Speaker 1: Though radical fundamental principles of freedom, rational self interest, and
Speaker 1: individual rights.
Speaker 2: This is the ran Brook Show. All right, everybody, welcome
Speaker 2: to here on book show on this Saturday, December twenty First,
Speaker 2: we're inching towards itching, inching, inching.
Speaker 3: Getting closer to Christmas.
Speaker 2: So Merry Christmas. Christmas just a few days away. Hopefully, Uh,
Speaker 2: you guys are getting ready buying presents, last minute, last
Speaker 2: minute shopping stuff like that. Hopefully you're having a great weekend.
Speaker 2: All right, Today we're going to talk about this will
Speaker 2: be your first and I guess a series that we're
Speaker 2: going to do on how do you how do you
Speaker 2: approach rationally, approach moving from where we are today towards
Speaker 2: freedom in a particular in a particular area. So today
Speaker 2: we're going to do a finance, We're going to do
Speaker 2: healthcare at some point, We're going to do immigration at
Speaker 2: some point, and we'll probably do us relationship.
Speaker 3: With China at some point.
Speaker 2: Right as as how do we move from where we
Speaker 2: are today towards towards freedom, towards what a rational free market, uh,
Speaker 2: constitutional rights respecting, properly rights respecting government would do. And
Speaker 2: as I said, today, we're gonna sell with finance. Alexis
Speaker 2: sponsored the show. He's on with us Live. That's great.
Speaker 2: Feel free all of you to ask questions as we
Speaker 2: go along, and you know, let's see, let's see how
Speaker 2: this goes. You know, let me just note that that's
Speaker 2: him Alexis, that that's him on the chat anyway. Let
Speaker 2: me note that I don't know if we're gonna be
Speaker 2: able to do any of these in one show. I'm
Speaker 2: gonna try. But complexity, there's massive amounts of complexity associated
Speaker 2: with regulation and as a consequences, massive amount of complexity
Speaker 2: associate deregulation. I'll get to why that is. Why you
Speaker 2: can't just wipe them all out. Why can't we just
Speaker 2: go somebody asked, somebody put this up on some comments
Speaker 2: to some way. Why can't you just cancel all the
Speaker 2: regulations somehow we'll just be free and I'll be it.
Speaker 3: We'll have freedom. That's great, We'll be done. So we'll
Speaker 3: get to that.
Speaker 2: We'll get to that in the in the context of
Speaker 2: finance in a minute, why you have to do it
Speaker 2: step by step? Why you have to do it in
Speaker 2: a in a kind of a rational way. Now, I'm
Speaker 2: not going to give you all the steps because the
Speaker 2: reality is that this is going to have to be
Speaker 2: major work that somebody's gonna have to do. This is
Speaker 2: a book length treatment of how to do this. When
Speaker 2: it comes to the details, the amount of regulations that
Speaker 2: apply to finance is so extensive that unwaning them is
Speaker 2: going to be a massive project that people are going
Speaker 2: to have to really figure out and and do over
Speaker 2: my guesses several years, and they're going to have to
Speaker 2: find solutions to a idea of different problems. And it's
Speaker 2: going to be great when it happens, but it's going
Speaker 2: to be a lot of work. It's going to be complicated,
Speaker 2: and so I'm going to give their principles, some examples,
Speaker 2: some examples of why it's complicated, you know, as we
Speaker 2: go through this, and of course feel free to ask
Speaker 2: about specific examples as they as you think of them,
Speaker 2: as you come up with new examples, please ask about them.
Speaker 2: But there's a lot here. You know, we're talking about
Speaker 2: numerous regulatory agencies at the federal level, six or seven
Speaker 2: or eight, and we're talking about regulatory agencies at the
Speaker 2: state level. Every state has significant regulations of finance. So
Speaker 2: there's state regulations, there's federal regulations, and there are multiple
Speaker 2: agencies that are responsible for these regulations. All of these
Speaker 2: need to be phased out and replaced with appropriate rights
Speaker 2: respecting rights protecting laws, and we'll talk about how we
Speaker 2: would think about all of that today. So that's what
Speaker 2: the show is going to be today. Again, feel free
Speaker 2: to ask questions about this. I guess you can ask
Speaker 2: questions about anything else if you want, we'll get to
Speaker 2: them last. But if any questions about finance, any questions
Speaker 2: about financial deregulation, or any question about finance broadly, we'll
Speaker 2: get priority today on the superchat. Don't forget the super chat.
Speaker 2: We still have to do a superchat. We still have
Speaker 2: to fund the shows, funding from listeners like you. Value
Speaker 2: for value, all right, So let's get started with finance.
Speaker 2: And I think the first thing to note about finance
Speaker 2: and what I'll do with these shows is lay out
Speaker 2: the lay of the landers as exist today approximately, so
Speaker 2: that we know what we're dealing with. First, finance is
Speaker 2: the most regulated industry in the world in the United States.
Speaker 2: Finance is the first industry to really get regulated in
Speaker 2: the United States. Other countries were better than the US
Speaker 2: in finance in terms of regulations. So from the very
Speaker 2: beginning of the Republic. Banks in particular, finance more broadly
Speaker 2: was regulated by primarily state regulations. The founders, particularly particularly Jefferson,
Speaker 2: very suspicious of financial enterprises and particularly large financial enterprises
Speaker 2: with a lot of financial and political power. And as
Speaker 2: a consequence, the nature banking early on was to be
Speaker 2: fragmented and small.
Speaker 3: And you know, so we'll get to that in a minute.
Speaker 2: So the first thing to remember is finance is the
Speaker 2: area that's been most regulated throughout history. Right. So if
Speaker 2: food regulations of food started in the don't I think
Speaker 2: the nineteen the teens, financial regulations started, you know, with
Speaker 2: the establishment of the United States. If environmental regulations are
Speaker 2: really a phenomena of the nineteen seventies, financial regulations are
Speaker 2: phenomena that goes back to the eighteenth century. And by
Speaker 2: the way, we're heavily, heavily, heavily part of fd attempts
Speaker 2: to completely restructure and change the US economy. So you
Speaker 2: have under FDR, you have the nineteen thirty three Act,
Speaker 2: You've got the Security and Exchange Actor in nineteen thirty four,
Speaker 2: and you've got the Investment Company Act of nineteen forty,
Speaker 2: which is still three of the forty five major regulatory
Speaker 2: bills that dominate finance this day. I'd add to those
Speaker 2: dot Frank of twenty twenty ten. I think twenty ten
Speaker 2: is basically the four big regulatory acts that by which
Speaker 2: that government basically modern finance. There have been some changes
Speaker 2: to them, There've been some pieces of them that have
Speaker 2: been deregulated, but for the most part, these bills, these
Speaker 2: regulatory bills from the nineteen thirties, nineteen forty and twenty
Speaker 2: ten basically are what run the financial world today, and
Speaker 2: they're what needs to be unwound if we're going to
Speaker 2: if we're going to deregulate finance. But as I said,
Speaker 2: state regulations, some federal regulations date back to the eighteenth century,
Speaker 2: so finance, they've had a lot of time to regulate,
Speaker 2: to control, to manipulate, to change. Finance, of all of
Speaker 2: them has some of the deepest regulations going to every
Speaker 2: aspect of the business. In many respects, American banks are
Speaker 2: branches of the US government, the extensions of the US government.
Speaker 2: And it's not an accident that banks also benefit from
Speaker 2: massive bailouts and to fail, and financial institutions do. In
Speaker 2: banks in particular, and all of that stuff, although now
Speaker 2: it's not just banks, it's financial institutions. More broadly, you
Speaker 2: don't have that so length of time and complexity. Finance
Speaker 2: is a complex field. It deals with a lot of
Speaker 2: different things. Banks, traditional banks, corner that you have in
Speaker 2: the corner of the town, investment banks and deal in
Speaker 2: securities and underwriting securities and complex financial transactions. You've got
Speaker 2: derivatives trading, You've got security exchanges in trading. You've got
Speaker 2: financial variety of differential financial markets, insurance companies, not just banks,
Speaker 2: but insurance companies, mortgage banks, mortgage securitization, and we could
Speaker 2: go on and on and on and on and on
Speaker 2: and on and on. I mean, auto loans have their
Speaker 2: own kind of little financial institutions, and the securitized and
Speaker 2: there's just no end to the number of different types
Speaker 2: of financial institutions, different types of financial products. And again,
Speaker 2: every single one of those hedge funds, private equity funds,
Speaker 2: venture capital funds, every one of those has its own set.
Speaker 3: Of regulations that apply to it.
Speaker 2: So we are talking about a vast array, complex array
Speaker 2: of regulations. And when you talk about deregulations, we're going
Speaker 2: to have to separate, separate a few things out because
Speaker 2: deregulation will look differently if we're talking about banks, it
Speaker 2: would look differently if we're talking about securities markets, stock
Speaker 2: market and the trading in stock markets, and hedge funds,
Speaker 2: mutual funds and other kind of funds, and the raising
Speaker 2: of money. That is the whole idea of a company
Speaker 2: going out there, issuing shares and raising money that is
Speaker 2: heavily regulated. That, by the way, is regulated by what's
Speaker 2: called Blue Sky law. A lot of that is regulated
Speaker 2: at the state level, and if you want to go public,
Speaker 2: you have to and if you want to raise capital,
Speaker 2: you often have to file different regulatory paperwork in every
Speaker 2: single state to fifty different pieces of paperwork because the
Speaker 2: criteria by which you raise money in California and criteria
Speaker 2: but you raise money Connecticut are going to be different.
Speaker 3: Right, So.
Speaker 2: We've got all these different markets and we're gonna have
Speaker 2: to talk about deregulating because they all serve different functions
Speaker 2: and they all have different different consequences to how we deregulate. Now,
Speaker 2: because of this complexity, and because of the crucial role
Speaker 2: finance plays in an economy, the economy shuts down without finance.
Speaker 2: Finances heavily heavily correlated. Freedom and finances heavily heavily collilated
Speaker 2: with a successful a successful economy, and sophistication in finances
Speaker 2: heavily coallated with, you know, success economically. One of the
Speaker 2: things that can happen if the deregulation is wrong, done badly,
Speaker 2: or if it's done all at once. If tomorrow we
Speaker 2: wake up and say no financial regulations, what are the consequences. Well,
Speaker 2: the reality is that most bank ninety nine point nine, no,
Speaker 2: not ninety nine, all banks, every single bank in the
Speaker 2: United States, does not have enough liquidity to be able
Speaker 2: to deal with the positives asking for their money back,
Speaker 2: even a small portion of them. Because the way they're regulated,
Speaker 2: they are encouraged to keep unreserved, very very little of
Speaker 2: what you deposit at the bank. They're encouraged to lend
Speaker 2: and invest all the rest, and they are told that
Speaker 2: if they get into liquidity problems, then the federal Reserve,
Speaker 2: the regulatory agencies, if you will, will bail them out.
Speaker 2: And we as depositors, for example, all assume that our
Speaker 2: money is safe in the bank because they all have
Speaker 2: deposit insurance, which is a government created regulatory thing. And
Speaker 2: if that went away tomorrow, I would want my money
Speaker 2: out of the bank. All of us would want our
Speaker 2: money out of the bank. All of us would go
Speaker 2: to the bank and ask for our money out. Now
Speaker 2: an the entire banking system would collapse. It would basically
Speaker 2: the entire thing would go bankrupt in a day. What
Speaker 2: happened at Silicon Valley Bank would happen at every bank
Speaker 2: in the United States.
Speaker 3: It would crash the economy, It would.
Speaker 2: Crash the financial sector. It would grow far beyond banks.
Speaker 2: Businesses would run their money backs, only they wouldn't have it.
Speaker 2: They'd have to write it all down. That bank would
Speaker 2: go bankrupt.
Speaker 3: The whole system would collapse.
Speaker 2: So we have created an unbelievably fragile system because of
Speaker 2: all the regulations. That is, the regulatory environment that we
Speaker 2: have today is a fragile regulatory environment. It's a fragile
Speaker 2: financial environment. What would happen tomorrow if other regulations went
Speaker 2: away visa vistock trading, I.
Speaker 3: Don't even know.
Speaker 2: Oh God, it would be such a mess. What rules
Speaker 2: would apply, what wouldn't apply. Basically, all the rules that
Speaker 2: dictate stock trading. Who can trade, when you can trade,
Speaker 2: how much you can trade, and what circumstances you can
Speaker 2: trade at, what prices you can trade are dictated by regulation.
Speaker 2: It can all be replaced by rules that are governed
Speaker 2: by the market. We can talk about how in a
Speaker 2: little bit, but that takes time. It doesn't that none
Speaker 2: of that happens in a day. So there's no question
Speaker 2: that the market would eventually organize itself. But the damage,
Speaker 2: the damage which would be done in the process would
Speaker 2: be unbelievably devastating and not necessary stating and not necessary.
Speaker 2: That is, we can achieve freedom if we're just willing
Speaker 2: to be patient two three, four years max. Without the damage.
Speaker 2: And that's what we said, strifle. It might be impossible.
Speaker 3: There might be some damage anyway, but we want to try.
Speaker 2: To move to a system of rights of right protection
Speaker 2: and property rights protection without a complete upheaval of the
Speaker 2: entire system. Think about all the contracts that are written.
Speaker 2: Just think about it this way, all the contracts that
Speaker 2: are written between investors, investment companies, depositors, and banks that
Speaker 2: assume explicitly and often implicitly, a particularly regulatory structure, a
Speaker 2: particularly regulatory structure. It's just unfair to all the market participants,
Speaker 2: all your risk assessments, all your planning, all the thinking
Speaker 2: you've done about your finances are all made under the
Speaker 2: assumption that at least this regulatory regime that exists a
Speaker 2: day to some extent is going to be with us.
Speaker 2: And if it's gone, everything has to change everything. So
Speaker 2: I am for sunsetting regulations in a particular order and
Speaker 2: with a known date for when they go away, so
Speaker 2: that markets can adapt to their disappearance. And before all
Speaker 2: that happens, you know, you've got a chance to build institutions, relationships, uh, contracts,
Speaker 2: UH basically market driven rules of conduct that are consistent
Speaker 2: with with with ryit so consistent with the market, uh
Speaker 2: that replace many of the regulations of those regulations that
Speaker 2: are kind of necessary. Okay, So an option where you
Speaker 2: just get rid of all the regulations tomorrow is just
Speaker 2: it's just too it's too chaotic and do unjust.
Speaker 3: It's unjust.
Speaker 2: So there has to be a process, and the question
Speaker 2: is how do we do the process? And how do
Speaker 2: we define the process, and and and how do we
Speaker 2: how do we engage it? Now, some things can be
Speaker 2: done pretty quickly, right, Some things can be done pretty
Speaker 2: Quickly'll give you an example.
Speaker 3: Are giving an example of hedge funds.
Speaker 2: Hedge funds, ah, you know pools of money that are
Speaker 2: being put together in order to trade, and they were
Speaker 2: originally put together in order to trade free of regulation.
Speaker 2: That is, the idea was that the people who invested
Speaker 2: in hedge funds were sophisticated investors. They were not going
Speaker 2: to be a lot of them. It's just going to
Speaker 2: be a few people. They had a lot of money investors,
Speaker 2: They had a lot of experience, and they had a
Speaker 2: lot of investable income so that they were relatively rich,
Speaker 2: so they could afford to lose some money. And so
Speaker 2: hedge funds were set up as financial institutions to get
Speaker 2: around the various the various regulations that existed. Give you
Speaker 2: some examples. Okay, So in order to get around the
Speaker 2: public offering registration requirements of the Securities Act of nineteen
Speaker 2: thirty three, right, and the reputting requirements of the Security
Speaker 2: Act in nineteen thirty four, and the registration requirements of
Speaker 2: the Investment Company Act of nineteen forty right, the hedge funds, again,
Speaker 2: as I said, only took what's called private offerings. It
Speaker 2: wasn't a public offering, it wasn't marketed. There was no
Speaker 2: general solicitation in general advertising. They exempted themselves by agreeing, basically,
Speaker 2: we're not going to do any marketing, and to the
Speaker 2: extent that we inform people about this, it's only to
Speaker 2: accredited investors, institutional investors, insiders, people who have five million
Speaker 2: dollars more of investable securities. So a whole variety of
Speaker 2: conditions were self imposed by hedge funds in order to
Speaker 2: allow them to get around the regulations, and they thrived.
Speaker 2: Hedge funds did very, very well, and during the nineteen
Speaker 2: eighties and nineteen nineties hedge.
Speaker 3: Funds were started.
Speaker 2: First, Headchehounds started in nineteen fifties. They did pretty well
Speaker 2: in the sixties, but then they really came into their
Speaker 2: own nineteen eighties and in the nineties. The first hedge
Speaker 2: fund billionaires were really made during the eighties and nineties,
Speaker 2: and the industry as a whole grew dramatically during this period.
Speaker 2: Maybe the most famous hedge fund at that time was
Speaker 2: George Soros, maybe the most to this day, who ran
Speaker 2: a hedge fund that did what's called today macro investing,
Speaker 2: or a lot of phone exchange investing, and basically made
Speaker 2: a lot of money on betting on particular currencies. Betting
Speaker 2: is not the right wood, but kind of predicting the
Speaker 2: direction and helping the direction happen, helping prices move in
Speaker 2: various currencies around the world, and so it's made billions
Speaker 2: and billions and billions of dollars during this period. Again,
Speaker 2: everything about hedge funds was structured to avoid regulations.
Speaker 3: You know, they avoid.
Speaker 2: Not just the investment company regulations, but also come the
Speaker 2: commodity futures trading commission regulations.
Speaker 3: And on and on and on and on you.
Speaker 2: Could go and how they found ways to get around us.
Speaker 2: So much of the way hedge funds functioned in the
Speaker 2: early days, in terms of raising money, structuring internal operations, was.
Speaker 3: In an attempt to avoid all regulations, and they succeeded
Speaker 3: to a large cresent.
Speaker 2: A like extent eighties and nineties, you know, hedge funds
Speaker 2: were relatively unregulated, and again they did phenomenally well, and
Speaker 2: they made a lot of money, and hedge fund managers
Speaker 2: made a lot of money. A typical hedge fund historically
Speaker 2: would get compensated two percent of the amount of money
Speaker 2: out of management plus twenty percent of all the profits.
Speaker 2: Some managers could get it. They did so well, could
Speaker 2: get away with four percent of the money and management
Speaker 2: and forty percent for zero of the profits.
Speaker 3: And you know, it was a beautiful thing. If I
Speaker 3: had hedge fund.
Speaker 2: Hedge funds, you know, they people can take their money
Speaker 2: in and out of a hedge fund fairly quickly. The
Speaker 2: money is not locked up typically in a hedge fund.
Speaker 2: So if you don't perform, people will draw their money.
Speaker 2: You close the hedge fund you've got. If you do perform,
Speaker 2: more money flows in, you might be able to create
Speaker 2: additional instruments, and you do phenomenally well.
Speaker 3: It's incredibly performance based.
Speaker 2: Compensation is on is one hundred percent the end of
Speaker 2: the day, performance based, because even the percentage of the
Speaker 2: amount of money you have in a management is performance
Speaker 2: based because the amount of money under management is going
Speaker 2: to determine by whether people want to invest in you
Speaker 2: or not. That is, whether people think you're performing well
Speaker 2: or not. So it's a dynamic industry in which hedge
Speaker 2: funds disappear in and hedge fund's coming into being constantly
Speaker 2: all the time. But of course, you know, regulators don't
Speaker 2: like that. Regulators don't like that. They don't like the
Speaker 2: fact that it's you know, independent of them. They don't
Speaker 2: like the fact that, you know, there's a whole world
Speaker 2: out there that they have no control over, and so
Speaker 2: from the beginning they've been trying to regulate it. And
Speaker 2: in nineteen eighty five, the SEC, you know, put in
Speaker 2: the first regulations of hedge funds. They found interpretation of
Speaker 2: the Investment Advisors Act that for the purposes of an
Speaker 2: exemption from registration under that Act, the safe hab allowed
Speaker 2: a limited partnership rather than each of its limited partners
Speaker 2: to be counted as a client of a general Anyway,
Speaker 2: it just gets complicated, but they started imposing rules. So
Speaker 2: and in nineteen ninety seven the SEC brought in the
Speaker 2: scope of certain rules to regulate it even more. And
Speaker 2: then in nineteen ninety eight, if you remember, Long Term
Speaker 2: Capital Management LTCM went bankrupt and was bailed out by
Speaker 2: a consortium of other hedge funds and other investors at
Speaker 2: the orchestration of the New York Federal Reserve Bank Alan Greenspan. Basically,
Speaker 2: and now there was fear that hedge funds were quote systemic,
Speaker 2: that if they failed, they would drag down the entire
Speaker 2: financial system. And now the Senator regulated increased even more
Speaker 2: so that by two thousand and four, the SEC tried
Speaker 2: to use its rule making authority to force hedge funds
Speaker 2: to register. In two thousand and six, the Supreme Court
Speaker 2: ruled that as outside the scope of the law, as arbitrary,
Speaker 2: and all the hedge funds that had registered de registered.
Speaker 2: But then in twenty ten dot frank was passed, and
Speaker 2: as part of dot frank you have the Private Fund
Speaker 2: Investment Advisors Registration Act PFIAR few whatever, which basically authorizes
Speaker 2: the SEC to bring hedge funds under regulatory supervision. And
Speaker 2: since then there's just a mountain, a mountain of regulations
Speaker 2: that are being imposed on the on the hedge fund
Speaker 2: industry by the SEC, and it just goes on and on.
Speaker 2: Now it's still true, though, for example, that hedge funds
Speaker 2: investments in hedge funds are dominated by what you'd call
Speaker 2: sophisticated investors. It's mainly wealthy individuals UH and UH pins
Speaker 2: of plans and insurance companies. And although if it's an
Speaker 2: insurance company and a pinsion planet, the fund has to
Speaker 2: be consistent with a RISSA, which is anyway, it gets
Speaker 2: more and more complicated. But the point is that you
Speaker 2: could deregulate hedge funds tomorrow pretty quickly. In other words,
Speaker 2: pretty quickly without much collateral damage, without much damage. More broadly, so,
Speaker 2: you could basically repeal what's called Title four of dot FRANK,
Speaker 2: which is the Private Fund Investment Advice or Registration Act.
Speaker 2: You could repeal that. You could repeal the nineteen ninety
Speaker 2: seven sec Rule, you could appeal the nineteen nineteen eighty
Speaker 2: five sec rule. And basically if it turned the hedge
Speaker 2: front industry to the way it was before then and now,
Speaker 2: you could do that very quickly. You could do that,
Speaker 2: you know, if you pass the laws and all of that,
Speaker 2: you could do that within.
Speaker 3: A month, and you'd hear a huge.
Speaker 2: Sigh of relief. But there would be no real that
Speaker 2: I can think of, downside in terms of consequence of
Speaker 2: the marketplace. Now, the question, of course is why would
Speaker 2: you do that? Why would you deregulate them without digilating
Speaker 2: anything else. And I'm not suggesting that, I'm suggesting that
Speaker 2: could be a step, and that could be an easy
Speaker 2: one and a quick one. Just do that, okay.
Speaker 3: Now, next, mutual funds.
Speaker 2: Mutual funds in best under very limited under huge constraints,
Speaker 2: often in similar securities to hedge funds. But mutual funds
Speaker 2: are heavily heavily, heavily, heavily heavily regulated by all those
Speaker 2: investment acts going up back to nineteen thirty three. Again,
Speaker 2: you could probably deregulate mutual funds, maybe with the exception
Speaker 2: of money market mutual funds, so money markets would have
Speaker 2: to be put aside. But stock mutual funds, bond mutual funds,
Speaker 2: you could do those fairly quickly. You could just slowly
Speaker 2: undo those pieces of the regulatory regimes from god Frank
Speaker 2: all the way back to nineteen thirty three that apply
Speaker 2: to mutual funds. Disclosure requirements. Do you know that by law,
Speaker 2: mutual funds are not allowed to pay their managers a
Speaker 2: percent of the profit. They can only pay them a salary. Say,
Speaker 2: you would slowly unwind that right, You would slowly get
Speaker 2: rid of all the regulations that restricted mutual funds, and
Speaker 2: in a sense, you could probably do this within a year.
Speaker 3: You would take away.
Speaker 2: Everything that makes a mutual funds special and different than
Speaker 2: a hedge fund, because mutual funds, for example, are not
Speaker 2: allowed to sell security short hedge funds can't.
Speaker 3: But if you took away the requirements.
Speaker 2: You would basically create a situation where the hedge fund
Speaker 2: industry and the mutual fund industry there was really no
Speaker 2: difference between them. And if you took away all the
Speaker 2: regulations that restricted who you can raise money from and
Speaker 2: so on, now hedge funds could raise money from regular
Speaker 2: people just like mutual funds, dude, And basically you would
Speaker 2: have one big investment industry that would evolve in completely
Speaker 2: new directions in completely new ways. They would not be
Speaker 2: like what we have today, and there would basically be
Speaker 2: marketing different products. They're playing vanilla regular index fund products
Speaker 2: all the way to sophisticated long short macro models where
Speaker 2: most people invested in the funds didn't really understand what
Speaker 2: they were doing, but they were okay with that, and
Speaker 2: the market would evolve. So I would say I would
Speaker 2: take a year, and within a year the goal would
Speaker 2: be to create a situation where mutual funds and hedge
Speaker 2: funds were all basically in terms of the regulation, the same.
Speaker 3: And the reason I would take.
Speaker 2: A year is to give people time to just a
Speaker 2: lot of investors. So for example, there's a lot of
Speaker 2: disclosure requirements both for hedge funds and for mutual funds.
Speaker 2: Hedge funds it's less important because investors know what they're
Speaker 2: getting into. But mutual funds, people expect sudden disclosures and
Speaker 2: being able to track and so on. And you want
Speaker 2: to give them time to get their money out, or
Speaker 2: you want to give them time to you want to
Speaker 2: give them the mutual funds time to figure out what
Speaker 2: the best disclosure practices are and how they want to
Speaker 2: market it. So I would say, Okay, in twelve months,
Speaker 2: here are all the things that are going away regulatory
Speaker 2: wise for mutual funds and for hedge funds.
Speaker 3: And after that we will be I'll tell you in
Speaker 3: a minute, we'll be checking.
Speaker 2: But after that there'll be one investment marketplace in which
Speaker 2: that can sell you investment products, whatever they happen to be.
Speaker 2: You probably include in this private equity funds, venture capital funds,
Speaker 2: private equity funds as well. Cannot they're all regulated in
Speaker 2: different ways, but all of these investment funds should be
Speaker 2: basically free of regulation and then allowed to innovate in
Speaker 2: terms of how they want to offer their product to
Speaker 2: the public, how they want to explain it, how they
Speaker 2: want to market it. And the only thing that the
Speaker 2: government needs to be aware of and needs to be
Speaker 2: diligent about and needs to make you know, needs to track.
Speaker 2: Is this what is the role of government in financial markets?
Speaker 2: The role of governing financial markets is to protect us
Speaker 2: against fraud. That is it to protect us against fraud
Speaker 2: promises that are detached from reality, commitments that are not
Speaker 2: on Bernie made up pyramid like schemes.
Speaker 3: That is it.
Speaker 2: And one of the things the regulators should spend the
Speaker 2: year doing is figuring out what replaces all these regulations
Speaker 2: as a form of fraud protection, monitoring for fraud. And
Speaker 2: it can't be disclosure requirements. You have to disclose all
Speaker 2: these things. It has to be some objective criteria by
Speaker 2: which the disclosure, whatever it happens to be, matches reality
Speaker 2: and what constitutes fought and what doesn't.
Speaker 3: And that is not going to be easy. It's not
Speaker 3: obvious what fraud is fought.
Speaker 2: Is a complicated violation of rights, not always straightforward. So
Speaker 2: they would have to real spend time setting up a
Speaker 2: set of rules laws that define clearly what constitute fraud
Speaker 2: in financial transactions and what they're going to do about
Speaker 2: trying to detect it and going after the thoughts.
Speaker 3: So I think in the section.
Speaker 2: Of investment institutions, hedge funds, mutual funds, private equity funds,
Speaker 2: venture funds, so on. It's relatively easy. You don't expect
Speaker 2: massive Mayhemmel though, because the public is involved with mutual funds,
Speaker 2: there'll be a lot of people unsettled and confuse and
Speaker 2: not to know what they do. And here hopefully there'll
Speaker 2: be financial advisors, and there'll be financial advisory firms that
Speaker 2: find ways to help them out and guide them through
Speaker 2: the process. And that should be the role of financial
Speaker 2: advisors is to help people deal with the complexity of finance,
Speaker 2: help people deal with, you know, how to structure their
Speaker 2: portfolios in a way that makes sense. So I think
Speaker 2: from the perspective of investment companies, it's relatively simple to deregulate.
Speaker 3: As we move deeper.
Speaker 2: Into finance, deeper in the sense of to the institutions,
Speaker 2: it becomes a lot harder.
Speaker 3: So let's go one step.
Speaker 2: In today, everything to do with how we buy and
Speaker 2: sell stock, not just in terms of how we buy
Speaker 2: in sell stock. Everything we have to do in terms
Speaker 2: of buying and selling stock is regulated, is controlled. What
Speaker 2: you can you know, what stocks you a lot about,
Speaker 2: depending on who you are under what conditions you can
Speaker 2: buy them, and what markets can you buy them, who
Speaker 2: can sell them to you, how are they advertised marketed?
Speaker 2: All of that is regulated, how they exchanges should behave.
Speaker 2: The exchanges is the.
Speaker 3: Way you buy and sell the stock.
Speaker 2: How IPOs initial public offering should be happen regulated, blue
Speaker 2: sky laws at the state level dictate how private companies
Speaker 2: can sell stock raise money, and to some extent, one
Speaker 2: of the things we would need to do in finance
Speaker 2: generally is to federalize finance, get rid of federalism, get
Speaker 2: rid of state regulations, state controls over much of this,
Speaker 2: so that we can liberate it all at once, not
Speaker 2: just liberated at the federal level, but liberated completely, including
Speaker 2: the state level. That's another complexity for the whole thing.
Speaker 2: So one of the things that's going to have to
Speaker 2: happen with regard to stock markets, for example, bond markets,
Speaker 2: other you know institutions, the facilitate trade is the thing
Speaker 2: that may have to be reconstituted as truly private entities.
Speaker 2: That is, the regulations that apply to them have to
Speaker 2: go away. That includes, for example, all the disclosure regulations
Speaker 2: that have to do with public companies.
Speaker 3: So you know, public companies have to file disclosures.
Speaker 2: They have to file annual reports and income statements, and
Speaker 2: they have to do it by a particular form of
Speaker 2: accounting standards, and they have to do it by a
Speaker 2: certain dates, and it has to be audited, and there's
Speaker 2: no end to the and they have to provide information,
Speaker 2: and they have to provide all kinds of information. Every
Speaker 2: change in management, every change in board of directors, every
Speaker 2: significant change in ownership has to be disclosed. I mean
Speaker 2: the amounts of paper of Luckily it's all electronic today.
Speaker 2: That of disclosures is unbelievable. The whole departments, massive, hundreds
Speaker 2: of people in charge of disclosure at publicly traded corporations,
Speaker 2: all of that dictated by government. Now, some of that
Speaker 2: makes sense, that is public companies. I own a stock
Speaker 2: in a public company. I would like to know what's
Speaker 2: going on. And the regulating body that should be regulating
Speaker 2: these kind of things is the exchange on which the
Speaker 2: company is listed. The stock is listed in which I
Speaker 2: buy and sell. They should say, you want to trade
Speaker 2: on the New York Stock Exchange.
Speaker 3: These are the qualifications. This is what you have to do.
Speaker 2: Your company has to disclose X y Z. Every company
Speaker 2: on the New York Stock Exchange has similar disclosure requirements,
Speaker 2: has to use certain acceptable accounting standards, has to do
Speaker 2: all these things.
Speaker 3: And why does the New York Stock Exchange care?
Speaker 2: Because what the New York Stock Exchange wants to do
Speaker 2: is optimize trading. It wants to maximize the amount of
Speaker 2: money they make from me and you trading stocks on
Speaker 2: New exchange. And I will only trade in stocks where
Speaker 2: I have some information about the value of these stocks
Speaker 2: and what they're doing and why they're doing it. And
Speaker 2: I want something, I want some information. So it's in
Speaker 2: the exchange interest to make sure that the company is
Speaker 2: listed on that exchange, traded in an exchange, get information,
Speaker 2: provide the information again, and you would need to allow
Speaker 2: time when you got rid of all these disclosure regulations
Speaker 2: that are in the thirty four Securities Act in nineteen
Speaker 2: forty act. When you in getting rid of all that,
Speaker 2: you need to give time for the market to replace
Speaker 2: them with exchange based regulations. Regulations here in the positive
Speaker 2: sense of market regulating now here again, here's a complexity.
Speaker 2: Right now, there are regulations that say that basically, wherever
Speaker 2: you list your stock, whether you IPO, you do an
Speaker 2: initial public offering, all exchanges get to trade all stocks.
Speaker 2: But that's just an opportuary regulatory thing that it actually
Speaker 2: goes against the incentives of the exchanges. Exchanges should want
Speaker 2: to specialize in only trading certain stocks, and therefore have
Speaker 2: required on those companies to have disclosure and all of
Speaker 2: the rest right, So the whole structure of the markets
Speaker 2: would probably have to change, and that might take time
Speaker 2: for exchanges to figure out which companies they want to
Speaker 2: keep and which companies they don't keep, and what they
Speaker 2: want to trade and what they don't want to trade.
Speaker 2: Suddenly that freedom to make those decisions. And again what
Speaker 2: I would do is say you've got a year. You've
Speaker 2: got a year to figure that out.
Speaker 1: In a year, these laws, all these disclosure laws, all
Speaker 1: the laws governing how exchanges should work, all the laws
Speaker 1: regulating exchanges, all of them go away, and we.
Speaker 2: Have a free market in stock trading and bond trading.
Speaker 2: And you could make that coincide with the same time
Speaker 2: that invest managers suddenly become free, and the market will
Speaker 2: have a year to dramatically and fast and quickly realign itself,
Speaker 2: adjust completely, and of course it'll continue adjusting after that year,
Speaker 2: but it have a year to prepare for freedom, for
Speaker 2: being completely free, and it.
Speaker 3: Will be a beautiful thing.
Speaker 2: By the way, It'll be amazing to watch the human
Speaker 2: mind liberated to figure out the best way to organize
Speaker 2: financial markets and institutions. I mean, wow, that would be
Speaker 2: so cool. The best way to trade securities, the best
Speaker 2: way to make investments, the best way to raise money,
Speaker 2: the best structures for this, and you know, and new
Speaker 2: structures will be invented because a lot of the structures
Speaker 2: that exists today, whether it's in LLC or partnership or
Speaker 2: or all of that is some of it's dictated by
Speaker 2: tax law. A lot of it is dictated by regulatory though.
Speaker 3: And once those.
Speaker 2: Regulations go away, people will become incredibly innovative, all right,
Speaker 2: and it'll be very different than it was before the
Speaker 2: regulations came into me because the technology is different, the
Speaker 2: possibilities are different, the kind of transactions are different, and
Speaker 2: the innovation think about I mean, it's sad to think
Speaker 2: that we haven't had seventy years of innovation in financial structures.
Speaker 2: Most of the innovation in finance over the last seventy
Speaker 2: years eighty nine years, nine years, no, one hundred years,
Speaker 2: nine years over the last nine years has been to
Speaker 2: find ways to get around regulations, and suddenly all of
Speaker 2: that would be liberated to now we get to actually
Speaker 2: think about how to innovate in order to better serve
Speaker 2: our customer better, you know, make more money, make more
Speaker 2: you know, allocate capital more effectively, figure out better ways
Speaker 2: to you know, to to trade, come up with new
Speaker 2: technologies that make trading even faster, better prices, reflect better information, whatever,
Speaker 2: right you get Innovation that is now focused on efficiency,
Speaker 2: on productivity, on money making, on profit making, rather than
Speaker 2: innovation that is focused on all of that in the
Speaker 2: context of regulation. And the best way, of course, to
Speaker 2: make money is to get around the regulation. The best
Speaker 2: way to increase efficiencies to get around the regulations. So
Speaker 2: much of the complexity we see in financial markets today
Speaker 2: is driven by the need to get around regulations. No
Speaker 2: way is that more the case than in banking. Banking
Speaker 2: is the most complicated to deregulate, the most risky to deregulate,
Speaker 2: the one that has the most impact on the most people.
Speaker 2: Because almost all of us have money in a bank.
Speaker 2: It's why banks but not a lot of other financial
Speaker 2: institutions have deposit insurance.
Speaker 3: Although we'll talk about two weeks to fail.
Speaker 2: In a minute, because that applies to a lot of
Speaker 2: different institutions.
Speaker 3: And then the question is how do we deregulate banks?
Speaker 2: So here's the principle for all of these, right, the
Speaker 2: principle for deregulation has to be move towards freedom as
Speaker 2: quickly as possible, freedom being less to no regulations as
Speaker 2: quickly as possible without creating unnecessary chaos and financial disaster.
Speaker 3: And while.
Speaker 2: Continuing to protect against fraud. So the principle that should
Speaker 2: guide all regulations is move towards freedom, less regulations to
Speaker 2: no regulations without creating unnecessary chaos and financial disaster, while
Speaker 2: continuing to protect individuals against fraud. That's my best formulation
Speaker 2: of the principle by which should guide regulations, deregulations, sorry,
Speaker 2: deregulation primarily in the financial sector. Yeah, when your sunset
Speaker 2: for a lot of this is quick but is doable. Banking,
Speaker 2: it's going to be a little longer because you're gonna
Speaker 2: have to do this in phases I suspect and you're
Speaker 2: gonna have to give people a heads up about what
Speaker 2: is coming.
Speaker 3: So one of the.
Speaker 2: Things that nineteen thirty three Act did is established deposit insurance.
Speaker 2: Depositive insurance basically guarantees that up to a certain amount
Speaker 2: of your deposits in the bank. There is a fund
Speaker 2: that is supposedly funded by the premiums that banks pay
Speaker 2: into this fund that will pay you off if the
Speaker 2: bank cannot pay you. What we've seen in history is
Speaker 2: ultimately standing behind this fund is the US government. Government
Speaker 2: basically is guaranteeing your money in the bank up to
Speaker 2: a certain amount. That amount historically was ten thousand, It
Speaker 2: was then raised to fifty thousand, and to one hundred thousand,
Speaker 2: more recently to two hundred and fifty thousand, and then
Speaker 2: what we've seen in two thousand and eight and then
Speaker 2: again was Silicon Valley Bank, is that the actual limit
Speaker 2: for the amount of money that the government is guaranteeing
Speaker 2: in the bank is everything. It's unlimited. And that is
Speaker 2: explicitly the case in financial institutions banks that the government
Speaker 2: has deemed to big to fail those financial institutions, everything
Speaker 2: is guaranteed by the government.
Speaker 3: Now, this creates lots of problems. It creates what's called.
Speaker 2: Model hazard, which is an incentive for banks to take
Speaker 2: on more risk than they would otherwise take because the
Speaker 2: downside is protected by the governments, and the upside the
Speaker 2: bank benefits from. And this is clearly what's happened. On
Speaker 2: top of that, the government also sets things like reserve
Speaker 2: requirements capital requirements, and those don't turn out to be
Speaker 2: just like minimum requirements. You can have more, but competition
Speaker 2: basically drives everybody to the lowest common denominator. At the
Speaker 2: end of the day, whatever the minimal reserve requirements, that's
Speaker 2: how much money the bank has to put aside from
Speaker 2: the money that you deposit in that they cannot loan out.
Speaker 2: All banks basically have almost the same deposit ratio reserve ratio.
Speaker 2: All banks have about the same amount of capital or
Speaker 2: at the very minimal that the government requires, not much
Speaker 2: more than that. If they hold more than that, they've
Speaker 2: had a competitive disadvantage.
Speaker 3: Versus the competition.
Speaker 2: Because deposit insurance, we as the positives, the providers of
Speaker 2: financing to the bank, have no incentive to care about
Speaker 2: how risky the bank is, so all banks maximize the risk.
Speaker 2: All banks maximize leverage because there's no body.
Speaker 3: To discipline them.
Speaker 2: We the are positives who should be disciplining them don't.
Speaker 2: So if you get rid of deposit insurance. First, the
Speaker 2: whole thing collapses, So you can't do that. So how
Speaker 2: do you do regulate banks? How do you do regulate banks? Well,
Speaker 2: step one is you have to let at all banks
Speaker 2: know the deposit insurance is going away. Let's say two
Speaker 2: years from now. In two years there is no deposit insurance.
Speaker 2: You can replace it with private deposit insurance.
Speaker 3: If you can find that.
Speaker 2: You cannot replace it, you can do as you will.
Speaker 2: But between now and two years from now, you have
Speaker 2: to get ready for this position where there is no
Speaker 2: deposit insurance. In the meantime.
Speaker 3: We are going to.
Speaker 2: Do you regulate different aspects of the banking environment.
Speaker 3: Now, A big part of.
Speaker 2: What caused a lot of problems in banking original was
Speaker 2: the fact that there were heavy regulations against bank mergers.
Speaker 3: Banks were not allowed to merge.
Speaker 2: Out of state, sometimes out of county, and banks were
Speaker 2: fragmented and small. A lot of that has gone away,
Speaker 2: that is the regulations that bass that was basically taken
Speaker 2: away in nineteen eighty six, sorry, nineteen eighty four. But
Speaker 2: it's still true that every bank merger has to be
Speaker 2: approved by the regulators, by FDIC and the OCC and
Speaker 2: all these other regulations. What needs to happen is, first
Speaker 2: of all, basically all these basically these regulatory agencies needs
Speaker 2: to be told that they must approve all bank merges.
Speaker 2: Gumman should have no stay whether a bank can merge
Speaker 2: or not. They should all be allowed to merge. So
Speaker 2: that's step one. We want larger financial institute. So they
Speaker 2: have to be able to be able to merge. They
Speaker 2: have to be able to merge and grow. They have
Speaker 2: to be able to do more things than they're allowed
Speaker 2: to do today. Banks are very restricted in what kind
Speaker 2: of loans they make, what kind of securities they can
Speaker 2: invest in.
Speaker 3: That all needs to be loosened up.
Speaker 2: So banks need the freedom to be able to do
Speaker 2: a lot more with the capital that they have, the
Speaker 2: money being deposited with them. So all of these loosening
Speaker 2: up regulations they need to be phased in over these
Speaker 2: two years so that in two years the positive insurance
Speaker 2: goes away. At that point, you would expect banks to
Speaker 2: have increased the amount of capital that they have. You'd
Speaker 2: expect banks to increase the amount of reserves that they
Speaker 2: have to the extent that private deposit insurance becomes available,
Speaker 2: you would expect banks to acquire that insurance. You'd also
Speaker 2: probably expect that to come about to develop a variety
Speaker 2: of different rating agencies the rank banks on how risky
Speaker 2: they are, so we as depositors know where that bank
Speaker 2: is a highly rated bank, a low rated bank, a
Speaker 2: high risk bank, a low risk bank, so that we
Speaker 2: can make judgments about whether we should take our money
Speaker 2: out or not. And those ratings would come into force
Speaker 2: before deposit insurance goes away. But I think with deposit
Speaker 2: insurance you need a little bit more time. You need
Speaker 2: two three years. You'd have to really play it out
Speaker 2: before it is completely gone.
Speaker 3: And of course deposit insurance, the.
Speaker 2: Whole idea of to be to fail has to go
Speaker 2: Do you know there's a regulatory agency now created by
Speaker 2: dot FANK that is responsible for establishing wish institutions in
Speaker 2: the United States are to be to fail and then
Speaker 2: establishing new regulations on them, and new disclosure requirements and
Speaker 2: and and stress tests on them, to be able to
Speaker 2: to be able to monitor them and and UH and
Speaker 2: and assess their riskiness. All of that has to go away.
Speaker 2: So you would within three years have a banking sector
Speaker 2: there was completely free. Now here's one more complication. One
Speaker 2: more complication and that is that as long as you
Speaker 2: have a central bank, banks on our free. As long
Speaker 2: as you have a central banks, you know, it's going
Speaker 2: to be very difficult to have a truly free banking system.
Speaker 2: So I'm not going to get into it today. We
Speaker 2: can do it separately. But one of the things you
Speaker 2: would have to do over those three years is basically
Speaker 2: get rid of the FED and then convert to a
Speaker 2: truly free banking system, a truly free banking system in
Speaker 2: which banks also responsible for currency, for money and what
Speaker 2: money is, and have the market develop that as well.
Speaker 2: And again you need to give it time to be
Speaker 2: able to do that practically. Some of the ways you
Speaker 2: would go around this is the lost hanging food. The
Speaker 2: lost hanging fruit really is to deregulate by starting with
Speaker 2: the most recent laws.
Speaker 3: Right we did okay before there was dot frank.
Speaker 2: So I would say, within the first one hundred days
Speaker 2: of a presidency, repeal dot frank.
Speaker 3: Just get rid of dot frank.
Speaker 2: That would do a lot to liberate hedge funds, It
Speaker 2: would do a lot to liberate banks, to reduce certain
Speaker 2: regulatory burdens from banks.
Speaker 3: It would just put us in the same position as.
Speaker 2: We were in before dot frank, before twenty ten, and
Speaker 2: no disaster there. I mean, we had the financial crisis
Speaker 2: two thousand and eight, but that was a unique set
Speaker 2: of circumstances which we wouldn't have immediately following that. And
Speaker 2: then look at the nineteen forties. You know, they're all
Speaker 2: kinds of other regulatory bills in between, but just go
Speaker 2: sequentially and just get rid of them one at a time.
Speaker 2: Now you could look at particular parts of them and deregulate,
Speaker 2: get rid of those pieces, right, And this is the
Speaker 2: sense in which also deregulation has to happen at the
Speaker 2: level of Congress. It has to happen at the level
Speaker 2: of legislation. It cannot happen by executive order. It cannot
Speaker 2: happen at the FDAC. And once you get, for example,
Speaker 2: to nineteen thirty three, you would get rid of the
Speaker 2: FDAC nineteen thirty three, by getting rid of the nineteen
Speaker 2: thirty three securities law, you would get rid of the
Speaker 2: deposit insurance. So you would literally repeal these laws. Now,
Speaker 2: if there's any aspect of any particular law there was
Speaker 2: necessary to preserve in order to protect us from fraud,
Speaker 2: that would be in fault. But think about it. Nineteen
Speaker 2: thirty four bail repealing that would get rid of the
Speaker 2: SEC thirty three would get rid of the FDIC. You'd
Speaker 2: have to have something special to get rid of the
Speaker 2: OCC because the OCC, which is the Office of Control
Speaker 2: of the Councy, is a remnant of a law that
Speaker 2: was passed during the during World War, you know, during
Speaker 2: the Civil War, so you'd have to have a special
Speaker 2: law getting rid of the OCC.
Speaker 3: The CFPB would go as part of dot frank.
Speaker 2: So as you got rid of these laws, as you
Speaker 2: reverse these laws, the regulatory agencies would follow away. And
Speaker 2: if you basically did this on a schedule right from
Speaker 2: let's say we've got three years start with dot frank,
Speaker 2: and then there's some bills in between that you could
Speaker 2: degrade rid of that had to do with snls and
Speaker 2: other things that you would get rid of, and then
Speaker 2: you would ultimately get to the nineteen forties Investment Company Act,
Speaker 2: the nineteen thirty four Securities Exchange Act, and the nineteen
Speaker 2: thirty three Act, And by the time you ended with
Speaker 2: the nineteen thirty three most of banking would be done with.
Speaker 2: You'd still have to deal with the fact that you
Speaker 2: had a central bank and but you could probably unwind
Speaker 2: a over that period as well, and by the end
Speaker 2: of this process, by another three years, have a completely
Speaker 2: free banking system and a completely unregulated financial industry and
Speaker 2: just have a schedule in advance. Let the world don
Speaker 2: this is really important. What do you call it? Visibility?
Speaker 2: Transparency really really, really crucial in all deregulation, because you
Speaker 2: want the market to be able to respond. You want
Speaker 2: the market to be able to understand what you're doing,
Speaker 2: know exactly when everything's going to happen, and adapt to it.
Speaker 2: Adapt to it, right, all right? What am I missing?
Speaker 2: What have I not covered? And then you would create
Speaker 2: one special entity, the financial Fraud Agency, whose only responsibility was.
Speaker 3: Catch financial fought.
Speaker 2: And the only reason you'd create a special agency you
Speaker 2: wouldn't just be part of the FBI or something, is
Speaker 2: because you know, financial fought can be sophisticated, complex and
Speaker 2: it requires certain skills to be able to identify fraud
Speaker 2: and to be able to prove fraud and persecute fraud.
Speaker 2: So that would be that would be the reason you
Speaker 2: would That's the one agency you would create as the
Speaker 2: sec the fd SC, those cc CFPB, even the various
Speaker 2: futures and derivatives. Regulatory agencies would go. Although some of
Speaker 2: those were created in a sense by the private sector,
Speaker 2: they were created by the exchanges, and they were voluntary,
Speaker 2: and you could maybe see some of the things that
Speaker 2: maybe the SEC does are now being done by the exchanges,
Speaker 2: and maybe they create agencies to monitor at the exchange
Speaker 2: level what is happening. But then it's all done voluntarily.
Speaker 2: It's all done in the marketplace. It has no involvement
Speaker 2: of government. What is the o FAC Office of what?
Speaker 2: Tell me what it stands for, and I'll tell you
Speaker 2: whether it stays or gone. Almost everything goes. Every alphabet
Speaker 2: agency ultimately goes, but except the policing function of government,
Speaker 2: which might require.
Speaker 3: Special agency just because of the expertise Office of feign
Speaker 3: Asset Controls I assume.
Speaker 2: So part of this.
Speaker 3: Ultimately will also mean god.
Speaker 2: I mean, yeah, there's all of those regulations, I mean
Speaker 2: sanctions regulations. Ultimately, the answer to that is it should go.
Speaker 2: The US government has no right to sanction foreign individuals.
Speaker 2: I mean, without a court trial.
Speaker 3: It just takes their assets, it just freezes their assets.
Speaker 2: By what right.
Speaker 3: It can deal with other governments as it sees fit.
Speaker 3: But by what right.
Speaker 2: Does it actually freeze their assets or particularly individuals. It
Speaker 2: seems completely wrong to me. I get the intent penalize
Speaker 2: those evil holigogs, but without a court, without a trial,
Speaker 2: without any due process, you just take their assets. She
Speaker 2: could tell them they're not welcome in the United States
Speaker 2: and they could take their assets and invest them somewhere else.
Speaker 2: But I don't think a lot of these sanctions are legitimate.
Speaker 2: But I would view all of that as something that
Speaker 2: relates to phone policy more than it relates to financial regulations.
Speaker 2: Now regulations have transfers to in front farm banks. No,
Speaker 2: there should be no regulation for that. It's not the
Speaker 2: government's business.
Speaker 3: Ultimately, money laundering laws should go away.
Speaker 2: It's not the job of a bank to monitor the funds,
Speaker 2: whether the funds of gangster's funds or in a civilian funds.
Speaker 2: None of the bank should not violate privacy laws. The
Speaker 2: bank doesn't know if it's a gangster and shouldn't be
Speaker 2: required to get information.
Speaker 3: To figure it out.
Speaker 2: All those laws which are relatively new should go away,
Speaker 2: should go away. All the ideas you can't hold money
Speaker 2: in a Swiss bank account, you can't put money in
Speaker 2: a Caman bank account.
Speaker 3: All that should go away, and we can consider.
Speaker 2: Tax wise what to do about stuff like that, but
Speaker 2: that's a tax policy issue, and all kinds of ways
Speaker 2: in which we can make sure that that is minimal
Speaker 2: by loading taxes and simplifying the tax code. Right. So yeah,
Speaker 2: all right, So first I'm going to ask Alexis if
Speaker 2: he's on the chat, if he has anything that he
Speaker 2: thinks I haven't covered or anything that I've.
Speaker 3: Gone over too quickly.
Speaker 2: Uh. One way, as I said, one way to do
Speaker 2: regulate finance is to do it by the order by
Speaker 2: which the regulations would passed reverse order the latest first,
Speaker 2: and do it but importantly, do it on a predetermined,
Speaker 2: pre publicized schedule so everybody knows what's coming.
Speaker 3: All right.
Speaker 2: So if you have any questions around this, any anything
Speaker 2: around finance, financial regulations, how they how they unwound all
Speaker 2: of that, free for to ask. I'll give those questions
Speaker 2: a priority. Let's start with Alexis, and then if Alexis
Speaker 2: wants to comments and see sponsored the show. I want
Speaker 2: to make sure I covered the material that he wanted
Speaker 2: me to cover and whether I went in n f
Speaker 2: detail or any of that. Alexis is is the fact
Speaker 2: that finance was regulated first related to the larger materialistic
Speaker 2: skeptic philosophy philosophical trend, as it is a more abstract
Speaker 2: industry and the culture is suspicious of conceptual activities. Yeah,
Speaker 2: I mean there's a sense in which that's true. I
Speaker 2: think it has to do with a lot of it
Speaker 2: has to do with the economic ignorance of the world
Speaker 2: of the finance plays. I mean, the country was found
Speaker 2: in seventeen seventy six. The understanding of finance in the
Speaker 2: late eighteenth century was not very good. There were a
Speaker 2: few good thinkers to go in France, Adam Smith, but
Speaker 2: none of them really got it. None of them at
Speaker 2: a theory of banking. None of them are the three
Speaker 2: of banking as it integrates to a monetary theory, a
Speaker 2: theory of money. And they didn't really under stand banks,
Speaker 2: and they were a little afraid of them. And they
Speaker 2: had also seen the banking in Europe and being captured
Speaker 2: by the state, so they were worried that big banks
Speaker 2: would then be used by a future American state for
Speaker 2: status goals, which they have been by the way American
Speaker 2: banks have been used like that by the state, the
Speaker 2: bigger banks and the smaller banks to do all kinds
Speaker 2: of things. Community Reinvestment Acts is another one that would
Speaker 2: be gone right if you went back, you know, all
Speaker 2: the different So you'd have to get rid of the
Speaker 2: Community of Investment Act as part of the process. That
Speaker 2: would that would that you could do. That's the kind
Speaker 2: of thing you could do day one. That's the kind
Speaker 2: of act that you could get rid of first one
Speaker 2: hundred days. So I think the hostility towards finance came
Speaker 2: from one a deep lack of understanding of it. And
Speaker 2: then as we go through the nineteenth century, there is
Speaker 2: an ever growing suspicion of capitalism, an ever going suspicion
Speaker 2: of conceptual activity, but also just of capitalism, and ever.
Speaker 3: Going suspicion of freedom.
Speaker 2: So as we get further away from the founding, a
Speaker 2: further away from the Enlightenment, it becomes more and more
Speaker 2: difficult to justify, explain, understand the role of freedom and
Speaker 2: the role of free markets, and the role of free
Speaker 2: markets as they apply to finance in the world out there.
Speaker 2: And therefore more and more and more regulations are loaded
Speaker 2: on without really anybody arguing against them, partially because there
Speaker 2: was partly because there was no economic defense of finance
Speaker 2: and partly because there was no moral defensive finance, and
Speaker 2: partially because, as you say, there was no conceptual There
Speaker 2: was no trust in this abstract value creation, and they
Speaker 2: all integrate. People just people don't understand because they don't
Speaker 2: want to understand. People don't understand because they're suspicious of
Speaker 2: all driven by Roden philosophy that spreads during the nineteenth
Speaker 2: century through Europe and then into the United States. So
Speaker 2: it was regulated first because it was the least understood
Speaker 2: and the least appreciated activity of all economic activities. Uh, Andrew,
Speaker 2: Are the crusaders for regulation, like Elizabeth Wann, intellectually honest,
Speaker 2: even in the sense of being honestly blinded by altruism?
Speaker 3: Or are they motivated by nihilism and envy?
Speaker 2: Well, I think that's a false alternative, right. I think
Speaker 2: they're fundamentally dishonest because they're evading, But I don't think
Speaker 2: that they are motivated by an explosit nihilistic motivation. That is,
Speaker 2: Elizabeth want does not want to see our economy burned.
Speaker 2: It does not. She does not want to see it destroyed.
Speaker 2: That's not what she holds in her mind as her motivation.
Speaker 2: She holds in her mind that look at a disaster,
Speaker 2: look at inequality, look at how unfair it is. Look
Speaker 2: at how finance discriminates. Look at how it perpetuates the
Speaker 2: rich being the rich and it doesn't help the poor.
Speaker 2: Look at how ill informed people are about finance, and
Speaker 2: yet they're expected to participate in the game. I'm going
Speaker 2: to correct that by regulating and enforcing disclosure and making
Speaker 2: it fairer. And So I don't think that's honest in
Speaker 2: a sense that to come to all those conclusions, she
Speaker 2: has to evade. The evasion, if you will, is motivated
Speaker 2: by altruism. That is true. So I think she's dishonest
Speaker 2: without being nihilistic. I don't think her motivation is nihilistic,
Speaker 2: but she's definitely guided by dishonesty, by evasion, and by
Speaker 2: suddenly any galitarian like attitude towards life, towards economics at least.
Speaker 2: All right, Thank Wes. Thank you for the fifty dollars sticker. Gail,
Speaker 2: thank you for the sticker. I think I saw another
Speaker 2: fifty dollars here. Yeah, Adri Adri, thank you for the
Speaker 2: fifty dollars sticker. I really appreciate that. Mike, thank you
Speaker 2: for the twenty dollars sticker, So thank you to all
Speaker 2: the stickers, all the supporters of the show really really
Speaker 2: appreciate that. Of course, most of our thanks my thanks
Speaker 2: today to Alexis who sponsored this show, who I don't
Speaker 2: think is on the Chat anymore, but I'm sure we'll
Speaker 2: listen to the show later on. Okay, David fifty dollars question,
Speaker 2: based on the premise that regulation attempts protects the uneducated,
Speaker 2: does the ubiquitous availability of AI help close the education gap?
Speaker 2: Does it introduce the capacity of regulation of consumer maybe
Speaker 2: self regulation. I mean, it's certainly another tool that's available
Speaker 2: very cheaply to investors and the public to educate themselves
Speaker 2: about what they are doing. So to the extent that
Speaker 2: people are concerned about uneducated investors, I don't think that's
Speaker 2: ever really been the case. I don't think any regulation
Speaker 2: is actually really sincerely motivated by that. Going back to
Speaker 2: Elizabeth One, Elizabeth One primarily is motivated by altruism and power.
Speaker 3: She wants control, She wants government to have control.
Speaker 2: She believes in government control. She rationalizes that through these
Speaker 2: kind of explanations about educated the uneducated masses.
Speaker 3: But yes, AI has the potential to close the education gap.
Speaker 2: To make it cheap and easy for people to get
Speaker 2: educated about finance, about you know, complex issues, complex things.
Speaker 2: But the question is, well, they use them those tools,
Speaker 2: and as long as the government, as.
Speaker 3: Long as the attitude is they have you.
Speaker 2: Know, it's out, we cannot let them trade unless they're educated.
Speaker 2: Then the government is never going to trust the people
Speaker 2: to educate themselves and will always impose some form of
Speaker 2: regulation if only well, you have to take this ten
Speaker 2: hour course with an AI before you can make an investment,
Speaker 2: like all the investment advisive requirements.
Speaker 3: For example, for me to advise.
Speaker 2: You, I have to get I have to I have
Speaker 2: to get you know, trained, although that would also go away,
Speaker 2: by the way, when we deregulated.
Speaker 3: So I think they've always been tools.
Speaker 2: I've always been ways by which but it's true that
Speaker 2: technology is making those tools cheap, tools cheaper, more available, easier,
Speaker 2: and the excuses that these tools are not available to
Speaker 2: me go away. Now what about then the next level,
Speaker 2: which is the government saying they might have the tool
Speaker 2: to educate themselves, but they're just too stupid, they're not
Speaker 2: smart enough.
Speaker 3: We're trying to protect people from their low IQ.
Speaker 2: I don't know what you do about that, maybe that
Speaker 2: chip in the brain that Elon Musk is.
Speaker 3: Working on to make them smarter.
Speaker 2: But people will always find excuses to justify the regulation.
Speaker 2: So I don't I never I don't think it was
Speaker 2: ever about the uneducated, unknowledgeable mass masses.
Speaker 3: I think that was just a rationalization.
Speaker 2: I think AI makes that less credible in the sense
Speaker 2: that everybod but he now has access to this, the government,
Speaker 2: the authorities, the regularities will just find another excuse, another rationalization,
Speaker 2: and partially as people are too stupid to understand what
Speaker 2: AI teaches them. Thank you, David, thank you for the
Speaker 2: fifty dollars. Really really appreciate the support. Barbara, thank you
Speaker 2: for the Thank you for the sticker. Incredible, thank you.
Speaker 2: All right, let's go over some of these.
Speaker 3: A nascent, what do you think?
Speaker 2: Wait a minute, let's let's wait on that. That's Brazil,
Speaker 2: that's the UN. Andrews says. I know, regulatory capture is real,
Speaker 2: but it's too often used as a smea against big business.
Speaker 2: The government has a gun to their heads, what are
Speaker 2: they supposed to do? But absolutely, and you know Dot
Speaker 2: Fank is a good example of this. Dot Fank was
Speaker 2: this law there was passed as a shell handed over
Speaker 2: to regulators and said fill in the content of the regulations.
Speaker 2: And now it's hard and it's complicated. So the regulators
Speaker 2: went to the bankers and said, okay, let's figure out
Speaker 2: what you'ld be in here. And you could say, oh,
Speaker 2: this is completely captured, and it is to some extent,
Speaker 2: but they're going to be controlled. A gun is pointed
Speaker 2: at them, and they want to minimize the damage. And
Speaker 2: does that include protecting themselves against competitions.
Speaker 3: Sure, but the fault is with Congress and the regulators.
Speaker 2: And you know, regulator capture is inevitable in every regulatory regime,
Speaker 2: possibly because regulators are not smart enough and they have
Speaker 2: to have industry inputs, and it you know, sometimes it
Speaker 2: happens through explicit fraud. It's through explicit what do you
Speaker 2: call it corruption? Sometimes the corruption is more implicit. I'll
Speaker 2: hire you when you leave your regulatory job. I'll give
Speaker 2: you a nice salary then, and it's never even spoken,
Speaker 2: it's just implied. So regulatory capture is a feature, not
Speaker 2: a bug of regulation. It's a feature not a bug
Speaker 2: of regulation. You want to get rid of regulatory capture,
Speaker 2: get rid of regulation and don't blame the business, blame
Speaker 2: the government. Megan says Peter. Welcome home, love Wow. Not
Speaker 2: not in a no puzzle, no, no clever rhyming, just
Speaker 2: straight out there, We'll come home all right, Matches.
Speaker 3: How does the Great Depression factor in?
Speaker 2: Is regulation necessary because economic collapse like this as possible
Speaker 2: or does regulation cause a collapse? Well, in this sense,
Speaker 2: neither right, So, but something causes the collapse. So the
Speaker 2: pattern is, and this is true of the Great Depression,
Speaker 2: some government action, some government control, causes a collapse. That's
Speaker 2: what happened to Great Depression. The Federals of his mismanagement, suit, Holly,
Speaker 2: raising taxes, all of that caused the Great Depression. Biggest
Speaker 2: villain there was the federers of and the tariffs, teriffs right,
Speaker 2: restrictions on trade.
Speaker 3: But the world, the intellectuals, many economists blame the stock.
Speaker 2: Market for the collapse. So the response to collapse is
Speaker 2: not to get rid of the fed. The response to
Speaker 2: collapse is to regulate finance because they're blamed for it.
Speaker 2: So then you have a massive quantity of regulations nineteen
Speaker 2: thirty three bill, nineteen thirty four bill. All you know, really,
Speaker 2: with the perspective of this is to prevent the great
Speaker 2: the next great depression, because these institutions, stock markets, banks
Speaker 2: caused the Great Depression. They didn't. Nobody today thinks they did.
Speaker 2: They didn't. But it's a great opportunity for don't let
Speaker 2: a good crisis go to waste. Let's regulate, that's control,
Speaker 2: let's increase our power. Then these new regulations cause some
Speaker 2: crisis in the future. In the case of the thirty three,
Speaker 2: thirty four, and forty regulations, they caused the crisis sixty
Speaker 2: years sixty four years later in two thousand and eight.
Speaker 2: They caused a great financial crisis. I mean, other things helped,
Speaker 2: you know, but they did. I mean, if you think
Speaker 2: about those laws also created Freddy and Fanny, or at
Speaker 2: least Freddy those oh maybe it was Fanny. I can't
Speaker 2: remember which one came first. Anyway, they created one of those.
Speaker 2: They created the whole mortgage industry, They created snls, they
Speaker 2: created the whole thirty year mortgage idea. The regulations created
Speaker 2: the setup for the two thousand and eight great financial
Speaker 2: crisis that happens. The blame is not then placed on
Speaker 2: those ancient regulations that caused it. The blame is not
Speaker 2: placed on oh no, it's the freedom that was left
Speaker 2: in the gaps between those regulations. I don't know what
Speaker 2: overheating is. So you get dot Frank twenty ten, which
Speaker 2: is supposed to close these but dot Fank creates basically
Speaker 2: the framework for the Knicks crisis, and to some extent,
Speaker 2: all of these regulations created the SNL crisis of the
Speaker 2: nineteen eighties and created the failure of Silicon Valley Bank
Speaker 2: and the crisis that that created a couple of years ago.
Speaker 2: All of that is part of these ancient regulations. So
Speaker 2: they might create stability for a little while, ultimately they
Speaker 2: cause damage, and the damage is always blamed not on
Speaker 2: the regulation but on the market, on that element that
Speaker 2: is still free.
Speaker 3: So that's the way it happens.
Speaker 2: Regulations called depressions, which lead to more regulations, which cause
Speaker 2: more crises, which leads to more regulations with caused more crises,
Speaker 2: which leads some more regulations, and on and on and
Speaker 2: on it goes. Okay, Henrick says, why was the first
Speaker 2: bank of the United States followed with the Bank of
Speaker 2: North America. Fine, as created by Congress, it should so
Speaker 2: was the first bank of the United States following followed
Speaker 2: with the Bank of North America fine as created by
Speaker 2: Congress and should not have been ended.
Speaker 3: No, it was not fine.
Speaker 2: They had way too much federal government involvement. What was
Speaker 2: fine about them is that they were attempts to create
Speaker 2: a national charter for a bank versus the way banking
Speaker 2: was really until nineteen ninety four, which was state charted.
Speaker 2: Everything was at the state level, which created a fragmented
Speaker 2: and fragile banking system in the United States. So what
Speaker 2: should have happened is that the First Bank of the
Speaker 2: United States and should have been just a model charter
Speaker 2: for a for a charter for a US bank that
Speaker 2: could have branches and operate anywhere in the US with
Speaker 2: no straight state restrictions on it. It should have been
Speaker 2: divorced from the government, which from the federal government, which
Speaker 2: the First Bank of the United States was not. It
Speaker 2: functioned as the lender to the to the.
Speaker 3: To the to the to the government.
Speaker 2: It you know, it's the bonds counted as reserves. It
Speaker 2: was very I don't have all the details, but it
Speaker 2: was very much acted like a pseudo central bank, and
Speaker 2: that shouldn't have happened.
Speaker 3: They should have been competition.
Speaker 2: Anybody should have been allowed to open a bank, and
Speaker 2: they should have been able to get a national charter
Speaker 2: which would have allowed several national banks to compete with
Speaker 2: one another, rather than just one, which basically acts like
Speaker 2: a central bank. All right, so let's go back to
Speaker 2: the questions these and have questions unrelated to bank regulation
Speaker 2: or deregulation a necessan. What do you think about the
Speaker 2: economic situation here in Brazilian about the Brazilians if you
Speaker 2: quote trying to regulate control social media, what do you
Speaker 2: suggest we do to improve this situation? Well, I mean
Speaker 2: what you need to do is elect a Milay like
Speaker 2: president and a Milay you know liking Congress. You need
Speaker 2: to completely restructure the Brazilian economy. The Brazilian economy is
Speaker 2: a disaster. It's overly controlled, overly regulated, overly taxed, overly
Speaker 2: owned by the you know, too much government ownership of
Speaker 2: the means of production. Uh, it's too corrupt, too much
Speaker 2: corruption being facilitated. The Supreme Court needs to be newted.
Speaker 2: It has way too much power. It needs to be
Speaker 2: like the Supreme Court of the United States. It should
Speaker 2: not be a supreme court that actually can go out
Speaker 2: and basically write their own laws, which is what the
Speaker 2: Brazilian Supreme Court.
Speaker 3: Is doing.
Speaker 2: So. Brazil needs a massive restructuring of its economy and
Speaker 2: of its political structure, and that's going to require a
Speaker 2: major revolution in thinking, and it's going to require somebody
Speaker 2: like Melay to really shake things up and redo, rethink
Speaker 2: what's going on, Anmerkat, should you support turning the UN
Speaker 2: building into a Trump hotel? If that's the price of
Speaker 2: having the UN kicked out of the US? Gods that
Speaker 2: must be destroyed, sure, I'd support the UN building. I'd
Speaker 2: support the UN being kicked out of the US. And
Speaker 2: if we have to pay Trump or Bride by giving
Speaker 2: him the property, that's a cheap price to pay in
Speaker 2: order to get rid of the UN. Fank I know,
Speaker 2: I know you like Renaissance. The group Renaissance. The bass
Speaker 2: player John camp just died. Also can explain the Cave
Speaker 2: of the Patriarchs massacre. Who was both Goldstein God. I
Speaker 2: don't remember the details of that, but Goldstein was some
Speaker 2: He was a religious nationalist nutcase who, if I remember right,
Speaker 2: came into a place of worship. I think this is
Speaker 2: during the Second inter Faught US in the early two thousands,
Speaker 2: when buses and were blowing up all over the place.
Speaker 2: And Israelis were being killed regularly by Palestinian terrorists and
Speaker 2: just shot up a bunch of people who were praying
Speaker 2: and killed a lot of people, and you know, land
Speaker 2: up I think being arrested and put in jail, you know,
Speaker 2: So that is the massacre I think. And yeah, it
Speaker 2: was a horpable act of murder of terrorism, and you know,
Speaker 2: he should have been put in jail and the keys
Speaker 2: thrown away. And I think that's actually what happened, unless
Speaker 2: he was killed. I can't remember, but yeah, I mean
Speaker 2: there are nutcases on the side of Israel as well,
Speaker 2: but that is not the rule.
Speaker 3: That is the exception.
Speaker 2: Michael says, I'm saving my mega questions for the end
Speaker 2: of the month Q and A show and the New
Speaker 2: Year Eve show.
Speaker 3: Okay, thanks Michael.
Speaker 2: Andrew. Why wouldn't selfishness entail using the government to wield
Speaker 2: regulation for one's own interest, because it's never in one's
Speaker 2: own interest to have the government wield force.
Speaker 3: The goverment.
Speaker 2: Wielding forces is a granting of arbitrary force to the
Speaker 2: government which is going to be wielded against you in
Speaker 2: one way or the other. And it harms your self
Speaker 2: esteem to know that you are being successful because let's
Speaker 2: say you've managed to get the government to wield force
Speaker 2: against your competitor. See, you are now damaging your own recognition,
Speaker 2: your own knowledge of your own productive ability, and you
Speaker 2: now know that you're a failure, that you can only
Speaker 2: be successful by wielding force. Basically, the government wielding force
Speaker 2: on your behalf is like you wielding force. It's the
Speaker 2: same reason why it's not in yourself interest. A light
Speaker 2: cheat and steel, It basically is an acknowledgment by yourself
Speaker 2: that you cannot incapable of using reason to survive, and
Speaker 2: therefore incapable living a life of a human being, that
Speaker 2: you have to revert to being an animal in order
Speaker 2: to survive. That's what it means to use the government
Speaker 2: to wield force against your competitors, let's say. And that
Speaker 2: is never in yourself interest. Not to mention the fact
Speaker 2: that once you give the government the power to use
Speaker 2: force against competitor, you're giving them the power to use
Speaker 2: force against you. Andrew, what do you think of this
Speaker 2: notion that Elon is politically active in order to help
Speaker 2: his businesses gain advantage.
Speaker 3: I mean, I don't think that is most of what's
Speaker 3: going on here.
Speaker 2: I don't think that is what dominates Ellen's thinking. I
Speaker 2: don't think that's dominates his incentive. I think he thinks
Speaker 2: it's fun. I think he has a certain belief that
Speaker 2: this is good for the country, that this is his responsibility.
Speaker 2: But I also think he's going to be there when
Speaker 2: relevant to make sure that the interests of his businesses
Speaker 2: are not hood. I think he'll be a voice and
Speaker 2: he'll make sure to express himself in order to protect
Speaker 2: the interests of his business. And you know the fact
Speaker 2: that the ban on investment It's China disappeared from the
Speaker 2: bill that was passed by the House in the Senate
Speaker 2: yesterday to keep the Gunman open, I'm sure was cheered
Speaker 2: on by a L. N. Musk, if not suggested by
Speaker 2: him to begin with. But I don't think that's the
Speaker 2: main reason, or the sole reason he went into politics.
Speaker 2: But it's not it's not absent. It's there as well.
Speaker 2: Philosophy work, Merrimans. What do you call a bunch of
Speaker 2: chess players bragging about their game in a hotel lobby,
Speaker 2: chess nuts boasting in an open for you, it's supposed
Speaker 2: to be funny, guys. I'm sure Mary Bands is laughing
Speaker 2: but she's biased. All right, chess nuts, chess nuts boasting
Speaker 2: in an open for you?
Speaker 3: All right, uh friend, harp up?
Speaker 2: Final question I think for the show. What's the difference
Speaker 2: between Congress and Parliament? Does a Parliament have a House
Speaker 2: of representatives equivalent to a Senate equivalent? I don't think so.
Speaker 3: I think Parliament is just one house.
Speaker 2: Well, the British have the House of Lords, which kind
Speaker 2: of acts like a Senate maybe supposedly, not really. I
Speaker 2: don't know if there's a difference. I don't know what
Speaker 2: the difference between Congress and our house and Parliament is.
Speaker 2: I really don't know. I have to look it up. Andrew,
Speaker 2: would you describe libertarianism as philosophy for free markets, no,
Speaker 2: as philosophically for free markets. No, because anarchy is anti
Speaker 2: free markets and anarchy is part of libertarianism.
Speaker 3: I would describe libertarianism as.
Speaker 2: A big tent with a lot of different views in it,
Speaker 2: many of them pretending to be.
Speaker 3: Pro free markets but not actually.
Speaker 2: And suddenly, I wouldn't use the philosophically in the description
Speaker 2: because I don't think libertarianism is very philosophical. They think
Speaker 2: they're advocating for free markets, but they're not all right,
Speaker 2: we will call it a day. Thank you everybody. I
Speaker 2: hope you enjoyed that. I hope there was some value
Speaker 2: in that. As I said, we'll do healthcare, immigration, China next,
Speaker 2: we'll probably come back to financial deregulation because there's so
Speaker 2: many things we for example, didn't cover insurance. There's a
Speaker 2: lot of other things that we didn't cover. Oh, Frank
Speaker 2: has a twenty dollars questions. If people understood money profit
Speaker 2: money's profitability, and had a more active view of money,
Speaker 2: most regulations would be seen as limiting and weak. I
Speaker 2: think that's right. But in order to have that kind
Speaker 2: of view of money, they'd have to have a better
Speaker 2: view of morality. That is, that have to be a
Speaker 2: self they have to have a self interested view of morality.
Speaker 2: They'd have to be thinkers as well. But yes, I mean,
Speaker 2: part of the need to regulate, the perceived need to
Speaker 2: regulate finance is this idea of money is barren interest
Speaker 2: as basically stealing, not real wealth, creation, not real creation.
Speaker 2: And therefore we need protection from those evil guys that
Speaker 2: make money for money somehow magically. So the understanding money,
Speaker 2: understanding how money leads them more money, money leads to productivity,
Speaker 2: is a crucial piece in making people be okay with
Speaker 2: a true free market in money and banking and finance.
Speaker 2: All right, everybody, I will see you on Monday. Those
Speaker 2: If you speak Hebo, there will be a show tomorrow
Speaker 2: eleven am East Coast time. Otherwise, see all money by everybody.
Speaker 2: Have a great rest of your weekend.