Bailout 15: More on the solution발음듣기
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Bailout 15: More on the solution
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출처 : 칸아카데미
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Let's talk a little bit about what I'll call the Plutsky Plan, because it came from my friend, Todd Plutsky.발음듣기
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But let's think about a little bit of its repercussions and see if it's more or less likely to actually work.발음듣기
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Well first of all, you know, I threw out in the last video 50 banks, maybe that's logistically difficult.발음듣기
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Instead of having 50 banks with $14 billion initial capital, maybe you do five banks with $140 forty billion initial capital.발음듣기
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But the point being is that you should have more than one bank, it shouldn't be too big to fail, and you should try to instill some type of competition there.발음듣기
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But because they have pristine balance sheets, all of these banks are going to be able to lever 10:1, which we know isn't crazy.발음듣기
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And frankly, they're probably going to be able to attract a lot more - you know we said foreign governments probably would be willing to lend to them, the private sector is willing to lend to them.발음듣기
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If these are commercial banks, which means that they can take deposits, a lot of people are going to be willing to essentially put their money with this bank because it has a clean balance sheet, and essentially it'll be owned individually by the American people, and it will have the federal backstop above and beyond the FDIC insurance limit and all that.발음듣기
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So in terms of whether you'll be able to capitalize these banks and lever up 10:1, I don't think there's an issue there.발음듣기
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Then there's a question, will it solve the fundamental problem of keeping credit markets flowing to those people that it needs to keep credit to?발음듣기
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Well we already said it'll have no trouble being able to have access to funds above and beyond how much the government capitalizes it with.발음듣기
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It'll be able to attract deposits, it'll be able to attract investment from the private sector and from international money, especially with this five year government backstop.발음듣기
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I mean you might argue that is too much - that might provide too much credit, and it might go from, you know, thawing to overheating credit markets.발음듣기
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So then you might say well if $7 trillion is too much liquidity, well why don't we just reduce this number a little bit.발음듣기
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Because then $100 billion, if you do 10 banks with $10 billion each, so you introduce $100 billion.발음듣기
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They all lever up because it's all new liabilities and new assets, clean balance sheets, it'll introduce $1 trillion of new loans that it can go put to work for people building factories and doing real things.발음듣기
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And because their incentive is not to bail out their friends, it's not to help out the companies they used to work for, the companies that are donating to them in some way or contributing to them, or promising jobs in some way.발음듣기
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It won't go - this $1 trillion is not going to go to buy assets at higher prices than they should.발음듣기
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You know it could go to buy assets at discount prices if the new managers of these banks do see a good return.발음듣기
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But most probably they'll invest it in areas of the economy where they do see a positive return on investment.발음듣기
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And one person had sent me a note and said, hey, wouldn't introducing all of this liquidity into the financial system, whether it's $7 trillion or $1 trillion, wouldn't that lead to hyperinflation?발음듣기
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In general, if anyone makes a positive investment - so if I have $1 and I make it an investment where it generates $1.20 of benefit, that by definition is not inflationary.발음듣기
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A good way to think about inflation - I'll do a lot about this because it is a very abstract concept.발음듣기
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And let's say I have another pool of the amount of money there is in a given year. So money.발음듣기
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And the money supply is an interesting thing, because it's not just dependent on the amount of physical coins or dollars.발음듣기
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It also is a function of how quickly those transact and how much leverage there is in the system.발음듣기
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So you can actually have a whole economy where everyone just has one dollar bill, but every time someone needs something from someone else, they exchange that one dollar bill.발음듣기
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If this pool, the pool of money grows faster than the actual goods and services and the actual productive capacity of that country, then you have inflation.발음듣기
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You have the same, or you have some amount of money representing more goods and services, so goods and services actually become cheaper.발음듣기
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And the problem that we're talking about right now, this credit crisis, this is a problem of deleveraging, where the government injects a dollar into this current broken banking system, and instead of that dollar - you know, the normal system is you lend a dollar to a bank, so you lend $1 to a bank, and then, let's say this is the Fed right?발음듣기
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Then that bank has to keep - it can only lever 10:1 - so it essentially has to keep in reserve $0.10 of that dollar, but then it lends $0.90 to somebody else, to another bank, right?발음듣기
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And then that someone else can lend whatever $0.81 times 0.9 is, so I don't know, seventy-something cents to someone else.발음듣기
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But you get the idea, that in a normal, functioning banking system, one dollar injected into the system has this multiplier effect, so it actually creates a lot of money.발음듣기
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And that's what people are implicitly talking about when they talk about the printing press.발음듣기
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But what's going on right now is the Fed lends $1 to Bank A, but Bank A is so scared that it doesn't lend out to anyone else, it just keeps that dollar.발음듣기
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Because right now their main priority isn't to try to get a little bit of incremental interest on whatever money they have, their main priority is survival.발음듣기
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So the main problem when you have a credit crisis and when you have a recession is actually the money supply shrinks.발음듣기
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The amount of goods and services probably shrinks as well, but the money supply shrinks even more.발음듣기
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And you know, that was the main problem in the Great Depression, and that was the main problem in the Japanese crisis.발음듣기
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And you know, Ben Bernanke, he's written papers about this and he's like, well you can always cure deflation by printing money and dropping money from a helicopter.발음듣기
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They've already been - the Fed's been willing to take pretty large credit risks on bank and lending money into the system.발음듣기
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But the problem is, if this multiplier effect is disappearing at a faster rate than you are dropping money from a helicopter, you still have deflation, right?발음듣기
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Before when you not only let people lever 10:1, you let them lever 30:1 and 40:1, every dollar you put in the system became $40 that was given to someone else, and then they could lever up.발음듣기
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And frankly, the only reason why we didn't have inflation - I mean the last 5, 10 years we had this huge explosion of money.발음듣기
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And the only reason why it didn't, at least in measurable inflation, show up, is that on the other side of the equation, you had all of this new productive capacity come on line in China and India.발음듣기
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But in things that were not manufactured goods, like commodities, like homes, you had this huge asset inflation.발음듣기
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Or even college tuition, or healthcare - things that are dependent on American labor - became hugely expensive, and that's because you had this huge, huge infusion - you know, there's different ways to measure money, but the broadest indicator, which is called M3 - and I know I'm kind of going out of the domain, but I'll make a bunch of videos on this.발음듣기
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The broadest indicator, M3, which the government stopped officially reporting, exploded because there was so much leverage in the system.발음듣기
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And frankly, this new $700 billion bail out, I personally think this is the helicopter that Ben Bernanke always talked about using.발음듣기
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And whenever you're going to drop money from a helicopter, the question is, where do you drop it?발음듣기
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The point of this video and the last is maybe you should just drop it into a new banking system, or maybe you just drop it into everyone's pockets and see what happens.발음듣기
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