The Chicago Plan
Towards a secure banking system
Buckle in; this one might be a little dense.
It should come as no surprise to most people that I am a nut for economics. If investing is the discipline where we make money by participating in economic prosperity economics is the discipline by which we create economic prosperity. Economics is designed to examine both participants’ choices and the optimal allocation of resources. I will state at the outset that I do not see myself as much of a Keynesian-which believes that government intervention can frequently improve the economy, and there is evidence for this dominates in academia due to their ability to use mathematical models. I utilize the Chicago School and the Austrian School of Economics primarily. However, these schools differ mostly on philosophy and focus rather than on having major disagreements; Chicagoans study how scarce resources get allocated compared to Austrians study how people and firms make choices. It is important to understand that many of these ideas run together over time, but I also incorporate them with certain Keynesian ideas like sticky wages and imperfect competition. In essence, the market is not efficient in the short run; on that much, I agree with Keynes, but the arguments convince me of the Austrian and Chicagoan schools that very short-run government intervention often causes long-run problems that lead to swallowing the horse syndrome, where we keep fixing small problems with big solutions that wind up needing fixed longer and bigger each time until we find ourselves in an unsustainable path. This leads very well into the topic at hand, banking.