As a college student at the University of Chicago I have access to so many interesting people. Several of them are Nobel Laureates, and others will win this notorious prize in the future.
However, the U of C is not only known for these great theoreticians but applied academics who are either consultants or serve in important government organizations.
One of the members of faculty who has had extensive experience with top politicians and lawmakers is Dr. Randall S. Kroszner. This chap is very young but has accomplished so much.
In under 50 years of age, not only has Dr. Kroszner written for many top academic journals in economics and has been nominated for several academic prizes for his work, but he served in the Council of Economic Advisors under George W. Bush, and just returned to the Booth School of Business as Norman R Bobins Professor of Economics from a three year service as Federal Reserve Governor.
Wait, I'm not done yet!
No, Dr. Kroszner was not just some researcher. Let these positions speak for themselves: he was a member of the Federal Reserve Board and chaired the committee on Supervision and Regulation of Banking Institutions and the committee on Consumer and Community Affairs. In other words, Dr. Kroszner voted on interest rate policy on the Federal Open Market Committee as a member of the board and put together regulation crucial to the credit crisis.
Dr. Kroszner has much more to claim to his name but I selected credentials relative to what policy makers and everyday people are interested in today.
Firstly, the whole point is that I want to take the opportunity to pick his brain before he's snatched up by policymakers once again.
Secondly, Friedrich Hayek pointed out that the market as a whole has complete information. As a response to that wisdom, I will decentralize theprocess of question production to you: the nerdy Nolan Chart community.
Here are some rules from me, the dictator:
©2009 Jeff Peters, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Friday, March 27, 2009
Last modified: Monday, May 4, 2009
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Reader Comments:
Posted By: gene
Date: 2009-03-27 08:43:00
Hi Chris, My question would be based on the subject of my last article, "Getting Something For Nothing!" How is it fair that the Fed purchases products [securities] of the economy for nothing?
Posted By: Christopher Espinal
Date: 2009-03-27 13:07:29
Seems like no one is interested!
Posted By: Walt Thiessen
Date: 2009-03-27 13:34:48
Just saw your article, Chris. OK, here are a few questions for Dr. Kroszner:
(1) Does he believe that the Federal Reserve should be audited by Congress? If not, why not?
(2) Why should banks (including central banks) have the right to lend out money belonging to others while simulateously promising the depositors whose money they loan out that they can have their money back at any time? If any of the rest of us did that, we'd be thrown in prison, while bankers are rewarded for it.
(3) Why shouldn't people be allowed to use gold and silver as money? This is a position the Fed has long held.
(4) In light of the huge amount of new money dumped into the economy after the crash of 2000 that led to the real estate boom (and later its bust), why shouldn't M3 be resurrected, since only M3 detected that huge new money creation?
(5) When will the Fed admit that they are the root cause of the current financial crisis?
Those are enough questions to get us started. I look forward to seeing his replies.
Posted By: gene
Date: 2009-03-27 14:50:53
Hi Chris, what I meant by my question [if you haven't scanned the article] is why the Fed is allowed to purchase securities [open market operations] for absolutely nothing when they represent the product of our economy? Also, I second #2 of Walt's. This is the root of the entire crisis really.
Posted By: Walt Thiessen
Date: 2009-03-29 06:07:40
Absolutely right, Gene. #2 definitely is the root of the crisis, and indeed it is the root of every single banking crisis this country (and every other country in the world) has ever faced without exception. If it's okay to engage in that practice, then I want to have the right to engage in it too. That way, when I get caught in a shortful (which always happens in the long run), I can count on the government to bail me out while simultaneously allowing me to keep all my profits, just like the big boys do!
Posted By: Walt Thiessen
Date: 2009-03-31 06:08:24
If it's not too late, here's one more question that desperately needs to be asked:
What constitutes a bank or a company that is "too big to fail," and what evidence do we have to substantiate the claim that they ARE to big to fail? This is a vitally important question because, as far as I've been able to tell, it has never been addressed except in the most general and unsubstantiated way. The most specific answer I've heard is, "If a really big company fails it would lead the country to depression," but I've heard zero evidence to substantiate that lofty claim.
My suspicion is that the real reason a bank is "too big to fail" is that FDIC never properly collected enough premium from the really big banks to provide sufficient protection for their depositors. Thus, "too big to fail" is nothing more than a way to cover up yet another example of government incompetence.