I’ll be the first to admit it: I’m not that great with managing money. Oh sure, I’ve been fairly good at earning money by working most of my adult life, but when it comes to investing and managing my income, not so good.
It’s all so confusing what, with stocks, bonds, mutual funds, real estate, securities, precious metals, derivatives, IRAs, 401K’s, Roths, etc. to think about. Even the experts can get it wrong, and sometimes in a really big way. And, as one of the “little guys”, if professionals can get it wrong then I’m really nervous: I’d like to think I worked hard to make myself employable, work hard to stay employed, honestly earned my income, and have the individual freedom to spend it as I wish in a free market economy, and I sure don’t want to lose it all.
Gosh, if there were only some way to simplify all this “money management”.
Fortunately, Saule T. Omarova – a Kazakh-American who graduated from Moscow State University in 1989, currently a law professor at Cornell University, and Joe Biden’s nominee to serve as US Comptroller of the Currency – appears to have it all figured out:
According to her recently-published, 70-page article “The People’s Ledger: How to Democratize Money and Finance the Economy“, by Saule T. Omarova, Vanderbilt Law Review, Vol. 74, No. 5, October 2021, Pgs. 1231-1300, the answer is simple, at least as far as I can tell (to paraphrase Star Trek’s Dr. McCoy, “I’m an Engineer, not a Banker!“)
Have the Federal Reserve assume and handle all bank accounts, end the current banking system as we know it, abolish the FDIC and bank reserves, put money into certain eligible accounts – or take it away – as needed to create jobs, control inflation, ensure wealth equity, fight climate change, enable social justice, or a host of other social initiatives as decided by the government, essentially get rid of Money Market Mutual Funds, and severely limit the Securities and Derivatives markets.
And, if the United States Senate approves her nomination as Comptroller of the Currency Saule T. Omarova would be in a position to simplify all this “money management”, as she would be supervising all of America’s banks. Because, as she’ll say to the US Senate at the start of her confirmation hearing: “Every American family should have the same opportunities that my family has had.”, and with her plan to have the Fed be the “People’s Ledger” she could make it a centrally-run Socialist banking a reality.
But don’t believe me…read these quotes taken directly from her article:
“In principle, FedAccounts can be made available as an alternative to bank deposit accounts, upon a person’s request.[127 ] As explained below, however, the more effective option would be to transition all [private and individual bank] deposits to the Fed.[128]
…In basic terms, the Fed will credit all eligible FedAccounts when it determines that it is necessary to expand the money supply in order to stimulate economic activity and ensure better utilization of the national economy’s productive capacity. In the economic literature, this form of unconventional (by present standards) monetary policy is commonly known as “helicopter drop” or “QE for the people.”[134]
…Implementing a contractionary monetary policy by debiting FedAccounts, in turn, presents a different set of ex ante institutional choices aiming to minimize the economic and political fallout from what is likely to be perceived as the government “taking away” people’s money.[140] This tool is to be reserved only for extreme and rare circumstances, when the Fed is unable to control inflation by raising interest rates and deploying its new asset-side tools, discussed below.[141] It is nevertheless important to have a mechanism in place for draining excess liquidity from these accounts with minimal disruption of productive activity.
…Once we accept the fact that the structural context for the Fed’s asset allocation itself can and should be changed, allowing the Fed to manage a much larger asset portfolio should not appear as a dangerous deviation from the norm. In fact, under the scheme proposed here, the Fed’s operations will finally render the orthodox notion of “financial intermediation” a reality.[205] By providing universally accessible deposit accounts and channeling the corresponding amounts into select classes of private and public issuances, the Fed will effectively stand as the intermediating link between savers/investors (the liability side) and wealth/productivity growth (the asset side).
…The Fed’s balance sheet will function as the ultimate platform for the integrated public management of the economy-wide flows of the sovereign public’s full faith and credit. It will become the People’s Ledger.
…the NIA [National Investment Authority], in particular, take on the task of mobilizing public and private investment in the real economy…to create jobs, fight climate change, reduce racial and social inequity, and so forth.[221] The NIA’s broad developmental policy mandate would explicitly embrace these critical public policy goals.[222]
…transforming the Fed’s balance sheet into a true People’s Ledger would…enable financial markets to perform their core function of supporting productive economic enterprise more effectively.[225]
…By separating [commercial banks'] lending function from their monetary function, the proposed reform will effectively “end banking,” as we know it.[239]
…both federal deposit insurance [FDIC] and deposit-based bank reserve requirements [Stress testing] will become unnecessary.
…the Fed could mandate a set of other socially desirable attributes that privately extended credit products must have in order to qualify for “New Discount Window” (NDW) support [i.e.: only "socially desirable" goals will get loans]. By excluding loans fueling secondary-market financial speculation, leveraged buyouts (“LBOs”), massive stock buybacks, and other private activities that divert resources from socially productive enterprise, the Fed would be able to redefine the scope and nature of “qualifying lending institutions” business operations.[252]
…Without an ability to arbitrage between two forms of privately issued money (bank deposit-money and Money Market Mutual Fund (MMMF) “shadow” money), the original rationale for the existence of an MMMF as a financial product would no longer exist.
…Securities dealers would still be able to finance their trading asset portfolios in [repurchase] markets, but not on the present scale and without the benefit of the Fed’s monetization and accommodation.[290]
…Derivatives dealers would not be able to take on as much risk as they do under the current system, and their diminished risk-bearing capacity would affect both the quantity and the quality of their derivatives “books.”
…Diminished supply and increased cost of funding would force securities dealers to scale back their trading inventories, risk exposure, and overall leverage. Among other things, that would lead to a significant fall in speculative trading by hedge funds and other entities that currently rely on leveraged financing provided by securities firms.
The Federal Reserve would eliminate banks, hold, track, and control “your” money using FedAccounts, manage its’ distribution to promote “wealth equity“, determine which “socially desirable” outcomes it wishes to fund, essentially eliminate speculative risk, and decide who is deemed “eligible” to participate.
See? Simple: The Federal Reserve will be the “People’s Ledger“…or, “Socialism”.
But, don’t worry: The US Government has never ordered you to surrender your money (except for that one time when Democrats seized your gold in 1933), and there’s no way a government would nationalize Pensions (as Argentina did, and Peru might do) or raid your Retirement Account (as Argentina did in 2001)
Thanks for Reading!
