Adair Turner's Keynote Speech at INET Conference

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The Institute for New Economic Thinking (INET) is holding its annual plenary conference in Hong Kong (April 4-7 2013).

Former FSA chairman Lord Adair Turner delivered a keynote speech entitled “Private Debt and Fiat Money: Lessons from the crisis and from some old economic texts” at this conference last night.

You can watch his groundbreaking keynote speech (with an introduction by George Soros) here (Adair Turner starts at 00:09:23):

 

“There is a huge wisdom in some old economics texts. And I’m going to begin by referring to some old economics texts, and perhaps the surprising ones… some of the founding fathers of the Chicago school of economics, people who supported very strong, clear laissez-faire economics, but to some particular issues in finance were not laissez-faire at all. I’m talking about Henry Simons, I’m talking about early Milton Friedman (in 1948) and I’m talking about Irving Fisher. Those economists came up with two really quite radical propositions in their writings in the 30’s and 40’s. *

The first was that the finance – and in particular banking – was subject to such potential instability that not only we should regulate banks tightly but that we should regulate banks out of existence. They didn’t believe that fractional reserve banks should exist. They believed that we have made a major elementary mistake in allowing banks to create private money and credit, that the creation of money was an essential monopoly function of the state and therefore they argued for 100% reserve banks in which the monetary base is the money supply.”

 

square-MM* Positive Money reform proposals are based on a proposal initially put forward by Irving Fisher and Henry Simons. (However while inspired by these original works, our proposals have some significant differences.)

 

Here you can watch CNBC interview with the billionaire George Soros about the Adair Turner’s keynote speech.

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Here you can watch livestream from the INET conference. (Conference Agenda here)

 

 

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  • Conrad Jones (Cheam)

    After attempting to get a ticket for the recent LSE event which included Mervyn King, Ben Bananke and Larry Summers, I was initially disappointed having failed to get one.
    After viewing the event on the LSE website, I was relived that I had not got a ticket because the thought of having gone through all the effort of having left work early, struggled through London Traffic, struggled to get a Parking space for my motorcyle and having to squeeze into my seat in the LSE holding all my bike gear and then listen to the self congratulory rhetoric saying how glad the speakers were that each one was in their respective roles as Central Bank Chairman, Governor and Treasury role, it became clear that they had learnt absolutely nothing about the Financial Crisis of 2007/8. I’m grateful to the LSE for denying me a ticket. Thank you LSE.

    Adair Turners speech – on the other hand; seemed to indicate a man who had an open minded and intellectual ability, but more importantly; a desire to evaluate our Financial System and come to the conclusion that there is someting wrong with it. A desire to look back in History and learn from the lessons form the past.
    I think that George Soros was correct in saying that it was good that Adair Turner did not get the job as Govenor of the Bank of England because he is not constrained from speaking his mind. It was good to hear him speak of Irvin Fischer and the Chicago Economists regarding Full Reserve Banking.
    In contrast to Lord Turners speech, Larry Summers speech (at the LSE) was a lesson in venomous speaking which seemed to aggressively maintain the status quo.

    Although Lord Turner did not totally support Full Reserve Banking , the fact that he talks about it means that he is open to discuss it when others – like Larry Summers, are not.

  • Bob Perkins

    Dear Mr. Adair Turner,

    First, I would like to say that I am in complete agreement with the policy prescriptions you put forth at Inet Hong Kong 2013. Where I differ with you is in the view of how we got into this predicament. I am writing in the hope that my perspective may be of assistance to you in getting others to “buy into” your thinking.

    If I understand you correctly, you feel the current deleveraging is the direct consequence of our decades-long binge on credit within the financial sector. While this is true, what caused credit to expand so rapidly? I would argue that credit creation was partially necessitated by the inadequate supply of real dollars, pounds, euros and yen during this period. Since our governments did not print enough money to satisfy the worldwide demand for our currencies, the financial sector assumed this fuction. That the money supply needed to be increased during this era is evidenced by the relative stability of the CPI throughout much of this period.

    Looked at in this light, a policy to overtly expand the money supply is not simply a means of dealing with the present deleveraging. It is also a means assuring an adequate supply of dollars, pounds, euros and yen so that people can efficiently transact with each other.

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