Free Markets, Free Men, and Fractional Reserve Banking, Part I
My colleague Chris Mayer recently penned a piece entitled, “The Greatest Con in the History of Money” — the noteworthy con being fractional reserve banking. This essay is my spirited rebuttal — or rather, Part I of my rebuttal, as there is so much to say — in defense of fractional reserve banking. The title (“Free Markets, Free Men…”) may seem ludicrous to you upon first read, but will hopefully make sense by the time we are done.
Before we begin, a quick note: I find it ironic that a top-notch banker would be so dismissive of his own industry. (Before manning the helm of his excellent value investing newsletter, Capital & Crisis , Chris had 10 years in the banking biz without a single defaulted loan.) It is further ironic that an iconoclastic outsider such as yours truly — someone who actually expects the return of a gold standard, in reality, not just in theory — would find himself defending the financial establishment here.
It is indeed fitting, though, for me to be drawing swords with yet another “purist” school of thought. No matter how hard I try, it seems I can’t get the hang of being any kind of purist. (Groucho Marx once observed he would never join a club that would have him as a member. I know how he feels.)
Oh, and one last thing: I consider myself lucky to count Chris as a friend. While the sparks sometimes fly — particularly when I am right and he is wrong, the usual state of affairs — we always take each other’s ribbing in the good nature with which it was intended.
So with that bit of housekeeping taken care of, I’ve got Chris’ essay in my hand, a refreshing beverage at my elbow, and keyboard at the ready. Let’s begin.
Emotional Rhetoric Cuts Both Ways
“The Greatest Con in the History of Money,” eh? The first thing that stands out in this otherwise thoughtful piece is the emotional rhetoric. There is talk of con jobs. Thieves. Scoundrels. Scumbags. Cheats. People getting “screwed.”
Them’s fightin’ words.
Whether you agree with his assessment or not, it’s fairly clear that Chris starts off in high dudgeon. Unless I am far off the mark, his goal is to paint fractional reserve banking as not just a bad idea, but a moral travesty. A sinful abomination. Not evil incarnate, perhaps, but heading in that direction. And that, friends and neighbors, is what you call emotional rhetoric.
I am wary of emotional rhetoric, for three main reasons:
1. No matter how well intentioned, emotional rhetoric always strays close to demagoguery — defined by the American Heritage Dictionary as “impassioned appeals to the prejudices and emotions of the populace.”
2. Rhetoric tends to crowd out rationality; it muddies the waters of logic and obscures the true points of debate at hand.
3. Emotional appeals are like hand grenades and rocket launchers lying about — destructive weapons available to both sides, with little skill or care required for their use.
“Hang all that,” some of you say. “If fractional reserve banking truly is evil, then what’s wrong with calling a spade a spade?”
Well, try thinking of a debate like a gentlemen’s duel. Whatever weapon you choose is available to your opponent also. If you choose a bazooka, the other guy gets one too. Here is what I mean: What if someone were to declare a 100% pure gold standard to be “evil”? What if someone were to declare the purists (my shorthand for one-to-one gold standard proponents) to be the ones morally repugnant and morally wrong?
I am not about to lob a moral rhetoric bomb at the purists, but plenty of others have. One of the most famous was William Jennings Bryan, who foreshadowed Keynes when he said: “Money is to be the servant of man, and I protest all theories that enthrone money and debase mankind.” Bryan’s most stirring bit of anti-purist rhetoric was delivered at a Democratic Party convention in July of 1896:
“If they dare come out in the open field and defend the gold standard as a good thing, we will fight them to the uttermost. Having behind us the producing masses of this nation and the world, supported by commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”
Now, I don’t trot out this pretty bit of demagoguery because I intend to side with William Jennings Bryan. (His position was slightly more complicated than it sounds, anyhow.) I do it to point out that emotional rhetoric cuts both ways, is available to both sides, and typically has little to do with the merits of the case. Thus, the best way to settle intellectual disputes is with logic and reason, not rhetoric.
So is fractional reserve banking morally wrong? Unless you wish to pick a fight with a modern-day William Jennings Bryan — not my cup of tea, thanks — that should not be the question.
Some more proper questions, in my opinion, are these: Is fractional reserve banking a useful innovation? Is it a step forward, rather than a step back? Does it add value, on balance, to our economies, our productivity levels, our financial system? The answers are yes, yes, and yes. (Please forgive me if I engage in a little emotional rhetoric as I try to show you why. I’m doing my best to keep a handle on it.)
Don’t Forget Aristotle
Chris begins his essay with a reference to the ancient Greeks, noting, “Athenians did not look at banks as sources of credit.” Bully for the Athenians. He also notes that “distrust of fractional reserve banking has a long history,” citing warnings “at least as far back as the 16th and 17th centuries.” Even the Founding Fathers distrusted it. And who could blame them? I’d certainly be leery of giving my dough to a wildcat bank run by some shady character circa 1802. (I’d also be leery of visiting a dentist or a doctor circa 1802. You heard what happened to George Washington, right? Bled to death with wooden teeth — yikes.)
Sorry, little sidetrack there. So where were we — oh yeah. Here’s a funny thing: If one can make a historical case against fractional reserve banking, based on warnings from learned men and the like, one can make an even stronger historical case against the practice of lending at interest!
Back to those ancient Greeks. Consider these words from one of the most learned Greeks of all, that big daddy of logic, Aristotle:
“For money was intended to be used in exchange, but not to increase at interest. And this term ‘interest,’ which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. That is why of all modes of getting wealth this is the most unnatural.”
“Usury” is defined as “an excessive or illegally high rate of interest charged on borrowed money.” In the old days, the term applied to all lending at interest, regardless of rate.
The parallels are instructive. If it is wise to go back to the ways of the ancient Greeks, does that mean we should listen to Aristotle and give up lending at interest too? If fractional reserve banking is condemned as “unnatural,” should the practice of lending at interest not hang at the same gallows? After all, the guy who came up with “A cannot equal non-A” says so!
Baby and the Bathwater
Furthermore, not all fractional reserve bankers are dirty rotten scoundrels, yet purists condemn the whole lot. So what about bad apples in the lending business, then? Should we look at the prominent instances of usury still in existence today — subprime credit cards and payday loans spring to mind — and from that condemn all lending at interest outright? If not, why not? Hey, we’re on a roll here. Let’s ban all guns because a few gun owners are irresponsible! Let’s fix those bad drivers but good and outlaw cars!
A little sarcasm there, sorry. The point is that Aristotle saw the bad in lending at interest, but he did not see the good. It was still too early to look around and say, Wow, man, look at all this good innovation. Aristotle probably looked around and saw little more than goatherders in a bad way getting ripped off. Instances of usury, i.e., the lender’s abuse of the creditor, were very real back then and are still very real today. Legal and illegal forms of loan sharking have been profitable for literally thousands of years — from well before Aristotle’s time.
Yet can anyone really argue that, when it comes to lending at interest, the bad has outweighed the good? Absolutely not. The ability to lend at interest — and the ability of the lender to receive some form of risk-weighted compensation in exchange for the constructive use of his capital — is a pillar of the modern economy. Without the ability to lend and borrow at interest, the lion’s share of productivity and innovation in this dynamic world of ours would grind to a halt.
I believe the same is true of fractional reserve banking. Certainly, there are instances of egregious abuse; certainly, there are fractional reserve abuses that still go on today. But the dynamic flexibility that fractional reserve banking brings to the table is a good that far outweighs the bad. The ability for private institutions to make responsible use of leverage, in fact, is a key factor in the gold standard’s imminent return! As the critics correctly point out, there is not enough gold in the world for a traditional gold standard to work — such a system would be too rigid and inflexible. But add the option of leverage — responsible leverage, mind you, monitored by accountable investors and private citizens, rather than government — and it becomes possible to replace politicians’ empty promises with the backing of gold. More on that later.
Not a Cure-All
Cowboy country singer Chris LeDoux, may he rest in peace, has a tongue-in-cheek love song dedicated to his favorite chewing tobacco, Copenhagen. The last stanza goes like this:
Well it’s a cure-all too
Cures fits and warts and freckles
Coughs, colds, runny nose
Guaranteed not to rip, run, or snag
Makes conception a wonder and childbirth a pleasure
Makes me feel so good! (How ’bout you?)
Like Copenhagen, many purists view the one-to-one gold standard as a monetary cure-all of sorts. And it makes ’em feel so good. They believe a little 100% tonic will fix what ails ya, banish inflation forevermore, and generally make things hunky-dory. Chewing tobacco can’t do any of that, and neither can a gold standard.
“What?!” some of you cry. “A gold standard won’t get rid of inflation? But it must… surely it will accomplish at least that!” Nope, sorry. The purist cure-all doesn’t even cure the main ailment it’s advertised for. I’ll try to explain with an example.
Imagine, if you will, this hypothetical scenari The United States of America has returned to a 100% pure gold standard, with fractional reserve banking outlawed. All the dirty rotten scoundrel bankers have been carted off and put in their place. Huzzah, glorious day, and all that.
Now further imagine some more good news: California is in the midst of an exciting biotech boom. After many years of experimentation and hard work, DNA research in San Diego’s biotech corridor is finally paying off. Cures for Alzheimer’s disease, Lou Gehrig’s disease, and possibly even the big daddy of them all, cancer, look to be on the horizon. The evidence is compelling, but more research is needed to make it down the last mile. Because San Diego is the epicenter, biochemists and genetic researchers are pouring in from all over the country and world. Floods of investor capital are pouring in, also.
Guess what monetary phenomenon Southern California would experience in this scenario? Yep — inflation. As high-paid scientists and researchers came into the local economy in droves, they would start bidding up the price of things: Real estate. Child care. Gourmet cheese. Tickets to the opera. If it’s relatively scarce and in demand, the price goes up. Along with exciting economic activity, more money is being pooled in a localized area. Biotech companies, flush with cash, start building mega-campuses. Various businesses surrounding the biotech economy see their wallets get fat and demand for their services rise — and they raise prices too. Boom, baby, boom. This, my friends, leads to inflation in the local economy — regardless of the fact that the whole country is on a pure gold standard! And if investors get too excited about the biotech boom — if they get ahead of themselves — then local inflation can easily get out of hand, too.
Now let’s imagine the flipside of this hypothetical scenario. While California is booming — and experiencing localized inflation, which a countrywide gold standard can do nothing to stop — poor old Mississippi is hurting. Young people are leaving Mississippi in droves because there are few good job prospects available. As the economy shrinks, Mississippi government at the state and local levels has to levy higher tax rates just to pay for the same level of public services. The investors who still live in Mississippi see that conditions at home are lousy and are sending their capital to more exciting places (like California).
So guess what Mississippi experiences in this scenario? Hint: It begins with a D. That’s right, it’s Deflation. Even under a pure gold standard, a country as large and diverse as the United States can experience destabilizing levels of inflation AND deflation at the same time, based on changes in investor focus and economic activity.
(By the way, the California/Mississippi example is analogous to the E.U. experience with widespread monetary union. The Economist likened the situation to pots on a stove; while France and Germany’s economies were cold and stagnant, Ireland and Spain were so hot they threatened to boil over. Unfortunately, with just one E.U.-wide interest rate, all pots must share the same flame setting.)
Going back to the California/Mississippi example, what happens if California just keeps getting more exciting and Mississippi keeps sinking into the mud? Eventually California collects so much gold its coffers are bulging at the seams — and Mississippi goes into a deflationary spiral that ends in bankruptcy. On a country level, this is one of the biggest objections to a gold standard in general. As more productive countries increase their gold reserves relative to unproductive ones, the trading partners of the productive country grow poorer. If enough gold leaves the system, deflation kicks in, as it did for poor old Mississippi. And under a pure gold standard, there is no effective way to rectify the situation short of a miracle. Or is there?
If you allow fractional reserve banking, then yes, there is!
Crisis Averted — Thanks to Fractional Reserve Banking
This California/Mississippi thing is working, so let’s keep it up.
Imagine that, in a desperate stroke of genius, the governor of Mississippi convinces the federal government to legalize fractional reserve banking for his state. He does this to counteract the devastating effects of a rapidly shrinking money supply (all the capital is flowing out, remember, and taxes are rising as revenues fall). Our heroic governor recognizes that his biggest problem is a rapidly shrinking local money supply. Unless he can fight off this deflationary death spiral, attempts to lure in new business and new capital will all be for naught.
With the return of fractional reserve banking, Mississippi banks suddenly have the ability to expand the money supply by lending against their reserves — something they could not do before. This enables the Mississippi banks to make loans they previously could not have made; which in turn enables the governor to broadcast a message to the nation: Come set up shop in Mississippi! Our cost of living is rock bottom, we will loan you the money you need to get rolling (if you have collateral, of course), and we will give you tax holidays and in general make it very worth your while. (By expanding the money supply, the state of Mississippi can borrow to fund the tax holidays too.)
The entrepreneurs and industrial manufacturing companies heed the call, and they come to Mississippi and take out loans and sign up for the tax holidays and generate productive economic activity, and state and local governments put a stop to the rising taxes, and the state is saved.
All of this happened because of the monetary flexibility made possible by fractional reserve banking. Obviously, there are a lot of other factors to turning an economy around. But monetary flexibility is key. When an economy gets too hot, it is important to be able to throttle down on the general monetary supply via free market movements — even in the presence of a gold standard. When an economy gets too cold and deflation looms, it is important to have the flexibility to increase the money supply via free market movements — especially in the presence of a gold standard.
Fractional reserve banking is a complement, not a threat, to a well-functioning monetary system; it goes with a gold standard like peanut butter with chocolate (two great tastes that taste great together). The inflexibility of the gold standard, you see, is both a virtue and a vice. In times of real tragedy, that inflexibility threatens to become intolerable.
When Physical Disaster Strikes
Let’s go back to booming California for a less pleasant scenario. Just as things are looking better than ever for the Golden State (thanks to biotech), a gigantic earthquake strikes. San Francisco and Los Angeles are hit pretty hard, and San Diego is absolutely devastated. Wiped out. The biotech corridor lies in ruins, due to a purely coincidental correlation with the San Andreas Fault. The huge pipe of investor capital that had been flowing into California now goes into reverse, becoming a giant vacuum as investors suck what they can back to safety. Meanwhile, huge swathes of the state’s capital are devoted to the medical, food, and shelter needs of traumatized and homeless Californians.
The earthquake-battered Golden State must get the rebuilding started, and do so as fast as it can. This means a lot of local businesses will need serious expansion capital as their orders go through the roof: construction companies, roofing companies, plumbers, carpenters, drywallers, air conditioning manufacturers, and so on. Where are these expansion funds going to come from? Where are these companies going to get the money they need to rapidly expand? Out-of-state investors aren’t interested in these types of businesses. Most of them are too unsexy and far too small to bother with.
Under a purist system, California is screwed. Oops, the word “screwed” could be classified as emotional rhetoric. Better to say that under a purist system, California is in serious trouble. The painful reality of disaster and the sudden outflux of investor capital means our hypothetical California must expand its money supply immediately… it must get expansionary capital to those businesses that need it most, due to huge demand… or it could suffer horrible consequences. As we saw with New Orleans, the people who leave don’t always come back. With the inflexibility of the purist system, the local money supply simply cannot expand fast enough. The businesses that need capital badly to do good work cannot get the capital they need. The inflexibility of the purist monetary system becomes a millstone around the state’s neck. The threat of a temporary setback turning into permanent structural decline is a real thing.
So now the shoe is on the other foot. Just as the inflexibility of the gold standard contains vice as well as virtue, the flexibility inherent in a fractional reserve banking system contains virtue as well as vice. With accessibility to fractional reserve banking, California’s local banks and the banks in surrounding states — or all 50 states, if need be — can choose to call upon the power of their reserves to direct loans where they are needed most. And they can do so responsibly, and with great benefit to California, and their own investors, and the rest of the country. Without the ability to increase lending and call on reserves, they could not have done this; in a purist system, all available capital is generally precommitted to existing needs. Flexibility and speed of the caliber required simply wouldn’t exist in a purist system.
Barry Goldwater once said, “Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue.” With apologies to Mr. Goldwater, prudent monetary expansion in the face of dangerous deflationary conditions is no vice. Blithe tolerance of a deflationary downward spiral is no virtue.
Yes, I know. “Another damned Keynesian,” some of you mutter. Well, keep reading, because this is not a Keynesian stance — not by a long shot. Keynes thought government was the solution, whereas I think government is the key problem a gold standard solves.
Killing the Wrong Pig
Observing the rise of Stalin’s Soviet Union after World War II, Winston Churchill remarked, “I’m afraid we’ve killed the wrong pig.”
In their opposition to fractional reserve banking, the purists make the same error: They want to kill the wrong pig! The real problem with our monetary system as it exists today is not fractional reserve banking; it is government involvement in the monetary system.
We have shown via our little California/Mississippi drama that a gold standard cannot prevent instances of destabilizing inflation and deflation on a local level (or a country level, when the analogy is expanded to trading partners). We have shown that the inflexibility of a gold standard can be dangerous without the mitigating factor of fractional reserve banking to allow for reasonable expansion (or contraction) of the local money supply based on a prudent assessment of local conditions.
So what exactly is the gold standard good for, then, if it’s not an economic cure-all and an inflation/deflation preventative?
It’s good for getting politicians out of the picture, that’s what!
Alan Greenspan reputedly had a sign on his desk that read, “The Buck Starts Here.” A little bit of central banker humor. Funny, but also the heart of the problem. Government manipulation of the money supply is the pig that must be killed.
When the money supply is attached to politician’s promises and whims — Greenspan, by the way, was one of the most accomplished politicians to ever walk the corridors of power — the money supply can be tampered with at will and manipulated for questionable purposes. When a government controls the printing press, that government has the ability to tax its citizens at will, without them even realizing it, by issuing more debt or putting more currency into circulation. THIS is the problem that a gold standard solves — it gets politicians’ fingers out of the pie. This is also a wholly separate issue from the issue of fractional reserve banking!
The Dukes of Moral Hazard
Ironically enough, many of the problems that the purists associate with fractional reserve banking actually go back to government involvement in the monetary system. Speculative disasters these days are primarily enabled by “moral hazard” — the practice by which government encourages bankers and investors to go for broke via implicit promises to bail them out. Why not push the redline when you know Uncle Sam has your back? Why not be irresponsible if you’re not held accountable for your own actions?
If we remove government from the equation, we essentially remove moral hazard too. Think how stupid the government’s bailout policies are, and how intertwined those policies are with past disasters: The S&L scandal was a grossly bloated example of moral hazard, for example, totally enabled by government promises. S&L managers speculated their buns off because they knew they couldn’t lose — they had a “policy put option” in place, courtesy of politicians, not unlike the later “Greenspan put” which encouraged foolishly distorted risk-taking across the globe.
Similarly to the S&Ls, consider the idiocy of FDIC insurance. The government is willing to insure all bank deposits equally — with backing funds provided by you and me, the taxpayers — regardless of how well the various individual banks are managed. Imagine if a life insurance company charged the same exact premium to everyone for a policy, regardless of whether the policy buyer was healthy and well mannered with clean living habits or a chain-smoking drunk driver who liked to wrestle alligators. That is roughly what our government does in refusing to take risk levels and management quality into account before offering the insurance it does.
If you “kill the pig” of government involvement in our monetary system — take away the printing presses and make the federal government live by the same basic fiscal rules a private corporation does, because it no longer controls the money supply — you solve a majority of the problems that are associated with the fractional reserve banking system today. The remaining problems with a fractional reserve banking system could be solved — will be solved, in my opinion — by a free-market combination of transparency, responsibility, and flexibility. Let’s look at those three elements very quickly, as this piece is getting dangerously close to the longest Whiskey essay ever written.
Transparency, Flexibility, & Responsibility
Transparency: Banks today are still about as opaque as can be. But whose fault is this? If investors and depositors get off their butts and demand more transparency, they can get it. There’s no reason why we shouldn’t be able to shine a light into the inner workings of a bank and see exactly what’s happening. We have fed funds futures that predict the odds of the next rate hike or cut; we could have solvency futures tied to the risk levels of a particular bank or financial network. There are other plenty of other ideas that could work. The free market is chewing on this problem as we speak. At the end of the day, the degree to which transparency happens, and how fast it happens, is a function of investor demand. If and when investors demand it, they will get it. This situation is a lot different, and a lot better, than the wildcat banks of centuries past, where investors were constantly in the dark with little clue as to what was going on. Transparency and vigilance can boost confidence, act as a prophylactic (that’s an economic jargon term, I swear) against speculative excess, and sharply reduce the occurrence of panics.
Flexibility: Technological innovation is a wonderful thing. As our financial system on the whole (and you and I as participants) become more knowledgeable and technologically capable, flexibility increases, which, in turn, increases the mobility of capital and the efficiency of capital allocation. This makes it easier for economies to function, and to tap the capital markets for what they need, or borrow what they need in time of temporary crisis, with less dead weight from the heavy hand of government getting in the way. We’re still learning what flexibility really means, and we still have far to go. On a personal level, you and I can invest in various emerging markets easily today, via ETFs (exchange-traded funds). You can turn the dollars in your IRA account into crude oil or gold or Swiss francs or Swedish krona with the click of a button, also via ETFs. That wasn’t even possible a few years ago. New ideas are changing and improving things on higher levels, too. Flexibility born of innovation makes it happen, and that makes the entire system more responsive and fluid in the face of change.
Responsibility: You know what an insurance company is. Do you know what a “reinsurance” company is? It’s the company that an insurance company goes to for insurance on itself — insurance against going bust. Why can’t our banks buy no-bust policies from reinsurance companies too? They would be doing this already if politicians weren’t providing the insurance for free and creating moral hazard in the process. In a free market system, banks that abused their fractional reserve capabilities would be shunned by investors, or find the premium cost on their reinsurance policies too high to continue operations. When responsibility is shifted to investors and depositors in a bank, those investors and depositors have wonderful incentive to watch the bank’s speculative activity levels like hawks and demand that the bank maintains proper insurance coverage. And the reinsurance company, of course, has great incentive to make sure its policy is priced correctly, which means it will be watching the bank closely, too. In the unlikely event a well-capitalized bank does fail, the presence of reinsurance company policies and vigilant investors means the odds of a system-destabilizing run are greatly reduced.
All the elements work in tandem: transparency, flexibility, and responsibility all reinforce each other and strengthen each other. The corrosive element is government involvement, not fractional reserve banking. Get rid of government involvement in the monetary system, and things get a lot better.
Combine a gold standard with fractional reserve banking and you get the best of both worlds. You get the ability to trade in your currency notes for a fixed amount of gold whenever you want, plus the international acceptance and fluidity of trade that comes with that, AND you maintain the flexibility virtues of a fractional reserve banking system that allows intelligent agents (like Chris M. in his past life as a banker) to respond to economic conditions on a local level.
Oh, and as a bonus, you wind up with a system that is more true to free markets than the one that purists prefer. How so? Because an economy that allows fractional reserve banks to exist alongside storage vault banks is more free than an economy that does not allow fractional reserve banks to exist at all. As a free man who sees the benefits of fractional reserve banking, I personally want the right to put my money with a well-run fractional reserve bank that makes good use of my funds and pays me interest on them. (By the way, if you enjoy getting paid interest from your bank but hate fractional reserve banking, you’re a little bit of a hypocrite. Think about it.) Meanwhile, Chris can put his money in a storage vault and pay a fee on it if he chooses. A fractional reserve banking system does not preclude the existence of storage vaults; if that’s your preference, go for it!
Hence, we come back round to the title of this essay, “Free Markets, Free Men, and Fractional Reserve Banking.” The system I propose is rooted in the grass roots of the free market and requires fewer top-down diktats than a government-enforced purist system would. (You would need government to enforce the purist standard — who else would do it? Who else would actively prevent free spirits like me from going fractional?) The virtuous circle of transparency, flexibility, and responsibility I speak of will be enabled by investors looking out for their own interests, not government officials telling investors what they can and can’t do.
What I foresee is a free market solution, and it is one that our current system can evolve into without the meddling of politicians. In fact, I think this is what WILL happen — we will gradually move away from a fiat currency standard, and on to a de facto gold standard, without the help or even the comprehension of most politicians as it is happening. It will simply happen behind the scenes and build momentum over time, as more and more people choose to link their finances to hard currency and forego their trust in paper. Banks will eventually come round to this way of thinking too, and link deposits to hard currency of their own accord by way of popular demand — those banks that do this will prosper, while those that resist will fall behind.
Our monetary system is evolving, and that is a good thing. The monetary evolution we are in the midst of incorporates the financial and technological innovations of the past 50 years. Evolution does not throw those innovations out, as the purists wish to do; the lumps we took are part of our tuition, so it makes little sense to discard our accumulated knowledge. And this post-fiat transition we are in is a very exciting thing! I get goose bumps just thinking about it.
There is plenty more to be said (sorry folks, this is a big and sprawling topic). But since I’ve now broken Byron’s unofficial record and made this the longest essay ever published by Whiskey & Gunpowder, I think I will stop here for now.
July 12, 2006