Mark Spitznagel Asks “Wouldn’t We Be Better Off Without Central Banks?”

Courtesy of Institutional Investor:

Happy 100th Birthday, Federal Reserve – Now, Please Go Away

Nearly 100 years ago, on December 23, 1913, the Federal Reserve Act was signed into law, giving the U.S. exactly what it didn’t need: a central bank. Many people simply assume that modern nations must have a central bank, just as they must have international airports and high-speed Internet. Yet Americans had gone without one since the 1836 expiration of the charter of the Second Bank of the United States, which Andrew Jackson famously refused to renew. Not to be a party pooper, but as this dubious anniversary is observed, we should ask ourselves, Has the Fed been friend or foe to growth and prosperity?

According to the standard historical narrative, America learned a painful lesson in the Panic of 1907, that a “lender of last resort” was necessary, lest the financial sector be in thrall to the mercies of private capitalists like J.P. Morgan. A central bank — the Federal Reserve — was supposed to provide an elastic currency that would expand and contract with the needs of trade and that could rescue solvent but illiquid firms by providing liquidity when other institutions couldn’t or wouldn’t. If that’s the case, then the Fed has obviously failed in its mission of preventing crippling financial panics. The early years of the Great Depression — commencing with a stock market crash that arrived 15 years after the Fed opened its doors — saw far more turmoil than anything in the pre-Fed days, with some 4,000 commercial banks failing in 1933 alone.

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When reality overthrows imagination

Courtesy of Hugo Salinas Price@Plata.com

Imagination is an exclusively human faculty. Only humans can imagine.
I have on another occasion mentioned Arthur Koestler’s remarkable book, “The Sleepwalkers”. As a child of his time, Koestler accepted the theory of Evolution, but he did have a question (which he did not answer) regarding this theory.

I am not quoting Koestler’s very words, but this is their substance: “If we are evolved creatures, and our bodily constitution reflects the challenges of survival and our ability to evolve to meet those challenges, then – how is it that we are endowed with brains of a capacity for thinking vastly greater than necessary for our survival? All other living creatures have brains only just sufficient for their survival. But we humans have brains whose abilities far exceed the requirements of survival. This is a puzzle.”

At no time in history, surely, has humanity lived in this real, physically tangible world with so enormous a reliance on the human brain’s capacity for imagination. Continue reading