Thursday, 17 April 2014
John Cochrane backs full reserve.
John Cochrane (economics prof. at the University of Chicago) published a paper day before yesterday arguing for full reserve.
This follows on from an earlier and shorter article by him in June last year arguing the same points. Here are a couple of quotes from the more recent paper that advocates of full reserve will like.
“..demand deposits . . . must be backed entirely by short - term Treasuries”. (“Treasuries are US government debt”). And….
“The essence of this vision is not novel. Proposals for narrow banking or equity - based banking have been with us about as long as runs and crashes have been with us. The "Chicago Plan," discarded in the 1930s, is only one of many such milestones..”
For another variation on the Chicago Plan and my – ahem – erudite comments thereon, see here.