and if you want to raise capital,

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<v Speaker 2>you often have to file different regulatory paperwork in every

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<v Speaker 2>single state to fifty different pieces of paperwork because the

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<v Speaker 2>criteria by which you raise money in California and criteria

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<v Speaker 2>but you raise money Connecticut are going to be different.

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<v Speaker 3>Right, So.

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<v Speaker 2>We've got all these different markets and we're gonna have

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<v Speaker 2>to talk about deregulating because they all serve different functions

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<v Speaker 2>and they all have different different consequences to how we deregulate. Now,

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<v Speaker 2>because of this complexity, and because of the crucial role

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<v Speaker 2>finance plays in an economy, the economy shuts down without finance.

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<v Speaker 2>Finances heavily heavily correlated. Freedom and finances heavily heavily collilated

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<v Speaker 2>with a successful a successful economy, and sophistication in finances

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<v Speaker 2>heavily coallated with, you know, success economically. One of the

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<v Speaker 2>things that can happen if the deregulation is wrong, done badly,

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<v Speaker 2>or if it's done all at once. If tomorrow we

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<v Speaker 2>wake up and say no financial regulations, what are the consequences. Well,

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<v Speaker 2>the reality is that most bank ninety nine point nine, no,

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<v Speaker 2>not ninety nine, all banks, every single bank in the

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<v Speaker 2>United States, does not have enough liquidity to be able

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<v Speaker 2>to deal with the positives asking for their money back,

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<v Speaker 2>even a small portion of them. Because the way they're regulated,

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<v Speaker 2>they are encouraged to keep unreserved, very very little of

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<v Speaker 2>what you deposit at the bank. They're encouraged to lend

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<v Speaker 2>and invest all the rest, and they are told that

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<v Speaker 2>if they get into liquidity problems, then the federal Reserve,

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<v Speaker 2>the regulatory agencies, if you will, will bail them out.

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<v Speaker 2>And we as depositors, for example, all assume that our

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<v Speaker 2>money is safe in the bank because they all have

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<v Speaker 2>deposit insurance, which is a government created regulatory thing. And

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<v Speaker 2>if that went away tomorrow, I would want my money

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<v Speaker 2>out of the bank. All of us would want our

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<v Speaker 2>money out of the bank. All of us would go

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<v Speaker 2>to the bank and ask for our money out. Now

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<v Speaker 2>an the entire banking system would collapse. It would basically

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<v Speaker 2>the entire thing would go bankrupt in a day. What

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<v Speaker 2>happened at Silicon Valley Bank would happen at every bank

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<v Speaker 2>in the United States.

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<v Speaker 3>It would crash the economy, It would.

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<v Speaker 2>Crash the financial sector. It would grow far beyond banks.

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<v Speaker 2>Businesses would run their money backs, only they wouldn't have it.

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<v Speaker 2>They'd have to write it all down. That bank would

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<v Speaker 2>go bankrupt.

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<v Speaker 3>The whole system would collapse.

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<v Speaker 2>So we have created an unbelievably fragile system because of

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<v Speaker 2>all the regulations. That is, the regulatory environment that we

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<v Speaker 2>have today is a fragile regulatory environment. It's a fragile

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<v Speaker 2>financial environment. What would happen tomorrow if other regulations went

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<v Speaker 2>away visa vistock trading, I.

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<v Speaker 3>Don't even know.

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<v Speaker 2>Oh God, it would be such a mess. What rules

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<v Speaker 2>would apply, what wouldn't apply. Basically, all the rules that

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<v Speaker 2>dictate stock trading. Who can trade, when you can trade,

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<v Speaker 2>how much you can trade, and what circumstances you can

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<v Speaker 2>trade at, what prices you can trade are dictated by regulation.

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<v Speaker 2>It can all be replaced by rules that are governed

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<v Speaker 2>by the market. We can talk about how in a

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<v Speaker 2>little bit, but that takes time. It doesn't that none

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<v Speaker 2>of that happens in a day. So there's no question

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<v Speaker 2>that the market would eventually organize itself. But the damage,

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<v Speaker 2>the damage which would be done in the process would

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<v Speaker 2>be unbelievably devastating and not necessary stating and not necessary.

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<v Speaker 2>That is, we can achieve freedom if we're just willing

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<v Speaker 2>to be patient two three, four years max. Without the damage.

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<v Speaker 2>And that's what we said, strifle. It might be impossible.

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<v Speaker 3>There might be some damage anyway, but we want to try.

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<v Speaker 2>To move to a system of rights of right protection

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<v Speaker 2>and property rights protection without a complete upheaval of the

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<v Speaker 2>entire system. Think about all the contracts that are written.

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<v Speaker 2>Just think about it this way, all the contracts that

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<v Speaker 2>are written between investors, investment companies, depositors, and banks that

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<v Speaker 2>assume explicitly and often implicitly, a particularly regulatory structure, a

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<v Speaker 2>particularly regulatory structure. It's just unfair to all the market participants,

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<v Speaker 2>all your risk assessments, all your planning, all the thinking

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<v Speaker 2>you've done about your finances are all made under the

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<v Speaker 2>assumption that at least this regulatory regime that exists a

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<v Speaker 2>day to some extent is going to be with us.

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<v Speaker 2>And if it's gone, everything has to change everything. So

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<v Speaker 2>I am for sunsetting regulations in a particular order and

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<v Speaker 2>with a known date for when they go away, so

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<v Speaker 2>that markets can adapt to their disappearance. And before all

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<v Speaker 2>that happens, you know, you've got a chance to build institutions, relationships, uh, contracts,

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<v Speaker 2>UH basically market driven rules of conduct that are consistent

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<v Speaker 2>with with with ryit so consistent with the market, uh

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<v Speaker 2>that replace many of the regulations of those regulations that

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<v Speaker 2>are kind of necessary. Okay, So an option where you

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<v Speaker 2>just get rid of all the regulations tomorrow is just

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<v Speaker 2>it's just too it's too chaotic and do unjust.

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<v Speaker 3>It's unjust.

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<v Speaker 2>So there has to be a process, and the question

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<v Speaker 2>is how do we do the process? And how do

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<v Speaker 2>we define the process, and and and how do we

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<v Speaker 2>how do we engage it? Now, some things can be

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<v Speaker 2>done pretty quickly, right, Some things can be done pretty

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<v Speaker 2>Quickly'll give you an example.

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<v Speaker 3>Are giving an example of hedge funds.

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<v Speaker 2>Hedge funds, ah, you know pools of money that are

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<v Speaker 2>being put together in order to trade, and they were

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<v Speaker 2>originally put together in order to trade free of regulation.

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<v Speaker 2>That is, the idea was that the people who invested

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<v Speaker 2>in hedge funds were sophisticated investors. They were not going

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<v Speaker 2>to be a lot of them. It's just going to

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<v Speaker 2>be a few people. They had a lot of money investors,

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<v Speaker 2>They had a lot of experience, and they had a

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<v Speaker 2>lot of investable income so that they were relatively rich,

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<v Speaker 2>so they could afford to lose some money. And so

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<v Speaker 2>hedge funds were set up as financial institutions to get

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<v Speaker 2>around the various the various regulations that existed. Give you

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<v Speaker 2>some examples. Okay, So in order to get around the

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<v Speaker 2>public offering registration requirements of the Securities Act of nineteen

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<v Speaker 2>thirty three, right, and the reputting requirements of the Security

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<v Speaker 2>Act in nineteen thirty four, and the registration requirements of

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<v Speaker 2>the Investment Company Act of nineteen forty right, the hedge funds, again,

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<v Speaker 2>as I said, only took what's called private offerings. It

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<v Speaker 2>wasn't a public offering, it wasn't marketed. There was no

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<v Speaker 2>general solicitation in general advertising. They exempted themselves by agreeing, basically,

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<v Speaker 2>we're not going to do any marketing, and to the

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<v Speaker 2>extent that we inform people about this, it's only to

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<v Speaker 2>accredited investors, institutional investors, insiders, people who have five million

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<v Speaker 2>dollars more of investable securities. So a whole variety of

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<v Speaker 2>conditions were self imposed by hedge funds in order to

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<v Speaker 2>allow them to get around the regulations, and they thrived.

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<v Speaker 2>Hedge funds did very, very well, and during the nineteen

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<v Speaker 2>eighties and nineteen nineties hedge.

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<v Speaker 3>Funds were started.

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<v Speaker 2>First, Headchehounds started in nineteen fifties. They did pretty well

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<v Speaker 2>in the sixties, but then they really came into their

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<v Speaker 2>own nineteen eighties and in the nineties. The first hedge

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<v Speaker 2>fund billionaires were really made during the eighties and nineties,

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<v Speaker 2>and the industry as a whole grew dramatically during this period.

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<v Speaker 2>Maybe the most famous hedge fund at that time was

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<v Speaker 2>George Soros, maybe the most to this day, who ran

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<v Speaker 2>a hedge fund that did what's called today macro investing,

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<v Speaker 2>or a lot of phone exchange investing, and basically made

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<v Speaker 2>a lot of money on betting on particular currencies. Betting

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00:23:07.079 --> 00:23:10.359
<v Speaker 2>is not the right wood, but kind of predicting the

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<v Speaker 2>direction and helping the direction happen, helping prices move in

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<v Speaker 2>various currencies around the world, and so it's made billions

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<v Speaker 2>and billions and billions of dollars during this period. Again,

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<v Speaker 2>everything about hedge funds was structured to avoid regulations.

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<v Speaker 3>You know, they avoid.

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<v Speaker 2>Not just the investment company regulations, but also come the

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<v Speaker 2>commodity futures trading commission regulations.

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<v Speaker 3>And on and on and on and on you.

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<v Speaker 2>Could go and how they found ways to get around us.

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<v Speaker 2>So much of the way hedge funds functioned in the

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<v Speaker 2>early days, in terms of raising money, structuring internal operations, was.

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<v Speaker 3>In an attempt to avoid all regulations, and they succeeded

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<v Speaker 3>to a large cresent.

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<v Speaker 2>A like extent eighties and nineties, you know, hedge funds

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00:24:19.960 --> 00:24:25.759
<v Speaker 2>were relatively unregulated, and again they did phenomenally well, and

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00:24:25.759 --> 00:24:28.440
<v Speaker 2>they made a lot of money, and hedge fund managers

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00:24:28.480 --> 00:24:31.559
<v Speaker 2>made a lot of money. A typical hedge fund historically

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00:24:32.559 --> 00:24:36.000
<v Speaker 2>would get compensated two percent of the amount of money

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00:24:36.000 --> 00:24:40.079
<v Speaker 2>out of management plus twenty percent of all the profits.

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<v Speaker 2>Some managers could get it. They did so well, could

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<v Speaker 2>get away with four percent of the money and management

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<v Speaker 2>and forty percent for zero of the profits.

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<v Speaker 3>And you know, it was a beautiful thing. If I

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<v Speaker 3>had hedge fund.

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<v Speaker 2>Hedge funds, you know, they people can take their money

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<v Speaker 2>in and out of a hedge fund fairly quickly. The

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<v Speaker 2>money is not locked up typically in a hedge fund.

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<v Speaker 2>So if you don't perform, people will draw their money.

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<v Speaker 2>You close the hedge fund you've got. If you do perform,

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<v Speaker 2>more money flows in, you might be able to create

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<v Speaker 2>additional instruments, and you do phenomenally well.

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<v Speaker 3>It's incredibly performance based.

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<v Speaker 2>Compensation is on is one hundred percent the end of

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00:25:37.119 --> 00:25:40.759
<v Speaker 2>the day, performance based, because even the percentage of the

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00:25:40.799 --> 00:25:42.799
<v Speaker 2>amount of money you have in a management is performance

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<v Speaker 2>based because the amount of money under management is going

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<v Speaker 2>to determine by whether people want to invest in you

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<v Speaker 2>or not. That is, whether people think you're performing well

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<v Speaker 2>or not. So it's a dynamic industry in which hedge

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00:25:57.079 --> 00:26:00.839
<v Speaker 2>funds disappear in and hedge fund's coming into being constantly

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00:26:01.079 --> 00:26:07.559
<v Speaker 2>all the time. But of course, you know, regulators don't

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<v Speaker 2>like that. Regulators don't like that. They don't like the

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00:26:12.559 --> 00:26:18.039
<v Speaker 2>fact that it's you know, independent of them. They don't

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00:26:18.160 --> 00:26:23.960
<v Speaker 2>like the fact that, you know, there's a whole world

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00:26:24.000 --> 00:26:27.680
<v Speaker 2>out there that they have no control over, and so

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00:26:27.720 --> 00:26:30.519
<v Speaker 2>from the beginning they've been trying to regulate it. And

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00:26:30.640 --> 00:26:35.960
<v Speaker 2>in nineteen eighty five, the SEC, you know, put in

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00:26:36.000 --> 00:26:43.279
<v Speaker 2>the first regulations of hedge funds. They found interpretation of

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00:26:43.319 --> 00:26:46.680
<v Speaker 2>the Investment Advisors Act that for the purposes of an

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00:26:46.680 --> 00:26:50.400
<v Speaker 2>exemption from registration under that Act, the safe hab allowed

340
00:26:50.400 --> 00:26:53.880
<v Speaker 2>a limited partnership rather than each of its limited partners

341
00:26:54.079 --> 00:26:57.039
<v Speaker 2>to be counted as a client of a general Anyway,

342
00:26:57.079 --> 00:27:03.640
<v Speaker 2>it just gets complicated, but they started imposing rules. So

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00:27:05.359 --> 00:27:08.960
<v Speaker 2>and in nineteen ninety seven the SEC brought in the

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00:27:09.000 --> 00:27:13.279
<v Speaker 2>scope of certain rules to regulate it even more. And

345
00:27:13.319 --> 00:27:16.319
<v Speaker 2>then in nineteen ninety eight, if you remember, Long Term

346
00:27:16.359 --> 00:27:24.519
<v Speaker 2>Capital Management LTCM went bankrupt and was bailed out by

347
00:27:25.240 --> 00:27:29.599
<v Speaker 2>a consortium of other hedge funds and other investors at

348
00:27:29.599 --> 00:27:35.480
<v Speaker 2>the orchestration of the New York Federal Reserve Bank Alan Greenspan. Basically,

349
00:27:37.200 --> 00:27:41.039
<v Speaker 2>and now there was fear that hedge funds were quote systemic,

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<v Speaker 2>that if they failed, they would drag down the entire

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00:27:44.960 --> 00:27:49.519
<v Speaker 2>financial system. And now the Senator regulated increased even more

352
00:27:51.759 --> 00:27:54.720
<v Speaker 2>so that by two thousand and four, the SEC tried

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00:27:55.400 --> 00:27:58.920
<v Speaker 2>to use its rule making authority to force hedge funds

354
00:27:59.000 --> 00:28:02.680
<v Speaker 2>to register. In two thousand and six, the Supreme Court

355
00:28:02.799 --> 00:28:09.240
<v Speaker 2>ruled that as outside the scope of the law, as arbitrary,

356
00:28:09.359 --> 00:28:12.000
<v Speaker 2>and all the hedge funds that had registered de registered.

357
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<v Speaker 2>But then in twenty ten dot frank was passed, and

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00:28:19.200 --> 00:28:21.880
<v Speaker 2>as part of dot frank you have the Private Fund

359
00:28:21.920 --> 00:28:31.640
<v Speaker 2>Investment Advisors Registration Act PFIAR few whatever, which basically authorizes

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00:28:31.680 --> 00:28:37.039
<v Speaker 2>the SEC to bring hedge funds under regulatory supervision. And

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00:28:37.119 --> 00:28:43.400
<v Speaker 2>since then there's just a mountain, a mountain of regulations

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<v Speaker 2>that are being imposed on the on the hedge fund

363
00:28:47.640 --> 00:28:52.759
<v Speaker 2>industry by the SEC, and it just goes on and on.

364
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<v Speaker 2>Now it's still true, though, for example, that hedge funds

365
00:29:01.200 --> 00:29:03.880
<v Speaker 2>investments in hedge funds are dominated by what you'd call

366
00:29:04.359 --> 00:29:09.920
<v Speaker 2>sophisticated investors. It's mainly wealthy individuals UH and UH pins

367
00:29:10.000 --> 00:29:14.640
<v Speaker 2>of plans and insurance companies. And although if it's an

368
00:29:14.640 --> 00:29:18.079
<v Speaker 2>insurance company and a pinsion planet, the fund has to

369
00:29:18.160 --> 00:29:20.799
<v Speaker 2>be consistent with a RISSA, which is anyway, it gets

370
00:29:20.839 --> 00:29:25.000
<v Speaker 2>more and more complicated. But the point is that you

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00:29:25.039 --> 00:29:33.119
<v Speaker 2>could deregulate hedge funds tomorrow pretty quickly. In other words,

372
00:29:33.200 --> 00:29:42.240
<v Speaker 2>pretty quickly without much collateral damage, without much damage. More broadly, so,

373
00:29:42.440 --> 00:29:48.400
<v Speaker 2>you could basically repeal what's called Title four of dot FRANK,

374
00:29:48.599 --> 00:29:51.480
<v Speaker 2>which is the Private Fund Investment Advice or Registration Act.

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<v Speaker 2>You could repeal that. You could repeal the nineteen ninety

376
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<v Speaker 2>seven sec Rule, you could appeal the nineteen nineteen eighty

377
00:30:02.480 --> 00:30:05.279
<v Speaker 2>five sec rule. And basically if it turned the hedge

378
00:30:05.279 --> 00:30:10.279
<v Speaker 2>front industry to the way it was before then and now,

379
00:30:11.359 --> 00:30:14.680
<v Speaker 2>you could do that very quickly. You could do that,

380
00:30:14.880 --> 00:30:16.880
<v Speaker 2>you know, if you pass the laws and all of that,

381
00:30:17.480 --> 00:30:18.680
<v Speaker 2>you could do that within.

382
00:30:18.480 --> 00:30:24.319
<v Speaker 3>A month, and you'd hear a huge.

383
00:30:25.640 --> 00:30:30.839
<v Speaker 2>Sigh of relief. But there would be no real that

384
00:30:30.880 --> 00:30:35.559
<v Speaker 2>I can think of, downside in terms of consequence of

385
00:30:35.599 --> 00:30:40.079
<v Speaker 2>the marketplace. Now, the question, of course is why would

386
00:30:40.119 --> 00:30:44.440
<v Speaker 2>you do that? Why would you deregulate them without digilating

387
00:30:44.440 --> 00:30:47.519
<v Speaker 2>anything else. And I'm not suggesting that, I'm suggesting that

388
00:30:47.559 --> 00:30:50.680
<v Speaker 2>could be a step, and that could be an easy

389
00:30:50.720 --> 00:30:53.400
<v Speaker 2>one and a quick one. Just do that, okay.

390
00:30:53.599 --> 00:30:58.240
<v Speaker 3>Now, next, mutual funds.

391
00:30:59.160 --> 00:31:06.359
<v Speaker 2>Mutual funds in best under very limited under huge constraints,

392
00:31:07.240 --> 00:31:14.200
<v Speaker 2>often in similar securities to hedge funds. But mutual funds

393
00:31:14.200 --> 00:31:18.839
<v Speaker 2>are heavily heavily, heavily, heavily heavily regulated by all those

394
00:31:18.880 --> 00:31:23.720
<v Speaker 2>investment acts going up back to nineteen thirty three. Again,

395
00:31:23.839 --> 00:31:28.880
<v Speaker 2>you could probably deregulate mutual funds, maybe with the exception

396
00:31:28.960 --> 00:31:32.079
<v Speaker 2>of money market mutual funds, so money markets would have

397
00:31:32.119 --> 00:31:35.519
<v Speaker 2>to be put aside. But stock mutual funds, bond mutual funds,

398
00:31:35.599 --> 00:31:41.039
<v Speaker 2>you could do those fairly quickly. You could just slowly

399
00:31:41.720 --> 00:31:47.240
<v Speaker 2>undo those pieces of the regulatory regimes from god Frank

400
00:31:47.279 --> 00:31:49.599
<v Speaker 2>all the way back to nineteen thirty three that apply

401
00:31:49.680 --> 00:31:54.759
<v Speaker 2>to mutual funds. Disclosure requirements. Do you know that by law,

402
00:31:55.599 --> 00:31:58.839
<v Speaker 2>mutual funds are not allowed to pay their managers a

403
00:31:58.920 --> 00:32:05.039
<v Speaker 2>percent of the profit. They can only pay them a salary. Say,

404
00:32:05.119 --> 00:32:11.519
<v Speaker 2>you would slowly unwind that right, You would slowly get

405
00:32:11.640 --> 00:32:16.640
<v Speaker 2>rid of all the regulations that restricted mutual funds, and

406
00:32:16.640 --> 00:32:20.359
<v Speaker 2>in a sense, you could probably do this within a year.

407
00:32:21.799 --> 00:32:22.960
<v Speaker 3>You would take away.

408
00:32:24.359 --> 00:32:26.960
<v Speaker 2>Everything that makes a mutual funds special and different than

409
00:32:26.960 --> 00:32:29.200
<v Speaker 2>a hedge fund, because mutual funds, for example, are not

410
00:32:29.279 --> 00:32:32.599
<v Speaker 2>allowed to sell security short hedge funds can't.

411
00:32:33.279 --> 00:32:35.559
<v Speaker 3>But if you took away the requirements.

412
00:32:35.440 --> 00:32:39.799
<v Speaker 2>You would basically create a situation where the hedge fund

413
00:32:39.839 --> 00:32:43.480
<v Speaker 2>industry and the mutual fund industry there was really no

414
00:32:43.559 --> 00:32:47.279
<v Speaker 2>difference between them. And if you took away all the

415
00:32:47.319 --> 00:32:51.079
<v Speaker 2>regulations that restricted who you can raise money from and

416
00:32:51.160 --> 00:32:54.880
<v Speaker 2>so on, now hedge funds could raise money from regular

417
00:32:54.920 --> 00:32:58.400
<v Speaker 2>people just like mutual funds, dude, And basically you would

418
00:32:58.440 --> 00:33:06.960
<v Speaker 2>have one big investment industry that would evolve in completely

419
00:33:07.000 --> 00:33:10.119
<v Speaker 2>new directions in completely new ways. They would not be

420
00:33:10.359 --> 00:33:12.559
<v Speaker 2>like what we have today, and there would basically be

421
00:33:13.880 --> 00:33:19.759
<v Speaker 2>marketing different products. They're playing vanilla regular index fund products

422
00:33:20.240 --> 00:33:26.559
<v Speaker 2>all the way to sophisticated long short macro models where

423
00:33:26.880 --> 00:33:29.440
<v Speaker 2>most people invested in the funds didn't really understand what

424
00:33:29.480 --> 00:33:34.839
<v Speaker 2>they were doing, but they were okay with that, and

425
00:33:34.920 --> 00:33:38.039
<v Speaker 2>the market would evolve. So I would say I would

426
00:33:38.079 --> 00:33:42.240
<v Speaker 2>take a year, and within a year the goal would

427
00:33:42.279 --> 00:33:48.759
<v Speaker 2>be to create a situation where mutual funds and hedge

428
00:33:48.799 --> 00:33:55.519
<v Speaker 2>funds were all basically in terms of the regulation, the same.

429
00:33:56.519 --> 00:33:57.640
<v Speaker 3>And the reason I would take.

430
00:33:57.480 --> 00:34:01.240
<v Speaker 2>A year is to give people time to just a

431
00:34:01.240 --> 00:34:05.279
<v Speaker 2>lot of investors. So for example, there's a lot of

432
00:34:05.279 --> 00:34:10.880
<v Speaker 2>disclosure requirements both for hedge funds and for mutual funds.

433
00:34:10.920 --> 00:34:13.760
<v Speaker 2>Hedge funds it's less important because investors know what they're

434
00:34:13.760 --> 00:34:18.719
<v Speaker 2>getting into. But mutual funds, people expect sudden disclosures and

435
00:34:18.760 --> 00:34:21.079
<v Speaker 2>being able to track and so on. And you want

436
00:34:21.119 --> 00:34:22.599
<v Speaker 2>to give them time to get their money out, or

437
00:34:22.599 --> 00:34:24.280
<v Speaker 2>you want to give them time to you want to

438
00:34:24.320 --> 00:34:27.480
<v Speaker 2>give them the mutual funds time to figure out what

439
00:34:27.480 --> 00:34:29.639
<v Speaker 2>the best disclosure practices are and how they want to

440
00:34:29.679 --> 00:34:33.480
<v Speaker 2>market it. So I would say, Okay, in twelve months,

441
00:34:34.679 --> 00:34:37.679
<v Speaker 2>here are all the things that are going away regulatory

442
00:34:37.719 --> 00:34:40.719
<v Speaker 2>wise for mutual funds and for hedge funds.

443
00:34:41.800 --> 00:34:48.159
<v Speaker 3>And after that we will be I'll tell you in

444
00:34:48.199 --> 00:34:49.519
<v Speaker 3>a minute, we'll be checking.

445
00:34:49.519 --> 00:34:54.519
<v Speaker 2>But after that there'll be one investment marketplace in which

446
00:34:54.719 --> 00:34:58.239
<v Speaker 2>that can sell you investment products, whatever they happen to be.

447
00:35:01.320 --> 00:35:05.880
<v Speaker 2>You probably include in this private equity funds, venture capital funds,

448
00:35:05.920 --> 00:35:09.440
<v Speaker 2>private equity funds as well. Cannot they're all regulated in

449
00:35:09.480 --> 00:35:13.239
<v Speaker 2>different ways, but all of these investment funds should be

450
00:35:13.320 --> 00:35:18.599
<v Speaker 2>basically free of regulation and then allowed to innovate in

451
00:35:18.679 --> 00:35:22.280
<v Speaker 2>terms of how they want to offer their product to

452
00:35:22.320 --> 00:35:24.000
<v Speaker 2>the public, how they want to explain it, how they

453
00:35:24.000 --> 00:35:29.199
<v Speaker 2>want to market it. And the only thing that the

454
00:35:29.239 --> 00:35:33.239
<v Speaker 2>government needs to be aware of and needs to be

455
00:35:33.760 --> 00:35:38.400
<v Speaker 2>diligent about and needs to make you know, needs to track.

456
00:35:39.239 --> 00:35:43.199
<v Speaker 2>Is this what is the role of government in financial markets?

457
00:35:44.360 --> 00:35:48.239
<v Speaker 2>The role of governing financial markets is to protect us

458
00:35:48.239 --> 00:35:51.480
<v Speaker 2>against fraud. That is it to protect us against fraud

459
00:35:53.039 --> 00:35:59.719
<v Speaker 2>promises that are detached from reality, commitments that are not

460
00:36:00.119 --> 00:36:02.519
<v Speaker 2>on Bernie made up pyramid like schemes.

461
00:36:05.039 --> 00:36:05.639
<v Speaker 3>That is it.

462
00:36:07.400 --> 00:36:09.960
<v Speaker 2>And one of the things the regulators should spend the

463
00:36:10.079 --> 00:36:16.159
<v Speaker 2>year doing is figuring out what replaces all these regulations

464
00:36:17.360 --> 00:36:23.840
<v Speaker 2>as a form of fraud protection, monitoring for fraud. And

465
00:36:23.880 --> 00:36:28.760
<v Speaker 2>it can't be disclosure requirements. You have to disclose all

466
00:36:28.800 --> 00:36:33.199
<v Speaker 2>these things. It has to be some objective criteria by

467
00:36:33.239 --> 00:36:37.840
<v Speaker 2>which the disclosure, whatever it happens to be, matches reality

468
00:36:38.239 --> 00:36:40.000
<v Speaker 2>and what constitutes fought and what doesn't.

469
00:36:40.039 --> 00:36:42.000
<v Speaker 3>And that is not going to be easy. It's not

470
00:36:42.079 --> 00:36:44.679
<v Speaker 3>obvious what fraud is fought.

471
00:36:44.480 --> 00:36:51.840
<v Speaker 2>Is a complicated violation of rights, not always straightforward. So

472
00:36:51.880 --> 00:36:54.039
<v Speaker 2>they would have to real spend time setting up a

473
00:36:54.039 --> 00:36:59.840
<v Speaker 2>set of rules laws that define clearly what constitute fraud

474
00:37:00.039 --> 00:37:05.079
<v Speaker 2>in financial transactions and what they're going to do about

475
00:37:05.639 --> 00:37:09.840
<v Speaker 2>trying to detect it and going after the thoughts.

476
00:37:12.880 --> 00:37:15.639
<v Speaker 3>So I think in the section.

477
00:37:15.480 --> 00:37:23.599
<v Speaker 2>Of investment institutions, hedge funds, mutual funds, private equity funds,

478
00:37:23.679 --> 00:37:32.159
<v Speaker 2>venture funds, so on. It's relatively easy. You don't expect

479
00:37:32.559 --> 00:37:36.599
<v Speaker 2>massive Mayhemmel though, because the public is involved with mutual funds,

480
00:37:37.000 --> 00:37:42.159
<v Speaker 2>there'll be a lot of people unsettled and confuse and

481
00:37:42.199 --> 00:37:45.360
<v Speaker 2>not to know what they do. And here hopefully there'll

482
00:37:45.400 --> 00:37:49.320
<v Speaker 2>be financial advisors, and there'll be financial advisory firms that

483
00:37:49.480 --> 00:37:51.320
<v Speaker 2>find ways to help them out and guide them through

484
00:37:51.360 --> 00:37:55.280
<v Speaker 2>the process. And that should be the role of financial

485
00:37:55.320 --> 00:37:59.400
<v Speaker 2>advisors is to help people deal with the complexity of finance,

486
00:37:59.480 --> 00:38:04.119
<v Speaker 2>help people deal with, you know, how to structure their

487
00:38:04.119 --> 00:38:09.960
<v Speaker 2>portfolios in a way that makes sense. So I think

488
00:38:10.480 --> 00:38:17.159
<v Speaker 2>from the perspective of investment companies, it's relatively simple to deregulate.

489
00:38:22.960 --> 00:38:24.480
<v Speaker 3>As we move deeper.

490
00:38:24.199 --> 00:38:27.840
<v Speaker 2>Into finance, deeper in the sense of to the institutions,

491
00:38:27.840 --> 00:38:28.880
<v Speaker 2>it becomes a lot harder.

492
00:38:29.800 --> 00:38:31.800
<v Speaker 3>So let's go one step.

493
00:38:31.599 --> 00:38:40.800
<v Speaker 2>In today, everything to do with how we buy and

494
00:38:40.880 --> 00:38:44.679
<v Speaker 2>sell stock, not just in terms of how we buy

495
00:38:44.679 --> 00:38:46.360
<v Speaker 2>in sell stock. Everything we have to do in terms

496
00:38:46.360 --> 00:38:50.800
<v Speaker 2>of buying and selling stock is regulated, is controlled. What

497
00:38:51.039 --> 00:38:54.599
<v Speaker 2>you can you know, what stocks you a lot about,

498
00:38:55.280 --> 00:39:00.400
<v Speaker 2>depending on who you are under what conditions you can

499
00:39:00.440 --> 00:39:06.159
<v Speaker 2>buy them, and what markets can you buy them, who

500
00:39:06.199 --> 00:39:09.719
<v Speaker 2>can sell them to you, how are they advertised marketed?

501
00:39:10.559 --> 00:39:15.199
<v Speaker 2>All of that is regulated, how they exchanges should behave.

502
00:39:16.400 --> 00:39:17.280
<v Speaker 2>The exchanges is the.

503
00:39:17.280 --> 00:39:18.519
<v Speaker 3>Way you buy and sell the stock.

504
00:39:19.679 --> 00:39:26.360
<v Speaker 2>How IPOs initial public offering should be happen regulated, blue

505
00:39:26.400 --> 00:39:30.199
<v Speaker 2>sky laws at the state level dictate how private companies

506
00:39:30.199 --> 00:39:35.920
<v Speaker 2>can sell stock raise money, and to some extent, one

507
00:39:35.960 --> 00:39:37.960
<v Speaker 2>of the things we would need to do in finance

508
00:39:38.079 --> 00:39:43.440
<v Speaker 2>generally is to federalize finance, get rid of federalism, get

509
00:39:43.559 --> 00:39:48.960
<v Speaker 2>rid of state regulations, state controls over much of this,

510
00:39:50.440 --> 00:39:53.880
<v Speaker 2>so that we can liberate it all at once, not

511
00:39:54.039 --> 00:39:58.239
<v Speaker 2>just liberated at the federal level, but liberated completely, including

512
00:39:58.239 --> 00:40:02.599
<v Speaker 2>the state level. That's another complexity for the whole thing.

513
00:40:05.960 --> 00:40:07.760
<v Speaker 2>So one of the things that's going to have to

514
00:40:07.800 --> 00:40:15.800
<v Speaker 2>happen with regard to stock markets, for example, bond markets,

515
00:40:16.480 --> 00:40:23.320
<v Speaker 2>other you know institutions, the facilitate trade is the thing

516
00:40:23.400 --> 00:40:26.880
<v Speaker 2>that may have to be reconstituted as truly private entities.

517
00:40:27.800 --> 00:40:30.400
<v Speaker 2>That is, the regulations that apply to them have to

518
00:40:30.400 --> 00:40:37.920
<v Speaker 2>go away. That includes, for example, all the disclosure regulations

519
00:40:37.920 --> 00:40:39.559
<v Speaker 2>that have to do with public companies.

520
00:40:40.079 --> 00:40:45.719
<v Speaker 3>So you know, public companies have to file disclosures.

521
00:40:45.760 --> 00:40:48.280
<v Speaker 2>They have to file annual reports and income statements, and

522
00:40:48.599 --> 00:40:50.960
<v Speaker 2>they have to do it by a particular form of

523
00:40:51.599 --> 00:40:53.960
<v Speaker 2>accounting standards, and they have to do it by a

524
00:40:54.079 --> 00:40:58.360
<v Speaker 2>certain dates, and it has to be audited, and there's

525
00:40:58.400 --> 00:41:02.119
<v Speaker 2>no end to the and they have to provide information,

526
00:41:02.239 --> 00:41:04.960
<v Speaker 2>and they have to provide all kinds of information. Every

527
00:41:05.119 --> 00:41:08.880
<v Speaker 2>change in management, every change in board of directors, every

528
00:41:08.920 --> 00:41:12.159
<v Speaker 2>significant change in ownership has to be disclosed. I mean

529
00:41:12.199 --> 00:41:16.199
<v Speaker 2>the amounts of paper of Luckily it's all electronic today.

530
00:41:16.239 --> 00:41:21.159
<v Speaker 2>That of disclosures is unbelievable. The whole departments, massive, hundreds

531
00:41:21.199 --> 00:41:25.440
<v Speaker 2>of people in charge of disclosure at publicly traded corporations,

532
00:41:26.760 --> 00:41:30.000
<v Speaker 2>all of that dictated by government. Now, some of that

533
00:41:30.039 --> 00:41:33.559
<v Speaker 2>makes sense, that is public companies. I own a stock

534
00:41:33.599 --> 00:41:35.079
<v Speaker 2>in a public company. I would like to know what's

535
00:41:35.079 --> 00:41:41.400
<v Speaker 2>going on. And the regulating body that should be regulating

536
00:41:41.440 --> 00:41:46.199
<v Speaker 2>these kind of things is the exchange on which the

537
00:41:46.480 --> 00:41:49.480
<v Speaker 2>company is listed. The stock is listed in which I

538
00:41:49.679 --> 00:41:53.119
<v Speaker 2>buy and sell. They should say, you want to trade

539
00:41:53.119 --> 00:41:55.400
<v Speaker 2>on the New York Stock Exchange.

540
00:41:56.639 --> 00:41:59.920
<v Speaker 3>These are the qualifications. This is what you have to do.

541
00:42:00.239 --> 00:42:03.159
<v Speaker 2>Your company has to disclose X y Z. Every company

542
00:42:03.199 --> 00:42:06.119
<v Speaker 2>on the New York Stock Exchange has similar disclosure requirements,

543
00:42:06.360 --> 00:42:11.480
<v Speaker 2>has to use certain acceptable accounting standards, has to do

544
00:42:11.519 --> 00:42:12.239
<v Speaker 2>all these things.

545
00:42:12.599 --> 00:42:14.559
<v Speaker 3>And why does the New York Stock Exchange care?

546
00:42:16.239 --> 00:42:19.719
<v Speaker 2>Because what the New York Stock Exchange wants to do

547
00:42:19.800 --> 00:42:24.159
<v Speaker 2>is optimize trading. It wants to maximize the amount of

548
00:42:24.199 --> 00:42:28.159
<v Speaker 2>money they make from me and you trading stocks on

549
00:42:28.199 --> 00:42:34.320
<v Speaker 2>New exchange. And I will only trade in stocks where

550
00:42:34.480 --> 00:42:38.360
<v Speaker 2>I have some information about the value of these stocks

551
00:42:38.400 --> 00:42:40.719
<v Speaker 2>and what they're doing and why they're doing it. And

552
00:42:41.119 --> 00:42:45.280
<v Speaker 2>I want something, I want some information. So it's in

553
00:42:45.360 --> 00:42:50.480
<v Speaker 2>the exchange interest to make sure that the company is

554
00:42:50.480 --> 00:42:56.639
<v Speaker 2>listed on that exchange, traded in an exchange, get information,

555
00:42:57.000 --> 00:43:01.840
<v Speaker 2>provide the information again, and you would need to allow

556
00:43:02.039 --> 00:43:05.639
<v Speaker 2>time when you got rid of all these disclosure regulations

557
00:43:05.679 --> 00:43:08.639
<v Speaker 2>that are in the thirty four Securities Act in nineteen

558
00:43:08.719 --> 00:43:14.880
<v Speaker 2>forty act. When you in getting rid of all that,

559
00:43:15.159 --> 00:43:19.119
<v Speaker 2>you need to give time for the market to replace

560
00:43:19.199 --> 00:43:25.679
<v Speaker 2>them with exchange based regulations. Regulations here in the positive

561
00:43:25.679 --> 00:43:30.840
<v Speaker 2>sense of market regulating now here again, here's a complexity.

562
00:43:31.800 --> 00:43:38.280
<v Speaker 2>Right now, there are regulations that say that basically, wherever

563
00:43:38.360 --> 00:43:41.000
<v Speaker 2>you list your stock, whether you IPO, you do an

564
00:43:41.000 --> 00:43:44.800
<v Speaker 2>initial public offering, all exchanges get to trade all stocks.

565
00:43:46.559 --> 00:43:51.480
<v Speaker 2>But that's just an opportuary regulatory thing that it actually

566
00:43:51.599 --> 00:43:54.440
<v Speaker 2>goes against the incentives of the exchanges. Exchanges should want

567
00:43:54.519 --> 00:43:59.559
<v Speaker 2>to specialize in only trading certain stocks, and therefore have

568
00:43:59.599 --> 00:44:03.880
<v Speaker 2>required on those companies to have disclosure and all of

569
00:44:03.880 --> 00:44:07.960
<v Speaker 2>the rest right, So the whole structure of the markets

570
00:44:08.079 --> 00:44:12.280
<v Speaker 2>would probably have to change, and that might take time

571
00:44:13.880 --> 00:44:16.719
<v Speaker 2>for exchanges to figure out which companies they want to

572
00:44:16.760 --> 00:44:18.760
<v Speaker 2>keep and which companies they don't keep, and what they

573
00:44:18.760 --> 00:44:20.400
<v Speaker 2>want to trade and what they don't want to trade.

574
00:44:20.880 --> 00:44:24.400
<v Speaker 2>Suddenly that freedom to make those decisions. And again what

575
00:44:24.440 --> 00:44:28.960
<v Speaker 2>I would do is say you've got a year. You've

576
00:44:29.000 --> 00:44:31.119
<v Speaker 2>got a year to figure that out.

577
00:44:31.400 --> 00:44:36.440
<v Speaker 1>In a year, these laws, all these disclosure laws, all

578
00:44:36.480 --> 00:44:40.079
<v Speaker 1>the laws governing how exchanges should work, all the laws

579
00:44:40.199 --> 00:44:50.199
<v Speaker 1>regulating exchanges, all of them go away, and we.

580
00:44:50.559 --> 00:44:53.320
<v Speaker 2>Have a free market in stock trading and bond trading.

581
00:44:56.480 --> 00:44:59.519
<v Speaker 2>And you could make that coincide with the same time

582
00:44:59.519 --> 00:45:04.880
<v Speaker 2>that invest managers suddenly become free, and the market will

583
00:45:04.920 --> 00:45:10.880
<v Speaker 2>have a year to dramatically and fast and quickly realign itself,

584
00:45:11.039 --> 00:45:17.880
<v Speaker 2>adjust completely, and of course it'll continue adjusting after that year,

585
00:45:18.440 --> 00:45:22.360
<v Speaker 2>but it have a year to prepare for freedom, for

586
00:45:22.480 --> 00:45:25.840
<v Speaker 2>being completely free, and it.

587
00:45:25.840 --> 00:45:26.760
<v Speaker 3>Will be a beautiful thing.

588
00:45:26.760 --> 00:45:31.400
<v Speaker 2>By the way, It'll be amazing to watch the human

589
00:45:31.519 --> 00:45:36.519
<v Speaker 2>mind liberated to figure out the best way to organize

590
00:45:36.519 --> 00:45:39.960
<v Speaker 2>financial markets and institutions. I mean, wow, that would be

591
00:45:40.039 --> 00:45:43.360
<v Speaker 2>so cool. The best way to trade securities, the best

592
00:45:43.400 --> 00:45:46.039
<v Speaker 2>way to make investments, the best way to raise money,

593
00:45:46.559 --> 00:45:50.280
<v Speaker 2>the best structures for this, and you know, and new

594
00:45:50.360 --> 00:45:54.239
<v Speaker 2>structures will be invented because a lot of the structures

595
00:45:54.239 --> 00:45:57.880
<v Speaker 2>that exists today, whether it's in LLC or partnership or

596
00:45:58.000 --> 00:46:01.280
<v Speaker 2>or all of that is some of it's dictated by

597
00:46:01.280 --> 00:46:04.280
<v Speaker 2>tax law. A lot of it is dictated by regulatory though.

598
00:46:05.159 --> 00:46:05.880
<v Speaker 3>And once those.

599
00:46:05.760 --> 00:46:15.519
<v Speaker 2>Regulations go away, people will become incredibly innovative, all right,

600
00:46:16.400 --> 00:46:21.280
<v Speaker 2>and it'll be very different than it was before the

601
00:46:21.320 --> 00:46:26.880
<v Speaker 2>regulations came into me because the technology is different, the

602
00:46:26.920 --> 00:46:35.400
<v Speaker 2>possibilities are different, the kind of transactions are different, and

603
00:46:36.239 --> 00:46:38.840
<v Speaker 2>the innovation think about I mean, it's sad to think

604
00:46:39.360 --> 00:46:44.599
<v Speaker 2>that we haven't had seventy years of innovation in financial structures.

605
00:46:44.400 --> 00:46:49.440
<v Speaker 2>Most of the innovation in finance over the last seventy

606
00:46:49.519 --> 00:46:53.039
<v Speaker 2>years eighty nine years, nine years, no, one hundred years,

607
00:46:53.760 --> 00:46:58.320
<v Speaker 2>nine years over the last nine years has been to

608
00:46:58.360 --> 00:47:06.239
<v Speaker 2>find ways to get around regulations, and suddenly all of

609
00:47:06.280 --> 00:47:11.159
<v Speaker 2>that would be liberated to now we get to actually

610
00:47:11.159 --> 00:47:14.960
<v Speaker 2>think about how to innovate in order to better serve

611
00:47:15.000 --> 00:47:20.280
<v Speaker 2>our customer better, you know, make more money, make more

612
00:47:20.800 --> 00:47:25.039
<v Speaker 2>you know, allocate capital more effectively, figure out better ways

613
00:47:25.119 --> 00:47:30.639
<v Speaker 2>to you know, to to trade, come up with new

614
00:47:30.679 --> 00:47:37.480
<v Speaker 2>technologies that make trading even faster, better prices, reflect better information, whatever,

615
00:47:37.719 --> 00:47:42.679
<v Speaker 2>right you get Innovation that is now focused on efficiency,

616
00:47:43.199 --> 00:47:48.360
<v Speaker 2>on productivity, on money making, on profit making, rather than

617
00:47:48.440 --> 00:47:51.559
<v Speaker 2>innovation that is focused on all of that in the

618
00:47:51.599 --> 00:47:54.880
<v Speaker 2>context of regulation. And the best way, of course, to

619
00:47:54.880 --> 00:47:56.719
<v Speaker 2>make money is to get around the regulation. The best

620
00:47:56.719 --> 00:48:00.239
<v Speaker 2>way to increase efficiencies to get around the regulations. So

621
00:48:00.400 --> 00:48:04.960
<v Speaker 2>much of the complexity we see in financial markets today

622
00:48:06.840 --> 00:48:16.800
<v Speaker 2>is driven by the need to get around regulations. No

623
00:48:16.880 --> 00:48:21.679
<v Speaker 2>way is that more the case than in banking. Banking

624
00:48:21.840 --> 00:48:27.360
<v Speaker 2>is the most complicated to deregulate, the most risky to deregulate,

625
00:48:28.760 --> 00:48:30.840
<v Speaker 2>the one that has the most impact on the most people.

626
00:48:31.039 --> 00:48:33.360
<v Speaker 2>Because almost all of us have money in a bank.

627
00:48:36.599 --> 00:48:39.880
<v Speaker 2>It's why banks but not a lot of other financial

628
00:48:39.880 --> 00:48:42.000
<v Speaker 2>institutions have deposit insurance.

629
00:48:42.440 --> 00:48:44.760
<v Speaker 3>Although we'll talk about two weeks to fail.

630
00:48:44.599 --> 00:48:47.400
<v Speaker 2>In a minute, because that applies to a lot of

631
00:48:47.400 --> 00:48:48.199
<v Speaker 2>different institutions.

632
00:48:48.480 --> 00:48:50.800
<v Speaker 3>And then the question is how do we deregulate banks?

633
00:48:50.800 --> 00:48:54.440
<v Speaker 2>So here's the principle for all of these, right, the

634
00:48:54.480 --> 00:48:59.599
<v Speaker 2>principle for deregulation has to be move towards freedom as

635
00:48:59.679 --> 00:49:04.960
<v Speaker 2>quickly as possible, freedom being less to no regulations as

636
00:49:05.039 --> 00:49:15.760
<v Speaker 2>quickly as possible without creating unnecessary chaos and financial disaster.

637
00:49:16.920 --> 00:49:17.920
<v Speaker 3>And while.

638
00:49:19.360 --> 00:49:24.920
<v Speaker 2>Continuing to protect against fraud. So the principle that should

639
00:49:24.960 --> 00:49:31.719
<v Speaker 2>guide all regulations is move towards freedom, less regulations to

640
00:49:31.800 --> 00:49:42.360
<v Speaker 2>no regulations without creating unnecessary chaos and financial disaster, while

641
00:49:42.400 --> 00:49:51.880
<v Speaker 2>continuing to protect individuals against fraud. That's my best formulation

642
00:49:52.039 --> 00:49:56.719
<v Speaker 2>of the principle by which should guide regulations, deregulations, sorry,

643
00:49:56.719 --> 00:50:07.679
<v Speaker 2>deregulation primarily in the financial sector. Yeah, when your sunset

644
00:50:07.840 --> 00:50:12.880
<v Speaker 2>for a lot of this is quick but is doable. Banking,

645
00:50:12.920 --> 00:50:15.760
<v Speaker 2>it's going to be a little longer because you're gonna

646
00:50:15.760 --> 00:50:18.960
<v Speaker 2>have to do this in phases I suspect and you're

647
00:50:18.960 --> 00:50:22.079
<v Speaker 2>gonna have to give people a heads up about what

648
00:50:22.199 --> 00:50:22.559
<v Speaker 2>is coming.

649
00:50:24.719 --> 00:50:25.679
<v Speaker 3>So one of the.

650
00:50:25.679 --> 00:50:31.199
<v Speaker 2>Things that nineteen thirty three Act did is established deposit insurance.

651
00:50:32.480 --> 00:50:36.519
<v Speaker 2>Depositive insurance basically guarantees that up to a certain amount

652
00:50:36.679 --> 00:50:40.400
<v Speaker 2>of your deposits in the bank. There is a fund

653
00:50:40.880 --> 00:50:46.559
<v Speaker 2>that is supposedly funded by the premiums that banks pay

654
00:50:46.679 --> 00:50:51.280
<v Speaker 2>into this fund that will pay you off if the

655
00:50:51.360 --> 00:50:55.679
<v Speaker 2>bank cannot pay you. What we've seen in history is

656
00:50:55.920 --> 00:51:00.400
<v Speaker 2>ultimately standing behind this fund is the US government. Government

657
00:51:00.440 --> 00:51:03.480
<v Speaker 2>basically is guaranteeing your money in the bank up to

658
00:51:03.519 --> 00:51:07.960
<v Speaker 2>a certain amount. That amount historically was ten thousand, It

659
00:51:08.000 --> 00:51:10.800
<v Speaker 2>was then raised to fifty thousand, and to one hundred thousand,

660
00:51:11.199 --> 00:51:14.119
<v Speaker 2>more recently to two hundred and fifty thousand, and then

661
00:51:14.159 --> 00:51:17.760
<v Speaker 2>what we've seen in two thousand and eight and then

662
00:51:17.800 --> 00:51:21.760
<v Speaker 2>again was Silicon Valley Bank, is that the actual limit

663
00:51:21.880 --> 00:51:24.679
<v Speaker 2>for the amount of money that the government is guaranteeing

664
00:51:24.960 --> 00:51:30.880
<v Speaker 2>in the bank is everything. It's unlimited. And that is

665
00:51:30.960 --> 00:51:36.000
<v Speaker 2>explicitly the case in financial institutions banks that the government

666
00:51:36.039 --> 00:51:42.800
<v Speaker 2>has deemed to big to fail those financial institutions, everything

667
00:51:43.440 --> 00:51:44.639
<v Speaker 2>is guaranteed by the government.

668
00:51:46.119 --> 00:51:50.480
<v Speaker 3>Now, this creates lots of problems. It creates what's called.

669
00:51:50.360 --> 00:51:55.760
<v Speaker 2>Model hazard, which is an incentive for banks to take

670
00:51:55.800 --> 00:52:00.639
<v Speaker 2>on more risk than they would otherwise take because the

671
00:52:00.719 --> 00:52:04.119
<v Speaker 2>downside is protected by the governments, and the upside the

672
00:52:04.119 --> 00:52:11.079
<v Speaker 2>bank benefits from. And this is clearly what's happened. On

673
00:52:11.159 --> 00:52:13.960
<v Speaker 2>top of that, the government also sets things like reserve

674
00:52:14.000 --> 00:52:20.280
<v Speaker 2>requirements capital requirements, and those don't turn out to be

675
00:52:20.639 --> 00:52:24.239
<v Speaker 2>just like minimum requirements. You can have more, but competition

676
00:52:24.519 --> 00:52:32.199
<v Speaker 2>basically drives everybody to the lowest common denominator. At the

677
00:52:32.239 --> 00:52:37.880
<v Speaker 2>end of the day, whatever the minimal reserve requirements, that's

678
00:52:37.920 --> 00:52:40.239
<v Speaker 2>how much money the bank has to put aside from

679
00:52:40.239 --> 00:52:43.239
<v Speaker 2>the money that you deposit in that they cannot loan out.

680
00:52:44.039 --> 00:52:50.519
<v Speaker 2>All banks basically have almost the same deposit ratio reserve ratio.

681
00:52:51.199 --> 00:52:54.679
<v Speaker 2>All banks have about the same amount of capital or

682
00:52:55.000 --> 00:52:57.880
<v Speaker 2>at the very minimal that the government requires, not much

683
00:52:57.880 --> 00:53:00.559
<v Speaker 2>more than that. If they hold more than that, they've

684
00:53:00.599 --> 00:53:02.639
<v Speaker 2>had a competitive disadvantage.

685
00:53:02.079 --> 00:53:03.639
<v Speaker 3>Versus the competition.

686
00:53:06.239 --> 00:53:11.000
<v Speaker 2>Because deposit insurance, we as the positives, the providers of

687
00:53:11.239 --> 00:53:16.000
<v Speaker 2>financing to the bank, have no incentive to care about

688
00:53:16.000 --> 00:53:21.480
<v Speaker 2>how risky the bank is, so all banks maximize the risk.

689
00:53:22.480 --> 00:53:27.760
<v Speaker 2>All banks maximize leverage because there's no body.

690
00:53:27.440 --> 00:53:28.519
<v Speaker 3>To discipline them.

691
00:53:28.920 --> 00:53:32.599
<v Speaker 2>We the are positives who should be disciplining them don't.

692
00:53:35.800 --> 00:53:41.760
<v Speaker 2>So if you get rid of deposit insurance. First, the

693
00:53:41.800 --> 00:53:48.639
<v Speaker 2>whole thing collapses, So you can't do that. So how

694
00:53:48.679 --> 00:53:56.199
<v Speaker 2>do you do regulate banks? How do you do regulate banks? Well,

695
00:53:56.639 --> 00:54:01.880
<v Speaker 2>step one is you have to let at all banks

696
00:54:02.000 --> 00:54:08.599
<v Speaker 2>know the deposit insurance is going away. Let's say two

697
00:54:08.719 --> 00:54:13.800
<v Speaker 2>years from now. In two years there is no deposit insurance.

698
00:54:16.679 --> 00:54:20.559
<v Speaker 2>You can replace it with private deposit insurance.

699
00:54:20.559 --> 00:54:21.440
<v Speaker 3>If you can find that.

700
00:54:23.039 --> 00:54:25.440
<v Speaker 2>You cannot replace it, you can do as you will.

701
00:54:27.119 --> 00:54:30.159
<v Speaker 2>But between now and two years from now, you have

702
00:54:30.239 --> 00:54:33.239
<v Speaker 2>to get ready for this position where there is no

703
00:54:33.599 --> 00:54:39.559
<v Speaker 2>deposit insurance. In the meantime.

704
00:54:40.760 --> 00:54:54.840
<v Speaker 3>We are going to.

705
00:54:48.360 --> 00:54:53.480
<v Speaker 2>Do you regulate different aspects of the banking environment.

706
00:54:53.519 --> 00:54:54.920
<v Speaker 3>Now, A big part of.

707
00:54:56.320 --> 00:55:00.480
<v Speaker 2>What caused a lot of problems in banking original was

708
00:55:00.519 --> 00:55:03.480
<v Speaker 2>the fact that there were heavy regulations against bank mergers.

709
00:55:04.719 --> 00:55:06.159
<v Speaker 3>Banks were not allowed to merge.

710
00:55:05.920 --> 00:55:10.920
<v Speaker 2>Out of state, sometimes out of county, and banks were

711
00:55:11.320 --> 00:55:14.039
<v Speaker 2>fragmented and small. A lot of that has gone away,

712
00:55:14.079 --> 00:55:18.079
<v Speaker 2>that is the regulations that bass that was basically taken

713
00:55:18.119 --> 00:55:24.360
<v Speaker 2>away in nineteen eighty six, sorry, nineteen eighty four. But

714
00:55:25.039 --> 00:55:27.000
<v Speaker 2>it's still true that every bank merger has to be

715
00:55:27.039 --> 00:55:30.599
<v Speaker 2>approved by the regulators, by FDIC and the OCC and

716
00:55:30.639 --> 00:55:37.480
<v Speaker 2>all these other regulations. What needs to happen is, first

717
00:55:37.559 --> 00:55:43.559
<v Speaker 2>of all, basically all these basically these regulatory agencies needs

718
00:55:43.639 --> 00:55:47.599
<v Speaker 2>to be told that they must approve all bank merges.

719
00:55:50.000 --> 00:55:52.639
<v Speaker 2>Gumman should have no stay whether a bank can merge

720
00:55:52.719 --> 00:55:56.800
<v Speaker 2>or not. They should all be allowed to merge. So

721
00:55:56.840 --> 00:56:01.760
<v Speaker 2>that's step one. We want larger financial institute. So they

722
00:56:01.800 --> 00:56:03.440
<v Speaker 2>have to be able to be able to merge. They

723
00:56:03.519 --> 00:56:07.079
<v Speaker 2>have to be able to merge and grow. They have

724
00:56:07.159 --> 00:56:09.079
<v Speaker 2>to be able to do more things than they're allowed

725
00:56:09.119 --> 00:56:13.000
<v Speaker 2>to do today. Banks are very restricted in what kind

726
00:56:13.000 --> 00:56:15.360
<v Speaker 2>of loans they make, what kind of securities they can

727
00:56:15.400 --> 00:56:15.880
<v Speaker 2>invest in.

728
00:56:16.559 --> 00:56:18.119
<v Speaker 3>That all needs to be loosened up.

729
00:56:20.400 --> 00:56:24.880
<v Speaker 2>So banks need the freedom to be able to do

730
00:56:24.960 --> 00:56:29.559
<v Speaker 2>a lot more with the capital that they have, the

731
00:56:29.639 --> 00:56:37.199
<v Speaker 2>money being deposited with them. So all of these loosening

732
00:56:37.239 --> 00:56:41.360
<v Speaker 2>up regulations they need to be phased in over these

733
00:56:41.400 --> 00:56:44.639
<v Speaker 2>two years so that in two years the positive insurance

734
00:56:44.679 --> 00:56:51.000
<v Speaker 2>goes away. At that point, you would expect banks to

735
00:56:51.239 --> 00:56:55.280
<v Speaker 2>have increased the amount of capital that they have. You'd

736
00:56:55.360 --> 00:56:59.800
<v Speaker 2>expect banks to increase the amount of reserves that they

737
00:56:59.800 --> 00:57:04.280
<v Speaker 2>have to the extent that private deposit insurance becomes available,

738
00:57:04.960 --> 00:57:13.199
<v Speaker 2>you would expect banks to acquire that insurance. You'd also

739
00:57:13.519 --> 00:57:20.679
<v Speaker 2>probably expect that to come about to develop a variety

740
00:57:21.079 --> 00:57:28.639
<v Speaker 2>of different rating agencies the rank banks on how risky

741
00:57:28.679 --> 00:57:31.840
<v Speaker 2>they are, so we as depositors know where that bank

742
00:57:31.920 --> 00:57:34.480
<v Speaker 2>is a highly rated bank, a low rated bank, a

743
00:57:34.519 --> 00:57:37.039
<v Speaker 2>high risk bank, a low risk bank, so that we

744
00:57:37.079 --> 00:57:39.039
<v Speaker 2>can make judgments about whether we should take our money

745
00:57:39.039 --> 00:57:43.159
<v Speaker 2>out or not. And those ratings would come into force

746
00:57:43.360 --> 00:57:50.920
<v Speaker 2>before deposit insurance goes away. But I think with deposit

747
00:57:50.920 --> 00:57:53.119
<v Speaker 2>insurance you need a little bit more time. You need

748
00:57:53.639 --> 00:57:57.159
<v Speaker 2>two three years. You'd have to really play it out

749
00:57:58.199 --> 00:57:59.559
<v Speaker 2>before it is completely gone.

750
00:57:59.599 --> 00:58:01.639
<v Speaker 3>And of course deposit insurance, the.

751
00:58:01.639 --> 00:58:04.920
<v Speaker 2>Whole idea of to be to fail has to go

752
00:58:05.719 --> 00:58:07.760
<v Speaker 2>Do you know there's a regulatory agency now created by

753
00:58:07.760 --> 00:58:12.960
<v Speaker 2>dot FANK that is responsible for establishing wish institutions in

754
00:58:12.960 --> 00:58:15.639
<v Speaker 2>the United States are to be to fail and then

755
00:58:17.199 --> 00:58:22.000
<v Speaker 2>establishing new regulations on them, and new disclosure requirements and

756
00:58:22.000 --> 00:58:25.679
<v Speaker 2>and and stress tests on them, to be able to

757
00:58:25.679 --> 00:58:28.400
<v Speaker 2>to be able to monitor them and and UH and

758
00:58:28.679 --> 00:58:33.960
<v Speaker 2>and assess their riskiness. All of that has to go away.

759
00:58:36.199 --> 00:58:42.639
<v Speaker 2>So you would within three years have a banking sector

760
00:58:44.159 --> 00:58:49.639
<v Speaker 2>there was completely free. Now here's one more complication. One

761
00:58:49.679 --> 00:58:55.719
<v Speaker 2>more complication and that is that as long as you

762
00:58:55.719 --> 00:59:01.639
<v Speaker 2>have a central bank, banks on our free. As long

763
00:59:01.639 --> 00:59:05.960
<v Speaker 2>as you have a central banks, you know, it's going

764
00:59:06.039 --> 00:59:12.280
<v Speaker 2>to be very difficult to have a truly free banking system.

765
00:59:12.559 --> 00:59:14.599
<v Speaker 2>So I'm not going to get into it today. We

766
00:59:14.639 --> 00:59:17.039
<v Speaker 2>can do it separately. But one of the things you

767
00:59:17.079 --> 00:59:21.360
<v Speaker 2>would have to do over those three years is basically

768
00:59:21.440 --> 00:59:24.880
<v Speaker 2>get rid of the FED and then convert to a

769
00:59:24.960 --> 00:59:31.079
<v Speaker 2>truly free banking system, a truly free banking system in

770
00:59:31.119 --> 00:59:36.079
<v Speaker 2>which banks also responsible for currency, for money and what

771
00:59:36.159 --> 00:59:41.199
<v Speaker 2>money is, and have the market develop that as well.

772
00:59:41.239 --> 00:59:43.239
<v Speaker 2>And again you need to give it time to be

773
00:59:43.280 --> 00:59:49.239
<v Speaker 2>able to do that practically. Some of the ways you

774
00:59:49.280 --> 00:59:52.760
<v Speaker 2>would go around this is the lost hanging food. The

775
00:59:52.800 --> 01:00:01.400
<v Speaker 2>lost hanging fruit really is to deregulate by starting with

776
01:00:01.559 --> 01:00:03.159
<v Speaker 2>the most recent laws.

777
01:00:03.480 --> 01:00:06.320
<v Speaker 3>Right we did okay before there was dot frank.

778
01:00:07.679 --> 01:00:11.880
<v Speaker 2>So I would say, within the first one hundred days

779
01:00:11.880 --> 01:00:14.559
<v Speaker 2>of a presidency, repeal dot frank.

780
01:00:15.400 --> 01:00:16.440
<v Speaker 3>Just get rid of dot frank.

781
01:00:17.079 --> 01:00:20.320
<v Speaker 2>That would do a lot to liberate hedge funds, It

782
01:00:20.360 --> 01:00:25.800
<v Speaker 2>would do a lot to liberate banks, to reduce certain

783
01:00:26.119 --> 01:00:27.679
<v Speaker 2>regulatory burdens from banks.

784
01:00:28.679 --> 01:00:30.719
<v Speaker 3>It would just put us in the same position as.

785
01:00:30.559 --> 01:00:35.480
<v Speaker 2>We were in before dot frank, before twenty ten, and

786
01:00:35.719 --> 01:00:38.000
<v Speaker 2>no disaster there. I mean, we had the financial crisis

787
01:00:38.000 --> 01:00:40.079
<v Speaker 2>two thousand and eight, but that was a unique set

788
01:00:40.079 --> 01:00:43.559
<v Speaker 2>of circumstances which we wouldn't have immediately following that. And

789
01:00:43.599 --> 01:00:50.199
<v Speaker 2>then look at the nineteen forties. You know, they're all

790
01:00:50.280 --> 01:00:52.519
<v Speaker 2>kinds of other regulatory bills in between, but just go

791
01:00:52.599 --> 01:00:55.960
<v Speaker 2>sequentially and just get rid of them one at a time.

792
01:00:56.000 --> 01:00:59.920
<v Speaker 2>Now you could look at particular parts of them and deregulate,

793
01:01:00.320 --> 01:01:03.960
<v Speaker 2>get rid of those pieces, right, And this is the

794
01:01:04.039 --> 01:01:09.840
<v Speaker 2>sense in which also deregulation has to happen at the

795
01:01:09.960 --> 01:01:13.119
<v Speaker 2>level of Congress. It has to happen at the level

796
01:01:13.159 --> 01:01:21.920
<v Speaker 2>of legislation. It cannot happen by executive order. It cannot

797
01:01:21.960 --> 01:01:25.159
<v Speaker 2>happen at the FDAC. And once you get, for example,

798
01:01:25.159 --> 01:01:29.239
<v Speaker 2>to nineteen thirty three, you would get rid of the

799
01:01:29.320 --> 01:01:32.440
<v Speaker 2>FDAC nineteen thirty three, by getting rid of the nineteen

800
01:01:32.480 --> 01:01:34.800
<v Speaker 2>thirty three securities law, you would get rid of the

801
01:01:35.840 --> 01:01:41.760
<v Speaker 2>deposit insurance. So you would literally repeal these laws. Now,

802
01:01:41.800 --> 01:01:45.400
<v Speaker 2>if there's any aspect of any particular law there was

803
01:01:45.599 --> 01:01:50.519
<v Speaker 2>necessary to preserve in order to protect us from fraud,

804
01:01:51.199 --> 01:01:53.920
<v Speaker 2>that would be in fault. But think about it. Nineteen

805
01:01:53.960 --> 01:01:56.519
<v Speaker 2>thirty four bail repealing that would get rid of the

806
01:01:56.599 --> 01:02:00.480
<v Speaker 2>SEC thirty three would get rid of the FDIC. You'd

807
01:02:00.519 --> 01:02:02.360
<v Speaker 2>have to have something special to get rid of the

808
01:02:02.360 --> 01:02:06.039
<v Speaker 2>OCC because the OCC, which is the Office of Control

809
01:02:06.079 --> 01:02:09.119
<v Speaker 2>of the Councy, is a remnant of a law that

810
01:02:09.199 --> 01:02:13.320
<v Speaker 2>was passed during the during World War, you know, during

811
01:02:13.360 --> 01:02:16.480
<v Speaker 2>the Civil War, so you'd have to have a special

812
01:02:16.559 --> 01:02:17.719
<v Speaker 2>law getting rid of the OCC.

813
01:02:19.440 --> 01:02:21.920
<v Speaker 3>The CFPB would go as part of dot frank.

814
01:02:23.639 --> 01:02:27.639
<v Speaker 2>So as you got rid of these laws, as you

815
01:02:27.719 --> 01:02:32.320
<v Speaker 2>reverse these laws, the regulatory agencies would follow away. And

816
01:02:32.360 --> 01:02:36.719
<v Speaker 2>if you basically did this on a schedule right from

817
01:02:37.000 --> 01:02:39.559
<v Speaker 2>let's say we've got three years start with dot frank,

818
01:02:40.559 --> 01:02:43.480
<v Speaker 2>and then there's some bills in between that you could

819
01:02:43.480 --> 01:02:45.559
<v Speaker 2>degrade rid of that had to do with snls and

820
01:02:45.599 --> 01:02:47.800
<v Speaker 2>other things that you would get rid of, and then

821
01:02:47.840 --> 01:02:51.000
<v Speaker 2>you would ultimately get to the nineteen forties Investment Company Act,

822
01:02:51.440 --> 01:02:55.880
<v Speaker 2>the nineteen thirty four Securities Exchange Act, and the nineteen

823
01:02:55.920 --> 01:02:57.960
<v Speaker 2>thirty three Act, And by the time you ended with

824
01:02:57.960 --> 01:03:03.159
<v Speaker 2>the nineteen thirty three most of banking would be done with.

825
01:03:04.519 --> 01:03:07.519
<v Speaker 2>You'd still have to deal with the fact that you

826
01:03:07.599 --> 01:03:16.599
<v Speaker 2>had a central bank and but you could probably unwind

827
01:03:16.599 --> 01:03:21.719
<v Speaker 2>a over that period as well, and by the end

828
01:03:21.719 --> 01:03:23.760
<v Speaker 2>of this process, by another three years, have a completely

829
01:03:23.760 --> 01:03:30.440
<v Speaker 2>free banking system and a completely unregulated financial industry and

830
01:03:31.320 --> 01:03:34.440
<v Speaker 2>just have a schedule in advance. Let the world don

831
01:03:35.239 --> 01:03:38.800
<v Speaker 2>this is really important. What do you call it? Visibility?

832
01:03:39.199 --> 01:03:44.519
<v Speaker 2>Transparency really really, really crucial in all deregulation, because you

833
01:03:44.599 --> 01:03:46.960
<v Speaker 2>want the market to be able to respond. You want

834
01:03:47.000 --> 01:03:48.920
<v Speaker 2>the market to be able to understand what you're doing,

835
01:03:49.679 --> 01:03:54.039
<v Speaker 2>know exactly when everything's going to happen, and adapt to it.

836
01:03:56.840 --> 01:04:05.679
<v Speaker 2>Adapt to it, right, all right? What am I missing?

837
01:04:05.760 --> 01:04:09.599
<v Speaker 2>What have I not covered? And then you would create

838
01:04:09.800 --> 01:04:21.920
<v Speaker 2>one special entity, the financial Fraud Agency, whose only responsibility was.

839
01:04:23.360 --> 01:04:24.800
<v Speaker 3>Catch financial fought.

840
01:04:25.360 --> 01:04:27.880
<v Speaker 2>And the only reason you'd create a special agency you

841
01:04:27.920 --> 01:04:31.159
<v Speaker 2>wouldn't just be part of the FBI or something, is

842
01:04:31.320 --> 01:04:36.480
<v Speaker 2>because you know, financial fought can be sophisticated, complex and

843
01:04:36.519 --> 01:04:40.840
<v Speaker 2>it requires certain skills to be able to identify fraud

844
01:04:41.360 --> 01:04:45.400
<v Speaker 2>and to be able to prove fraud and persecute fraud.

845
01:04:47.440 --> 01:04:51.719
<v Speaker 2>So that would be that would be the reason you

846
01:04:51.760 --> 01:04:55.880
<v Speaker 2>would That's the one agency you would create as the

847
01:04:56.039 --> 01:05:02.840
<v Speaker 2>sec the fd SC, those cc CFPB, even the various

848
01:05:03.599 --> 01:05:09.239
<v Speaker 2>futures and derivatives. Regulatory agencies would go. Although some of

849
01:05:09.280 --> 01:05:11.960
<v Speaker 2>those were created in a sense by the private sector,

850
01:05:12.039 --> 01:05:16.559
<v Speaker 2>they were created by the exchanges, and they were voluntary,

851
01:05:16.760 --> 01:05:23.639
<v Speaker 2>and you could maybe see some of the things that

852
01:05:23.880 --> 01:05:27.559
<v Speaker 2>maybe the SEC does are now being done by the exchanges,

853
01:05:29.480 --> 01:05:33.239
<v Speaker 2>and maybe they create agencies to monitor at the exchange

854
01:05:33.320 --> 01:05:36.159
<v Speaker 2>level what is happening. But then it's all done voluntarily.

855
01:05:36.440 --> 01:05:39.239
<v Speaker 2>It's all done in the marketplace. It has no involvement

856
01:05:39.239 --> 01:05:45.760
<v Speaker 2>of government. What is the o FAC Office of what?

857
01:05:46.719 --> 01:05:48.639
<v Speaker 2>Tell me what it stands for, and I'll tell you

858
01:05:48.679 --> 01:05:52.840
<v Speaker 2>whether it stays or gone. Almost everything goes. Every alphabet

859
01:05:52.880 --> 01:06:00.400
<v Speaker 2>agency ultimately goes, but except the policing function of government,

860
01:06:01.000 --> 01:06:02.159
<v Speaker 2>which might require.

861
01:06:01.880 --> 01:06:07.360
<v Speaker 3>Special agency just because of the expertise Office of feign

862
01:06:07.440 --> 01:06:10.119
<v Speaker 3>Asset Controls I assume.

863
01:06:10.239 --> 01:06:13.960
<v Speaker 2>So part of this.

864
01:06:15.519 --> 01:06:19.320
<v Speaker 3>Ultimately will also mean god.

865
01:06:19.440 --> 01:06:22.000
<v Speaker 2>I mean, yeah, there's all of those regulations, I mean

866
01:06:22.719 --> 01:06:33.360
<v Speaker 2>sanctions regulations. Ultimately, the answer to that is it should go.

867
01:06:36.199 --> 01:06:41.119
<v Speaker 2>The US government has no right to sanction foreign individuals.

868
01:06:42.719 --> 01:06:44.079
<v Speaker 2>I mean, without a court trial.

869
01:06:44.159 --> 01:06:46.599
<v Speaker 3>It just takes their assets, it just freezes their assets.

870
01:06:46.639 --> 01:06:47.400
<v Speaker 2>By what right.

871
01:06:48.920 --> 01:06:51.199
<v Speaker 3>It can deal with other governments as it sees fit.

872
01:06:52.000 --> 01:06:52.960
<v Speaker 3>But by what right.

873
01:06:52.880 --> 01:06:58.079
<v Speaker 2>Does it actually freeze their assets or particularly individuals. It

874
01:06:58.239 --> 01:07:04.519
<v Speaker 2>seems completely wrong to me. I get the intent penalize

875
01:07:04.559 --> 01:07:08.599
<v Speaker 2>those evil holigogs, but without a court, without a trial,

876
01:07:09.280 --> 01:07:14.679
<v Speaker 2>without any due process, you just take their assets. She

877
01:07:14.719 --> 01:07:17.280
<v Speaker 2>could tell them they're not welcome in the United States

878
01:07:17.760 --> 01:07:20.559
<v Speaker 2>and they could take their assets and invest them somewhere else.

879
01:07:21.000 --> 01:07:24.119
<v Speaker 2>But I don't think a lot of these sanctions are legitimate.

880
01:07:25.519 --> 01:07:29.159
<v Speaker 2>But I would view all of that as something that

881
01:07:29.199 --> 01:07:33.920
<v Speaker 2>relates to phone policy more than it relates to financial regulations.

882
01:07:36.039 --> 01:07:39.760
<v Speaker 2>Now regulations have transfers to in front farm banks. No,

883
01:07:39.960 --> 01:07:42.039
<v Speaker 2>there should be no regulation for that. It's not the

884
01:07:42.079 --> 01:07:42.880
<v Speaker 2>government's business.

885
01:07:43.440 --> 01:07:47.440
<v Speaker 3>Ultimately, money laundering laws should go away.

886
01:07:50.239 --> 01:07:56.639
<v Speaker 2>It's not the job of a bank to monitor the funds,

887
01:07:56.760 --> 01:08:01.400
<v Speaker 2>whether the funds of gangster's funds or in a civilian funds.

888
01:08:03.079 --> 01:08:06.679
<v Speaker 2>None of the bank should not violate privacy laws. The

889
01:08:06.719 --> 01:08:09.480
<v Speaker 2>bank doesn't know if it's a gangster and shouldn't be

890
01:08:09.599 --> 01:08:12.320
<v Speaker 2>required to get information.

891
01:08:13.280 --> 01:08:14.039
<v Speaker 3>To figure it out.

892
01:08:14.840 --> 01:08:18.199
<v Speaker 2>All those laws which are relatively new should go away,

893
01:08:19.000 --> 01:08:23.560
<v Speaker 2>should go away. All the ideas you can't hold money

894
01:08:23.600 --> 01:08:26.359
<v Speaker 2>in a Swiss bank account, you can't put money in

895
01:08:26.399 --> 01:08:27.239
<v Speaker 2>a Caman bank account.

896
01:08:27.279 --> 01:08:32.319
<v Speaker 3>All that should go away, and we can consider.

897
01:08:33.359 --> 01:08:35.399
<v Speaker 2>Tax wise what to do about stuff like that, but

898
01:08:35.439 --> 01:08:38.279
<v Speaker 2>that's a tax policy issue, and all kinds of ways

899
01:08:38.279 --> 01:08:41.039
<v Speaker 2>in which we can make sure that that is minimal

900
01:08:41.920 --> 01:08:55.479
<v Speaker 2>by loading taxes and simplifying the tax code. Right. So yeah,

901
01:08:55.880 --> 01:08:58.880
<v Speaker 2>all right, So first I'm going to ask Alexis if

902
01:08:58.880 --> 01:09:03.279
<v Speaker 2>he's on the chat, if he has anything that he

903
01:09:03.359 --> 01:09:06.479
<v Speaker 2>thinks I haven't covered or anything that I've.

904
01:09:08.560 --> 01:09:09.560
<v Speaker 3>Gone over too quickly.

905
01:09:10.479 --> 01:09:12.520
<v Speaker 2>Uh. One way, as I said, one way to do

906
01:09:12.640 --> 01:09:15.159
<v Speaker 2>regulate finance is to do it by the order by

907
01:09:15.159 --> 01:09:19.199
<v Speaker 2>which the regulations would passed reverse order the latest first,

908
01:09:20.720 --> 01:09:26.199
<v Speaker 2>and do it but importantly, do it on a predetermined,

909
01:09:26.319 --> 01:09:30.000
<v Speaker 2>pre publicized schedule so everybody knows what's coming.

910
01:09:32.279 --> 01:09:32.640
<v Speaker 3>All right.

911
01:09:32.720 --> 01:09:36.279
<v Speaker 2>So if you have any questions around this, any anything

912
01:09:36.319 --> 01:09:41.319
<v Speaker 2>around finance, financial regulations, how they how they unwound all

913
01:09:41.359 --> 01:09:45.479
<v Speaker 2>of that, free for to ask. I'll give those questions

914
01:09:45.520 --> 01:09:49.279
<v Speaker 2>a priority. Let's start with Alexis, and then if Alexis

915
01:09:49.319 --> 01:09:51.239
<v Speaker 2>wants to comments and see sponsored the show. I want

916
01:09:51.279 --> 01:09:53.279
<v Speaker 2>to make sure I covered the material that he wanted

917
01:09:53.279 --> 01:09:56.720
<v Speaker 2>me to cover and whether I went in n f

918
01:09:56.800 --> 01:10:00.640
<v Speaker 2>detail or any of that. Alexis is is the fact

919
01:10:00.680 --> 01:10:04.199
<v Speaker 2>that finance was regulated first related to the larger materialistic

920
01:10:04.279 --> 01:10:09.640
<v Speaker 2>skeptic philosophy philosophical trend, as it is a more abstract

921
01:10:09.680 --> 01:10:16.880
<v Speaker 2>industry and the culture is suspicious of conceptual activities. Yeah,

922
01:10:17.319 --> 01:10:19.439
<v Speaker 2>I mean there's a sense in which that's true. I

923
01:10:19.520 --> 01:10:22.000
<v Speaker 2>think it has to do with a lot of it

924
01:10:22.000 --> 01:10:27.239
<v Speaker 2>has to do with the economic ignorance of the world

925
01:10:27.239 --> 01:10:33.079
<v Speaker 2>of the finance plays. I mean, the country was found

926
01:10:33.119 --> 01:10:38.359
<v Speaker 2>in seventeen seventy six. The understanding of finance in the

927
01:10:38.439 --> 01:10:42.279
<v Speaker 2>late eighteenth century was not very good. There were a

928
01:10:42.279 --> 01:10:49.680
<v Speaker 2>few good thinkers to go in France, Adam Smith, but

929
01:10:49.720 --> 01:10:52.079
<v Speaker 2>none of them really got it. None of them at

930
01:10:52.079 --> 01:10:53.840
<v Speaker 2>a theory of banking. None of them are the three

931
01:10:53.920 --> 01:10:59.000
<v Speaker 2>of banking as it integrates to a monetary theory, a

932
01:10:59.039 --> 01:11:04.000
<v Speaker 2>theory of money. And they didn't really under stand banks,

933
01:11:04.119 --> 01:11:08.079
<v Speaker 2>and they were a little afraid of them. And they

934
01:11:08.159 --> 01:11:12.960
<v Speaker 2>had also seen the banking in Europe and being captured

935
01:11:12.960 --> 01:11:16.680
<v Speaker 2>by the state, so they were worried that big banks

936
01:11:16.680 --> 01:11:21.119
<v Speaker 2>would then be used by a future American state for

937
01:11:21.239 --> 01:11:25.000
<v Speaker 2>status goals, which they have been by the way American

938
01:11:25.039 --> 01:11:28.000
<v Speaker 2>banks have been used like that by the state, the

939
01:11:28.000 --> 01:11:30.119
<v Speaker 2>bigger banks and the smaller banks to do all kinds

940
01:11:30.159 --> 01:11:33.640
<v Speaker 2>of things. Community Reinvestment Acts is another one that would

941
01:11:33.680 --> 01:11:36.560
<v Speaker 2>be gone right if you went back, you know, all

942
01:11:36.600 --> 01:11:38.239
<v Speaker 2>the different So you'd have to get rid of the

943
01:11:38.239 --> 01:11:41.800
<v Speaker 2>Community of Investment Act as part of the process. That

944
01:11:41.840 --> 01:11:45.479
<v Speaker 2>would that would that you could do. That's the kind

945
01:11:45.560 --> 01:11:48.520
<v Speaker 2>of thing you could do day one. That's the kind

946
01:11:48.600 --> 01:11:50.800
<v Speaker 2>of act that you could get rid of first one

947
01:11:50.840 --> 01:12:08.239
<v Speaker 2>hundred days. So I think the hostility towards finance came

948
01:12:08.279 --> 01:12:13.600
<v Speaker 2>from one a deep lack of understanding of it. And

949
01:12:13.640 --> 01:12:17.680
<v Speaker 2>then as we go through the nineteenth century, there is

950
01:12:17.720 --> 01:12:22.960
<v Speaker 2>an ever growing suspicion of capitalism, an ever going suspicion

951
01:12:22.960 --> 01:12:27.039
<v Speaker 2>of conceptual activity, but also just of capitalism, and ever.

952
01:12:26.880 --> 01:12:29.720
<v Speaker 3>Going suspicion of freedom.

953
01:12:29.880 --> 01:12:32.359
<v Speaker 2>So as we get further away from the founding, a

954
01:12:32.479 --> 01:12:35.680
<v Speaker 2>further away from the Enlightenment, it becomes more and more

955
01:12:35.720 --> 01:12:44.199
<v Speaker 2>difficult to justify, explain, understand the role of freedom and

956
01:12:44.199 --> 01:12:45.880
<v Speaker 2>the role of free markets, and the role of free

957
01:12:45.920 --> 01:12:49.920
<v Speaker 2>markets as they apply to finance in the world out there.

958
01:12:51.560 --> 01:12:55.279
<v Speaker 2>And therefore more and more and more regulations are loaded

959
01:12:55.319 --> 01:13:08.880
<v Speaker 2>on without really anybody arguing against them, partially because there

960
01:13:09.000 --> 01:13:13.359
<v Speaker 2>was partly because there was no economic defense of finance

961
01:13:13.920 --> 01:13:17.399
<v Speaker 2>and partly because there was no moral defensive finance, and

962
01:13:17.439 --> 01:13:21.840
<v Speaker 2>partially because, as you say, there was no conceptual There

963
01:13:21.880 --> 01:13:28.520
<v Speaker 2>was no trust in this abstract value creation, and they

964
01:13:28.560 --> 01:13:31.760
<v Speaker 2>all integrate. People just people don't understand because they don't

965
01:13:31.760 --> 01:13:34.560
<v Speaker 2>want to understand. People don't understand because they're suspicious of

966
01:13:38.479 --> 01:13:43.319
<v Speaker 2>all driven by Roden philosophy that spreads during the nineteenth

967
01:13:43.399 --> 01:13:49.600
<v Speaker 2>century through Europe and then into the United States. So

968
01:13:51.079 --> 01:13:54.000
<v Speaker 2>it was regulated first because it was the least understood

969
01:13:54.640 --> 01:14:04.159
<v Speaker 2>and the least appreciated activity of all economic activities. Uh, Andrew,

970
01:14:05.000 --> 01:14:09.159
<v Speaker 2>Are the crusaders for regulation, like Elizabeth Wann, intellectually honest,

971
01:14:09.800 --> 01:14:12.920
<v Speaker 2>even in the sense of being honestly blinded by altruism?

972
01:14:13.319 --> 01:14:15.439
<v Speaker 3>Or are they motivated by nihilism and envy?

973
01:14:17.640 --> 01:14:21.640
<v Speaker 2>Well, I think that's a false alternative, right. I think

974
01:14:21.640 --> 01:14:26.199
<v Speaker 2>they're fundamentally dishonest because they're evading, But I don't think

975
01:14:26.239 --> 01:14:30.520
<v Speaker 2>that they are motivated by an explosit nihilistic motivation. That is,

976
01:14:30.840 --> 01:14:36.880
<v Speaker 2>Elizabeth want does not want to see our economy burned.

977
01:14:37.800 --> 01:14:40.880
<v Speaker 2>It does not. She does not want to see it destroyed.

978
01:14:40.880 --> 01:14:44.199
<v Speaker 2>That's not what she holds in her mind as her motivation.

979
01:14:46.199 --> 01:14:51.600
<v Speaker 2>She holds in her mind that look at a disaster,

980
01:14:52.119 --> 01:14:56.920
<v Speaker 2>look at inequality, look at how unfair it is. Look

981
01:14:56.920 --> 01:15:01.239
<v Speaker 2>at how finance discriminates. Look at how it perpetuates the

982
01:15:01.319 --> 01:15:03.359
<v Speaker 2>rich being the rich and it doesn't help the poor.

983
01:15:04.439 --> 01:15:07.600
<v Speaker 2>Look at how ill informed people are about finance, and

984
01:15:07.680 --> 01:15:12.119
<v Speaker 2>yet they're expected to participate in the game. I'm going

985
01:15:12.199 --> 01:15:16.920
<v Speaker 2>to correct that by regulating and enforcing disclosure and making

986
01:15:16.960 --> 01:15:21.439
<v Speaker 2>it fairer. And So I don't think that's honest in

987
01:15:21.439 --> 01:15:23.640
<v Speaker 2>a sense that to come to all those conclusions, she

988
01:15:23.720 --> 01:15:28.680
<v Speaker 2>has to evade. The evasion, if you will, is motivated

989
01:15:28.720 --> 01:15:32.880
<v Speaker 2>by altruism. That is true. So I think she's dishonest

990
01:15:33.000 --> 01:15:37.239
<v Speaker 2>without being nihilistic. I don't think her motivation is nihilistic,

991
01:15:41.159 --> 01:15:49.439
<v Speaker 2>but she's definitely guided by dishonesty, by evasion, and by

992
01:15:50.079 --> 01:15:57.119
<v Speaker 2>suddenly any galitarian like attitude towards life, towards economics at least.

993
01:15:59.359 --> 01:16:04.800
<v Speaker 2>All right, Thank Wes. Thank you for the fifty dollars sticker. Gail,

994
01:16:04.880 --> 01:16:08.359
<v Speaker 2>thank you for the sticker. I think I saw another

995
01:16:08.399 --> 01:16:11.359
<v Speaker 2>fifty dollars here. Yeah, Adri Adri, thank you for the

996
01:16:11.359 --> 01:16:13.760
<v Speaker 2>fifty dollars sticker. I really appreciate that. Mike, thank you

997
01:16:13.800 --> 01:16:16.119
<v Speaker 2>for the twenty dollars sticker, So thank you to all

998
01:16:16.119 --> 01:16:18.840
<v Speaker 2>the stickers, all the supporters of the show really really

999
01:16:18.880 --> 01:16:21.560
<v Speaker 2>appreciate that. Of course, most of our thanks my thanks

1000
01:16:21.560 --> 01:16:27.800
<v Speaker 2>today to Alexis who sponsored this show, who I don't

1001
01:16:27.840 --> 01:16:30.039
<v Speaker 2>think is on the Chat anymore, but I'm sure we'll

1002
01:16:30.079 --> 01:16:32.800
<v Speaker 2>listen to the show later on. Okay, David fifty dollars question,

1003
01:16:34.199 --> 01:16:38.960
<v Speaker 2>based on the premise that regulation attempts protects the uneducated,

1004
01:16:39.720 --> 01:16:44.279
<v Speaker 2>does the ubiquitous availability of AI help close the education gap?

1005
01:16:44.800 --> 01:16:50.640
<v Speaker 2>Does it introduce the capacity of regulation of consumer maybe

1006
01:16:50.680 --> 01:16:58.840
<v Speaker 2>self regulation. I mean, it's certainly another tool that's available

1007
01:16:59.000 --> 01:17:05.359
<v Speaker 2>very cheaply to investors and the public to educate themselves

1008
01:17:06.279 --> 01:17:11.680
<v Speaker 2>about what they are doing. So to the extent that

1009
01:17:11.760 --> 01:17:15.000
<v Speaker 2>people are concerned about uneducated investors, I don't think that's

1010
01:17:15.039 --> 01:17:17.640
<v Speaker 2>ever really been the case. I don't think any regulation

1011
01:17:17.760 --> 01:17:23.479
<v Speaker 2>is actually really sincerely motivated by that. Going back to

1012
01:17:23.960 --> 01:17:29.439
<v Speaker 2>Elizabeth One, Elizabeth One primarily is motivated by altruism and power.

1013
01:17:31.239 --> 01:17:34.119
<v Speaker 3>She wants control, She wants government to have control.

1014
01:17:34.199 --> 01:17:38.720
<v Speaker 2>She believes in government control. She rationalizes that through these

1015
01:17:38.800 --> 01:17:42.479
<v Speaker 2>kind of explanations about educated the uneducated masses.

1016
01:17:43.720 --> 01:17:49.840
<v Speaker 3>But yes, AI has the potential to close the education gap.

1017
01:17:49.880 --> 01:17:53.479
<v Speaker 2>To make it cheap and easy for people to get

1018
01:17:53.640 --> 01:18:02.680
<v Speaker 2>educated about finance, about you know, complex issues, complex things.

1019
01:18:05.279 --> 01:18:07.680
<v Speaker 2>But the question is, well, they use them those tools,

1020
01:18:08.720 --> 01:18:11.600
<v Speaker 2>and as long as the government, as.

1021
01:18:11.439 --> 01:18:14.920
<v Speaker 3>Long as the attitude is they have you.

1022
01:18:14.880 --> 01:18:18.399
<v Speaker 2>Know, it's out, we cannot let them trade unless they're educated.

1023
01:18:20.239 --> 01:18:23.680
<v Speaker 2>Then the government is never going to trust the people

1024
01:18:23.720 --> 01:18:27.000
<v Speaker 2>to educate themselves and will always impose some form of

1025
01:18:27.079 --> 01:18:31.800
<v Speaker 2>regulation if only well, you have to take this ten

1026
01:18:31.840 --> 01:18:34.319
<v Speaker 2>hour course with an AI before you can make an investment,

1027
01:18:35.520 --> 01:18:37.640
<v Speaker 2>like all the investment advisive requirements.

1028
01:18:37.640 --> 01:18:39.800
<v Speaker 3>For example, for me to advise.

1029
01:18:39.479 --> 01:18:41.920
<v Speaker 2>You, I have to get I have to I have

1030
01:18:41.960 --> 01:18:48.239
<v Speaker 2>to get you know, trained, although that would also go away,

1031
01:18:48.319 --> 01:18:50.119
<v Speaker 2>by the way, when we deregulated.

1032
01:18:50.800 --> 01:18:53.800
<v Speaker 3>So I think they've always been tools.

1033
01:18:55.319 --> 01:18:57.800
<v Speaker 2>I've always been ways by which but it's true that

1034
01:18:57.880 --> 01:19:03.680
<v Speaker 2>technology is making those tools cheap, tools cheaper, more available, easier,

1035
01:19:04.640 --> 01:19:08.279
<v Speaker 2>and the excuses that these tools are not available to

1036
01:19:08.279 --> 01:19:12.279
<v Speaker 2>me go away. Now what about then the next level,

1037
01:19:12.680 --> 01:19:15.880
<v Speaker 2>which is the government saying they might have the tool

1038
01:19:15.920 --> 01:19:22.239
<v Speaker 2>to educate themselves, but they're just too stupid, they're not

1039
01:19:22.319 --> 01:19:23.000
<v Speaker 2>smart enough.

1040
01:19:23.680 --> 01:19:25.840
<v Speaker 3>We're trying to protect people from their low IQ.

1041
01:19:28.960 --> 01:19:32.159
<v Speaker 2>I don't know what you do about that, maybe that

1042
01:19:32.279 --> 01:19:34.319
<v Speaker 2>chip in the brain that Elon Musk is.

1043
01:19:34.319 --> 01:19:36.159
<v Speaker 3>Working on to make them smarter.

1044
01:19:37.359 --> 01:19:41.760
<v Speaker 2>But people will always find excuses to justify the regulation.

1045
01:19:44.640 --> 01:19:47.760
<v Speaker 2>So I don't I never I don't think it was

1046
01:19:47.840 --> 01:19:52.760
<v Speaker 2>ever about the uneducated, unknowledgeable mass masses.

1047
01:19:53.439 --> 01:19:54.960
<v Speaker 3>I think that was just a rationalization.

1048
01:19:55.760 --> 01:19:59.600
<v Speaker 2>I think AI makes that less credible in the sense

1049
01:19:59.600 --> 01:20:03.640
<v Speaker 2>that everybod but he now has access to this, the government,

1050
01:20:04.079 --> 01:20:08.079
<v Speaker 2>the authorities, the regularities will just find another excuse, another rationalization,

1051
01:20:09.239 --> 01:20:12.680
<v Speaker 2>and partially as people are too stupid to understand what

1052
01:20:12.760 --> 01:20:17.560
<v Speaker 2>AI teaches them. Thank you, David, thank you for the

1053
01:20:17.600 --> 01:20:22.399
<v Speaker 2>fifty dollars. Really really appreciate the support. Barbara, thank you

1054
01:20:22.479 --> 01:20:25.880
<v Speaker 2>for the Thank you for the sticker. Incredible, thank you.

1055
01:20:27.920 --> 01:20:31.600
<v Speaker 2>All right, let's go over some of these.

1056
01:20:33.720 --> 01:20:37.279
<v Speaker 3>A nascent, what do you think?

1057
01:20:38.880 --> 01:20:41.520
<v Speaker 2>Wait a minute, let's let's wait on that. That's Brazil,

1058
01:20:43.960 --> 01:20:51.920
<v Speaker 2>that's the UN. Andrews says. I know, regulatory capture is real,

1059
01:20:52.720 --> 01:20:56.239
<v Speaker 2>but it's too often used as a smea against big business.

1060
01:20:56.720 --> 01:20:58.600
<v Speaker 2>The government has a gun to their heads, what are

1061
01:20:58.600 --> 01:21:02.119
<v Speaker 2>they supposed to do? But absolutely, and you know Dot

1062
01:21:02.159 --> 01:21:04.680
<v Speaker 2>Fank is a good example of this. Dot Fank was

1063
01:21:04.760 --> 01:21:09.199
<v Speaker 2>this law there was passed as a shell handed over

1064
01:21:09.239 --> 01:21:13.359
<v Speaker 2>to regulators and said fill in the content of the regulations.

1065
01:21:15.399 --> 01:21:20.720
<v Speaker 2>And now it's hard and it's complicated. So the regulators

1066
01:21:20.720 --> 01:21:23.600
<v Speaker 2>went to the bankers and said, okay, let's figure out

1067
01:21:23.640 --> 01:21:27.000
<v Speaker 2>what you'ld be in here. And you could say, oh,

1068
01:21:27.119 --> 01:21:29.319
<v Speaker 2>this is completely captured, and it is to some extent,

1069
01:21:29.800 --> 01:21:36.159
<v Speaker 2>but they're going to be controlled. A gun is pointed

1070
01:21:36.199 --> 01:21:40.159
<v Speaker 2>at them, and they want to minimize the damage. And

1071
01:21:40.800 --> 01:21:43.800
<v Speaker 2>does that include protecting themselves against competitions.

1072
01:21:43.800 --> 01:21:48.199
<v Speaker 3>Sure, but the fault is with Congress and the regulators.

1073
01:21:49.199 --> 01:21:56.399
<v Speaker 2>And you know, regulator capture is inevitable in every regulatory regime,

1074
01:21:57.279 --> 01:21:59.439
<v Speaker 2>possibly because regulators are not smart enough and they have

1075
01:21:59.479 --> 01:22:03.680
<v Speaker 2>to have industry inputs, and it you know, sometimes it

1076
01:22:03.760 --> 01:22:07.920
<v Speaker 2>happens through explicit fraud. It's through explicit what do you

1077
01:22:07.960 --> 01:22:12.159
<v Speaker 2>call it corruption? Sometimes the corruption is more implicit. I'll

1078
01:22:12.239 --> 01:22:15.840
<v Speaker 2>hire you when you leave your regulatory job. I'll give

1079
01:22:15.840 --> 01:22:19.399
<v Speaker 2>you a nice salary then, and it's never even spoken,

1080
01:22:19.439 --> 01:22:26.199
<v Speaker 2>it's just implied. So regulatory capture is a feature, not

1081
01:22:26.319 --> 01:22:30.720
<v Speaker 2>a bug of regulation. It's a feature not a bug

1082
01:22:31.319 --> 01:22:34.199
<v Speaker 2>of regulation. You want to get rid of regulatory capture,

1083
01:22:34.720 --> 01:22:39.399
<v Speaker 2>get rid of regulation and don't blame the business, blame

1084
01:22:39.479 --> 01:22:47.079
<v Speaker 2>the government. Megan says Peter. Welcome home, love Wow. Not

1085
01:22:47.399 --> 01:22:54.720
<v Speaker 2>not in a no puzzle, no, no clever rhyming, just

1086
01:22:54.760 --> 01:23:01.279
<v Speaker 2>straight out there, We'll come home all right, Matches.

1087
01:23:01.319 --> 01:23:02.720
<v Speaker 3>How does the Great Depression factor in?

1088
01:23:02.800 --> 01:23:06.439
<v Speaker 2>Is regulation necessary because economic collapse like this as possible

1089
01:23:06.680 --> 01:23:10.479
<v Speaker 2>or does regulation cause a collapse? Well, in this sense,

1090
01:23:10.600 --> 01:23:15.439
<v Speaker 2>neither right, So, but something causes the collapse. So the

1091
01:23:15.560 --> 01:23:19.079
<v Speaker 2>pattern is, and this is true of the Great Depression,

1092
01:23:20.279 --> 01:23:25.800
<v Speaker 2>some government action, some government control, causes a collapse. That's

1093
01:23:25.840 --> 01:23:30.720
<v Speaker 2>what happened to Great Depression. The Federals of his mismanagement, suit, Holly,

1094
01:23:31.039 --> 01:23:36.520
<v Speaker 2>raising taxes, all of that caused the Great Depression. Biggest

1095
01:23:36.640 --> 01:23:43.560
<v Speaker 2>villain there was the federers of and the tariffs, teriffs right,

1096
01:23:43.840 --> 01:23:46.960
<v Speaker 2>restrictions on trade.

1097
01:23:47.359 --> 01:23:53.279
<v Speaker 3>But the world, the intellectuals, many economists blame the stock.

1098
01:23:53.039 --> 01:23:57.079
<v Speaker 2>Market for the collapse. So the response to collapse is

1099
01:23:57.079 --> 01:23:59.439
<v Speaker 2>not to get rid of the fed. The response to

1100
01:23:59.479 --> 01:24:04.760
<v Speaker 2>collapse is to regulate finance because they're blamed for it.

1101
01:24:06.199 --> 01:24:09.079
<v Speaker 2>So then you have a massive quantity of regulations nineteen

1102
01:24:09.119 --> 01:24:15.199
<v Speaker 2>thirty three bill, nineteen thirty four bill. All you know, really,

1103
01:24:16.359 --> 01:24:20.039
<v Speaker 2>with the perspective of this is to prevent the great

1104
01:24:20.520 --> 01:24:25.640
<v Speaker 2>the next great depression, because these institutions, stock markets, banks

1105
01:24:25.680 --> 01:24:29.960
<v Speaker 2>caused the Great Depression. They didn't. Nobody today thinks they did.

1106
01:24:30.399 --> 01:24:35.479
<v Speaker 2>They didn't. But it's a great opportunity for don't let

1107
01:24:35.520 --> 01:24:39.239
<v Speaker 2>a good crisis go to waste. Let's regulate, that's control,

1108
01:24:39.399 --> 01:24:43.760
<v Speaker 2>let's increase our power. Then these new regulations cause some

1109
01:24:43.840 --> 01:24:47.520
<v Speaker 2>crisis in the future. In the case of the thirty three,

1110
01:24:47.600 --> 01:24:54.039
<v Speaker 2>thirty four, and forty regulations, they caused the crisis sixty

1111
01:24:54.119 --> 01:24:57.359
<v Speaker 2>years sixty four years later in two thousand and eight.

1112
01:24:58.359 --> 01:25:03.439
<v Speaker 2>They caused a great financial crisis. I mean, other things helped,

1113
01:25:04.479 --> 01:25:05.960
<v Speaker 2>you know, but they did. I mean, if you think

1114
01:25:06.000 --> 01:25:09.359
<v Speaker 2>about those laws also created Freddy and Fanny, or at

1115
01:25:09.479 --> 01:25:13.199
<v Speaker 2>least Freddy those oh maybe it was Fanny. I can't

1116
01:25:13.199 --> 01:25:15.319
<v Speaker 2>remember which one came first. Anyway, they created one of those.

1117
01:25:15.720 --> 01:25:18.960
<v Speaker 2>They created the whole mortgage industry, They created snls, they

1118
01:25:18.960 --> 01:25:24.520
<v Speaker 2>created the whole thirty year mortgage idea. The regulations created

1119
01:25:24.760 --> 01:25:28.039
<v Speaker 2>the setup for the two thousand and eight great financial

1120
01:25:28.079 --> 01:25:33.560
<v Speaker 2>crisis that happens. The blame is not then placed on

1121
01:25:33.600 --> 01:25:37.000
<v Speaker 2>those ancient regulations that caused it. The blame is not

1122
01:25:37.079 --> 01:25:40.800
<v Speaker 2>placed on oh no, it's the freedom that was left

1123
01:25:42.000 --> 01:25:46.439
<v Speaker 2>in the gaps between those regulations. I don't know what

1124
01:25:46.479 --> 01:25:52.319
<v Speaker 2>overheating is. So you get dot Frank twenty ten, which

1125
01:25:52.439 --> 01:25:57.319
<v Speaker 2>is supposed to close these but dot Fank creates basically

1126
01:25:57.399 --> 01:26:00.479
<v Speaker 2>the framework for the Knicks crisis, and to some extent,

1127
01:26:00.920 --> 01:26:04.239
<v Speaker 2>all of these regulations created the SNL crisis of the

1128
01:26:04.279 --> 01:26:08.960
<v Speaker 2>nineteen eighties and created the failure of Silicon Valley Bank

1129
01:26:09.079 --> 01:26:12.199
<v Speaker 2>and the crisis that that created a couple of years ago.

1130
01:26:13.199 --> 01:26:19.000
<v Speaker 2>All of that is part of these ancient regulations. So

1131
01:26:19.239 --> 01:26:22.800
<v Speaker 2>they might create stability for a little while, ultimately they

1132
01:26:22.840 --> 01:26:26.479
<v Speaker 2>cause damage, and the damage is always blamed not on

1133
01:26:26.520 --> 01:26:29.239
<v Speaker 2>the regulation but on the market, on that element that

1134
01:26:29.359 --> 01:26:32.199
<v Speaker 2>is still free.

1135
01:26:34.279 --> 01:26:36.039
<v Speaker 3>So that's the way it happens.

1136
01:26:36.119 --> 01:26:39.720
<v Speaker 2>Regulations called depressions, which lead to more regulations, which cause

1137
01:26:40.119 --> 01:26:44.439
<v Speaker 2>more crises, which leads to more regulations with caused more crises,

1138
01:26:44.439 --> 01:26:47.560
<v Speaker 2>which leads some more regulations, and on and on and

1139
01:26:47.600 --> 01:27:02.640
<v Speaker 2>on it goes. Okay, Henrick says, why was the first

1140
01:27:02.640 --> 01:27:04.840
<v Speaker 2>bank of the United States followed with the Bank of

1141
01:27:04.880 --> 01:27:09.720
<v Speaker 2>North America. Fine, as created by Congress, it should so

1142
01:27:10.159 --> 01:27:15.520
<v Speaker 2>was the first bank of the United States following followed

1143
01:27:15.560 --> 01:27:18.279
<v Speaker 2>with the Bank of North America fine as created by

1144
01:27:18.319 --> 01:27:20.359
<v Speaker 2>Congress and should not have been ended.

1145
01:27:24.319 --> 01:27:29.000
<v Speaker 3>No, it was not fine.

1146
01:27:29.399 --> 01:27:36.760
<v Speaker 2>They had way too much federal government involvement. What was

1147
01:27:37.079 --> 01:27:42.399
<v Speaker 2>fine about them is that they were attempts to create

1148
01:27:43.319 --> 01:27:49.319
<v Speaker 2>a national charter for a bank versus the way banking

1149
01:27:49.680 --> 01:27:55.840
<v Speaker 2>was really until nineteen ninety four, which was state charted.

1150
01:27:55.920 --> 01:27:59.239
<v Speaker 2>Everything was at the state level, which created a fragmented

1151
01:27:59.319 --> 01:28:04.880
<v Speaker 2>and fragile banking system in the United States. So what

1152
01:28:05.119 --> 01:28:07.560
<v Speaker 2>should have happened is that the First Bank of the

1153
01:28:07.640 --> 01:28:12.439
<v Speaker 2>United States and should have been just a model charter

1154
01:28:13.119 --> 01:28:17.520
<v Speaker 2>for a for a charter for a US bank that

1155
01:28:17.600 --> 01:28:21.279
<v Speaker 2>could have branches and operate anywhere in the US with

1156
01:28:21.479 --> 01:28:27.039
<v Speaker 2>no straight state restrictions on it. It should have been

1157
01:28:27.439 --> 01:28:31.680
<v Speaker 2>divorced from the government, which from the federal government, which

1158
01:28:31.760 --> 01:28:33.840
<v Speaker 2>the First Bank of the United States was not. It

1159
01:28:34.000 --> 01:28:36.960
<v Speaker 2>functioned as the lender to the to the.

1160
01:28:37.039 --> 01:28:38.439
<v Speaker 3>To the to the to the government.

1161
01:28:39.199 --> 01:28:42.640
<v Speaker 2>It you know, it's the bonds counted as reserves. It

1162
01:28:42.720 --> 01:28:45.359
<v Speaker 2>was very I don't have all the details, but it

1163
01:28:45.439 --> 01:28:49.960
<v Speaker 2>was very much acted like a pseudo central bank, and

1164
01:28:50.000 --> 01:28:51.520
<v Speaker 2>that shouldn't have happened.

1165
01:28:51.800 --> 01:28:53.079
<v Speaker 3>They should have been competition.

1166
01:28:53.600 --> 01:28:55.520
<v Speaker 2>Anybody should have been allowed to open a bank, and

1167
01:28:55.520 --> 01:28:58.600
<v Speaker 2>they should have been able to get a national charter

1168
01:28:58.880 --> 01:29:02.680
<v Speaker 2>which would have allowed several national banks to compete with

1169
01:29:02.680 --> 01:29:06.479
<v Speaker 2>one another, rather than just one, which basically acts like

1170
01:29:06.520 --> 01:29:20.800
<v Speaker 2>a central bank. All right, so let's go back to

1171
01:29:20.840 --> 01:29:24.720
<v Speaker 2>the questions these and have questions unrelated to bank regulation

1172
01:29:24.920 --> 01:29:30.880
<v Speaker 2>or deregulation a necessan. What do you think about the

1173
01:29:30.920 --> 01:29:33.359
<v Speaker 2>economic situation here in Brazilian about the Brazilians if you

1174
01:29:33.479 --> 01:29:36.600
<v Speaker 2>quote trying to regulate control social media, what do you

1175
01:29:36.600 --> 01:29:39.800
<v Speaker 2>suggest we do to improve this situation? Well, I mean

1176
01:29:39.880 --> 01:29:43.960
<v Speaker 2>what you need to do is elect a Milay like

1177
01:29:44.079 --> 01:29:49.680
<v Speaker 2>president and a Milay you know liking Congress. You need

1178
01:29:49.720 --> 01:29:52.560
<v Speaker 2>to completely restructure the Brazilian economy. The Brazilian economy is

1179
01:29:52.560 --> 01:29:58.079
<v Speaker 2>a disaster. It's overly controlled, overly regulated, overly taxed, overly

1180
01:29:58.159 --> 01:30:01.840
<v Speaker 2>owned by the you know, too much government ownership of

1181
01:30:01.880 --> 01:30:05.920
<v Speaker 2>the means of production. Uh, it's too corrupt, too much

1182
01:30:05.960 --> 01:30:11.279
<v Speaker 2>corruption being facilitated. The Supreme Court needs to be newted.

1183
01:30:11.720 --> 01:30:14.600
<v Speaker 2>It has way too much power. It needs to be

1184
01:30:14.720 --> 01:30:17.159
<v Speaker 2>like the Supreme Court of the United States. It should

1185
01:30:17.199 --> 01:30:20.800
<v Speaker 2>not be a supreme court that actually can go out

1186
01:30:20.920 --> 01:30:23.680
<v Speaker 2>and basically write their own laws, which is what the

1187
01:30:23.680 --> 01:30:24.880
<v Speaker 2>Brazilian Supreme Court.

1188
01:30:24.680 --> 01:30:25.279
<v Speaker 3>Is doing.

1189
01:30:26.800 --> 01:30:31.600
<v Speaker 2>So. Brazil needs a massive restructuring of its economy and

1190
01:30:31.640 --> 01:30:35.920
<v Speaker 2>of its political structure, and that's going to require a

1191
01:30:35.960 --> 01:30:39.680
<v Speaker 2>major revolution in thinking, and it's going to require somebody

1192
01:30:40.000 --> 01:30:45.600
<v Speaker 2>like Melay to really shake things up and redo, rethink

1193
01:30:47.560 --> 01:30:54.079
<v Speaker 2>what's going on, Anmerkat, should you support turning the UN

1194
01:30:54.159 --> 01:30:58.119
<v Speaker 2>building into a Trump hotel? If that's the price of

1195
01:30:58.239 --> 01:31:01.560
<v Speaker 2>having the UN kicked out of the US? Gods that

1196
01:31:01.680 --> 01:31:05.239
<v Speaker 2>must be destroyed, sure, I'd support the UN building. I'd

1197
01:31:05.239 --> 01:31:08.199
<v Speaker 2>support the UN being kicked out of the US. And

1198
01:31:08.520 --> 01:31:11.640
<v Speaker 2>if we have to pay Trump or Bride by giving

1199
01:31:11.680 --> 01:31:15.760
<v Speaker 2>him the property, that's a cheap price to pay in

1200
01:31:15.840 --> 01:31:21.279
<v Speaker 2>order to get rid of the UN. Fank I know,

1201
01:31:22.600 --> 01:31:27.399
<v Speaker 2>I know you like Renaissance. The group Renaissance. The bass

1202
01:31:27.399 --> 01:31:31.680
<v Speaker 2>player John camp just died. Also can explain the Cave

1203
01:31:31.960 --> 01:31:40.560
<v Speaker 2>of the Patriarchs massacre. Who was both Goldstein God. I

1204
01:31:40.560 --> 01:31:43.760
<v Speaker 2>don't remember the details of that, but Goldstein was some

1205
01:31:44.119 --> 01:31:50.560
<v Speaker 2>He was a religious nationalist nutcase who, if I remember right,

1206
01:31:50.680 --> 01:31:54.680
<v Speaker 2>came into a place of worship. I think this is

1207
01:31:54.760 --> 01:31:57.239
<v Speaker 2>during the Second inter Faught US in the early two thousands,

1208
01:31:57.800 --> 01:32:01.680
<v Speaker 2>when buses and were blowing up all over the place.

1209
01:32:01.680 --> 01:32:05.640
<v Speaker 2>And Israelis were being killed regularly by Palestinian terrorists and

1210
01:32:05.800 --> 01:32:08.920
<v Speaker 2>just shot up a bunch of people who were praying

1211
01:32:08.960 --> 01:32:14.800
<v Speaker 2>and killed a lot of people, and you know, land

1212
01:32:14.840 --> 01:32:19.920
<v Speaker 2>up I think being arrested and put in jail, you know,

1213
01:32:19.960 --> 01:32:23.119
<v Speaker 2>So that is the massacre I think. And yeah, it

1214
01:32:23.159 --> 01:32:28.640
<v Speaker 2>was a horpable act of murder of terrorism, and you know,

1215
01:32:28.800 --> 01:32:33.239
<v Speaker 2>he should have been put in jail and the keys

1216
01:32:33.239 --> 01:32:35.880
<v Speaker 2>thrown away. And I think that's actually what happened, unless

1217
01:32:35.880 --> 01:32:39.079
<v Speaker 2>he was killed. I can't remember, but yeah, I mean

1218
01:32:39.319 --> 01:32:41.640
<v Speaker 2>there are nutcases on the side of Israel as well,

1219
01:32:42.119 --> 01:32:43.760
<v Speaker 2>but that is not the rule.

1220
01:32:43.840 --> 01:32:44.600
<v Speaker 3>That is the exception.

1221
01:32:47.279 --> 01:32:49.960
<v Speaker 2>Michael says, I'm saving my mega questions for the end

1222
01:32:50.000 --> 01:32:52.560
<v Speaker 2>of the month Q and A show and the New

1223
01:32:52.640 --> 01:32:53.600
<v Speaker 2>Year Eve show.

1224
01:32:54.600 --> 01:32:56.680
<v Speaker 3>Okay, thanks Michael.

1225
01:32:58.760 --> 01:33:03.640
<v Speaker 2>Andrew. Why wouldn't selfishness entail using the government to wield

1226
01:33:03.720 --> 01:33:09.239
<v Speaker 2>regulation for one's own interest, because it's never in one's

1227
01:33:09.239 --> 01:33:13.039
<v Speaker 2>own interest to have the government wield force.

1228
01:33:15.239 --> 01:33:15.680
<v Speaker 3>The goverment.

1229
01:33:15.760 --> 01:33:20.079
<v Speaker 2>Wielding forces is a granting of arbitrary force to the

1230
01:33:20.079 --> 01:33:22.600
<v Speaker 2>government which is going to be wielded against you in

1231
01:33:22.640 --> 01:33:27.640
<v Speaker 2>one way or the other. And it harms your self

1232
01:33:27.760 --> 01:33:32.159
<v Speaker 2>esteem to know that you are being successful because let's

1233
01:33:32.159 --> 01:33:34.439
<v Speaker 2>say you've managed to get the government to wield force

1234
01:33:34.479 --> 01:33:41.479
<v Speaker 2>against your competitor. See, you are now damaging your own recognition,

1235
01:33:41.560 --> 01:33:46.800
<v Speaker 2>your own knowledge of your own productive ability, and you

1236
01:33:46.920 --> 01:33:49.119
<v Speaker 2>now know that you're a failure, that you can only

1237
01:33:49.159 --> 01:33:53.399
<v Speaker 2>be successful by wielding force. Basically, the government wielding force

1238
01:33:53.439 --> 01:33:56.279
<v Speaker 2>on your behalf is like you wielding force. It's the

1239
01:33:56.279 --> 01:33:58.600
<v Speaker 2>same reason why it's not in yourself interest. A light

1240
01:33:58.680 --> 01:34:03.680
<v Speaker 2>cheat and steel, It basically is an acknowledgment by yourself

1241
01:34:04.399 --> 01:34:09.359
<v Speaker 2>that you cannot incapable of using reason to survive, and

1242
01:34:09.439 --> 01:34:16.279
<v Speaker 2>therefore incapable living a life of a human being, that

1243
01:34:16.399 --> 01:34:18.800
<v Speaker 2>you have to revert to being an animal in order

1244
01:34:18.800 --> 01:34:21.920
<v Speaker 2>to survive. That's what it means to use the government

1245
01:34:22.119 --> 01:34:25.560
<v Speaker 2>to wield force against your competitors, let's say. And that

1246
01:34:25.840 --> 01:34:30.359
<v Speaker 2>is never in yourself interest. Not to mention the fact

1247
01:34:30.600 --> 01:34:33.600
<v Speaker 2>that once you give the government the power to use

1248
01:34:33.640 --> 01:34:36.159
<v Speaker 2>force against competitor, you're giving them the power to use

1249
01:34:36.159 --> 01:34:42.239
<v Speaker 2>force against you. Andrew, what do you think of this

1250
01:34:42.359 --> 01:34:44.600
<v Speaker 2>notion that Elon is politically active in order to help

1251
01:34:44.640 --> 01:34:46.119
<v Speaker 2>his businesses gain advantage.

1252
01:34:47.199 --> 01:34:52.560
<v Speaker 3>I mean, I don't think that is most of what's

1253
01:34:52.600 --> 01:34:53.239
<v Speaker 3>going on here.

1254
01:34:54.000 --> 01:34:58.680
<v Speaker 2>I don't think that is what dominates Ellen's thinking. I

1255
01:34:58.720 --> 01:35:01.600
<v Speaker 2>don't think that's dominates his incentive. I think he thinks

1256
01:35:01.640 --> 01:35:04.000
<v Speaker 2>it's fun. I think he has a certain belief that

1257
01:35:04.039 --> 01:35:07.800
<v Speaker 2>this is good for the country, that this is his responsibility.

1258
01:35:08.680 --> 01:35:12.119
<v Speaker 2>But I also think he's going to be there when

1259
01:35:12.239 --> 01:35:20.359
<v Speaker 2>relevant to make sure that the interests of his businesses

1260
01:35:20.359 --> 01:35:24.640
<v Speaker 2>are not hood. I think he'll be a voice and

1261
01:35:24.720 --> 01:35:29.560
<v Speaker 2>he'll make sure to express himself in order to protect

1262
01:35:29.560 --> 01:35:33.560
<v Speaker 2>the interests of his business. And you know the fact

1263
01:35:33.640 --> 01:35:39.479
<v Speaker 2>that the ban on investment It's China disappeared from the

1264
01:35:39.520 --> 01:35:41.720
<v Speaker 2>bill that was passed by the House in the Senate

1265
01:35:41.800 --> 01:35:46.760
<v Speaker 2>yesterday to keep the Gunman open, I'm sure was cheered

1266
01:35:46.760 --> 01:35:49.600
<v Speaker 2>on by a L. N. Musk, if not suggested by

1267
01:35:49.680 --> 01:35:55.079
<v Speaker 2>him to begin with. But I don't think that's the

1268
01:35:55.119 --> 01:35:57.680
<v Speaker 2>main reason, or the sole reason he went into politics.

1269
01:35:58.079 --> 01:36:02.800
<v Speaker 2>But it's not it's not absent. It's there as well.

1270
01:36:04.960 --> 01:36:08.680
<v Speaker 2>Philosophy work, Merrimans. What do you call a bunch of

1271
01:36:08.760 --> 01:36:13.159
<v Speaker 2>chess players bragging about their game in a hotel lobby,

1272
01:36:14.079 --> 01:36:20.560
<v Speaker 2>chess nuts boasting in an open for you, it's supposed

1273
01:36:20.560 --> 01:36:23.760
<v Speaker 2>to be funny, guys. I'm sure Mary Bands is laughing

1274
01:36:24.560 --> 01:36:30.920
<v Speaker 2>but she's biased. All right, chess nuts, chess nuts boasting

1275
01:36:31.000 --> 01:36:31.800
<v Speaker 2>in an open for you?

1276
01:36:33.600 --> 01:36:36.079
<v Speaker 3>All right, uh friend, harp up?

1277
01:36:36.239 --> 01:36:39.479
<v Speaker 2>Final question I think for the show. What's the difference

1278
01:36:39.479 --> 01:36:44.640
<v Speaker 2>between Congress and Parliament? Does a Parliament have a House

1279
01:36:44.680 --> 01:36:48.359
<v Speaker 2>of representatives equivalent to a Senate equivalent? I don't think so.

1280
01:36:48.399 --> 01:36:50.239
<v Speaker 3>I think Parliament is just one house.

1281
01:36:51.720 --> 01:36:55.520
<v Speaker 2>Well, the British have the House of Lords, which kind

1282
01:36:55.520 --> 01:36:59.760
<v Speaker 2>of acts like a Senate maybe supposedly, not really. I

1283
01:36:59.760 --> 01:37:01.520
<v Speaker 2>don't know if there's a difference. I don't know what

1284
01:37:01.560 --> 01:37:03.920
<v Speaker 2>the difference between Congress and our house and Parliament is.

1285
01:37:05.960 --> 01:37:10.479
<v Speaker 2>I really don't know. I have to look it up. Andrew,

1286
01:37:11.439 --> 01:37:15.279
<v Speaker 2>would you describe libertarianism as philosophy for free markets, no,

1287
01:37:16.640 --> 01:37:21.239
<v Speaker 2>as philosophically for free markets. No, because anarchy is anti

1288
01:37:21.279 --> 01:37:24.119
<v Speaker 2>free markets and anarchy is part of libertarianism.

1289
01:37:24.199 --> 01:37:27.119
<v Speaker 3>I would describe libertarianism as.

1290
01:37:28.159 --> 01:37:30.159
<v Speaker 2>A big tent with a lot of different views in it,

1291
01:37:32.560 --> 01:37:34.479
<v Speaker 2>many of them pretending to be.

1292
01:37:34.520 --> 01:37:36.399
<v Speaker 3>Pro free markets but not actually.

1293
01:37:38.640 --> 01:37:42.359
<v Speaker 2>And suddenly, I wouldn't use the philosophically in the description

1294
01:37:42.520 --> 01:37:48.359
<v Speaker 2>because I don't think libertarianism is very philosophical. They think

1295
01:37:48.359 --> 01:37:52.720
<v Speaker 2>they're advocating for free markets, but they're not all right,

1296
01:37:53.319 --> 01:37:57.000
<v Speaker 2>we will call it a day. Thank you everybody. I

1297
01:37:57.039 --> 01:37:59.560
<v Speaker 2>hope you enjoyed that. I hope there was some value

1298
01:37:59.720 --> 01:38:06.520
<v Speaker 2>in that. As I said, we'll do healthcare, immigration, China next,

1299
01:38:07.439 --> 01:38:11.159
<v Speaker 2>we'll probably come back to financial deregulation because there's so

1300
01:38:11.239 --> 01:38:14.640
<v Speaker 2>many things we for example, didn't cover insurance. There's a

1301
01:38:14.680 --> 01:38:17.680
<v Speaker 2>lot of other things that we didn't cover. Oh, Frank

1302
01:38:17.760 --> 01:38:22.920
<v Speaker 2>has a twenty dollars questions. If people understood money profit

1303
01:38:23.159 --> 01:38:26.840
<v Speaker 2>money's profitability, and had a more active view of money,

1304
01:38:27.920 --> 01:38:33.399
<v Speaker 2>most regulations would be seen as limiting and weak. I

1305
01:38:33.399 --> 01:38:35.640
<v Speaker 2>think that's right. But in order to have that kind

1306
01:38:35.640 --> 01:38:38.079
<v Speaker 2>of view of money, they'd have to have a better

1307
01:38:38.159 --> 01:38:40.199
<v Speaker 2>view of morality. That is, that have to be a

1308
01:38:40.239 --> 01:38:42.720
<v Speaker 2>self they have to have a self interested view of morality.

1309
01:38:43.720 --> 01:38:51.159
<v Speaker 2>They'd have to be thinkers as well. But yes, I mean,

1310
01:38:52.000 --> 01:38:55.560
<v Speaker 2>part of the need to regulate, the perceived need to

1311
01:38:55.600 --> 01:39:00.399
<v Speaker 2>regulate finance is this idea of money is barren interest

1312
01:39:00.439 --> 01:39:06.199
<v Speaker 2>as basically stealing, not real wealth, creation, not real creation.

1313
01:39:07.000 --> 01:39:11.439
<v Speaker 2>And therefore we need protection from those evil guys that

1314
01:39:11.560 --> 01:39:18.319
<v Speaker 2>make money for money somehow magically. So the understanding money,

1315
01:39:18.399 --> 01:39:23.960
<v Speaker 2>understanding how money leads them more money, money leads to productivity,

1316
01:39:25.159 --> 01:39:33.479
<v Speaker 2>is a crucial piece in making people be okay with

1317
01:39:34.680 --> 01:39:38.560
<v Speaker 2>a true free market in money and banking and finance.

1318
01:39:40.640 --> 01:39:45.560
<v Speaker 2>All right, everybody, I will see you on Monday. Those

1319
01:39:45.600 --> 01:39:47.960
<v Speaker 2>If you speak Hebo, there will be a show tomorrow

1320
01:39:48.159 --> 01:39:52.760
<v Speaker 2>eleven am East Coast time. Otherwise, see all money by everybody.

1321
01:39:52.840 --> 01:39:56.159
<v Speaker 2>Have a great rest of your weekend.