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