Naked Money Quotes

“The Fed could not create new money to act as the lender of last resort for failing banks, as new money had to be backed by gold.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“Commodity money solves the hyperinflation problem. No government can produce huge new quantities of gold, silver, or mackerel.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The logic was that neither the Americans nor the Soviets would launch an attack if they knew for certain that they would be destroyed in the counterattack—hence the name “mutually assured destruction,” or MAD.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“During the Cold War, game theorists argued that peace between the United States and the Soviet Union would be maintained as long as each nation had second-strike capability—meaning that each country could strike a massive nuclear blow even after being attacked first.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“America, a country with a GDP per capita of $55,000,12 does not have the cash on hand to finance all of its consumption and investment.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“Crisis Inquiry Commission, “The repo market, I mean it functioned fine up until one day it just didn’t function.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“In 1913, after a lengthy study, Congress and President Woodrow Wilson passed the Federal Reserve Act, which created the Federal Reserve System to act as the nation’s central bank.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The Constitution specifically forbids the states from coining money or issuing bills of credit.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The most defensible impetus for regulation is not to protect individuals or firms from making bad decisions or doing stupid things, but rather to insulate the rest of us from those poor choices (or bad luck).”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“Banks generate credit, and credit is new money.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“We want the impossibility set: the benefits of free-flowing capital without the disruptions; the flexibility of floating exchange rates without the unpredictability; and the ability to adapt monetary policy to domestic needs without the headaches caused when other countries do the same.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“There are no heroes for stopping a problem before it happens.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“We will just resent whatever cost and inconvenience the regulations impose, totally unaware that those precautions may have prevented a debt crisis or a real estate crash.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“Voters are prone to dislike regulators in any event. Just think about the nature of what those regulators are trying to do. If regulation averts a crisis—the real goal—the public never knows there would have been a crisis.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“As former Fed governor Kevin Warsh has said, “Economics, and the conduct of monetary policy, after all, is not physics.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“As humans, we are really bad at envisioning the counterfactual—what might have happened if different choices had been made.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The 2008 financial crisis only deepened Chinese skepticism that free-flowing capital and floating exchange rates work swimmingly in a modern economy.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“What was different about this crisis was that the institutional structure was different. It was not banks and depositors; it was broker-dealers and repo markets, money market funds and commercial paper. But the basic idea of providing short-term liquidity in order to stem a panic was very much what Bagehot envisioned when he wrote Lombard Street in 1873.” 37”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The ratings agencies were supposed to be the ones who made sense of this process by evaluating individual securities and assigning them a rating based on their relative risk: AAA, AA, BBB, and so on.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“Your condo loan might be packaged with 999 other mortgages and sold off to an investor who wanted to receive the steady stream of income as those mortgages were (hopefully) paid off.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The typical real estate purchase was far more leveraged than the stocks purchased on margin in the run up to the 1929 crash. Putting 5 percent down on a house means the other 95 percent is borrowed.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“were a lot of bad actors). Let’s start at the bottom: too many people borrowed too much money to buy real estate.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“All accounts of the crisis document a chain of events in which rising real estate prices led to reckless borrowing and ultimately the equivalent of a modern bank run.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“by 2005 “more than one out of every ten home sales was to an investor, speculator, or someone buying a second home.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“More specifically, there was no orderly process for allowing a handful of giant troubled firms to go bankrupt in a way that would not cause the rest of the system to unravel (e.g., Fannie Mae, Freddie Mac, AIG).”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The Financial Crisis Inquiry Report describes, “By the time the process was complete, a mortgage on a home in south Florida might become part of dozens of securities owned by hundreds of investors—or parts of bets being made by hundreds more.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“(Here is a statement of the obvious: banks with “state” in the name are chartered by the state; those with “national” in their name are chartered by the feds.)”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“One currency can be swapped for another at whatever rate two parties are willing to make a voluntary trade.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System

“The harvest is good. Families are awash with rice. Deposits at the rice storehouses climb, enabling more loans. Land values are rising, both because credit is more readily available and because villagers believe future harvests will continue to be bountiful.”
― Charles Wheelan, Naked Money: A Revealing Look at Our Financial System