Friday Flashback: A Free Banker's Christmas Wish List

digital money, Christmas, monetary rule, primary dealer, NGD targeting, Selgin
Used with the permission of Gary Varvel and Creators Syndicate. All rights reserved.

digital money, Christmas, monetary rule, primary dealer(Originally appeared  December 21, 2014)

As is usual this time of year, my mom and brother, and a close friend or two, asked me to share with them some of the items I'd included in the list they assumed I'd already mailed to the North Pole, as I have done diligently every year since I first learned to spell "toy." In the past I've always been happy to indulge them, for my petitions to ol' St. Nick were, truth be told, long enough to raise the eyebrows of more than a few elves. "The man who has everything" described, not the man that I've been, but the one I've always aspired to be.

But this year that's all changed, thanks to my having traded my 2800 square-foot place in Athens for a DC condominium less than a quarter as big. Speaking of her similarly small apartment in Manhattan, Dorothy Parker once said that she just had room enough to lay her hat and…a few other things. My social life is a lot duller than Parker's was, so as far as my place is concerned "my hat" pretty much says it all.

So I faced the question: what should a man who has no room for anything ask for for Christmas? And that's when my bright idea came. Books, paintings, neckties, pottery — love them though I do, they all take up space. So, what do I love that doesn't? You guessed it: free banking! Instead of having Santa or my family and friends deliver stuff to me for which I haven't any room, why not have them deliver me, and everyone else for that matter (for here is a genuine public good if there ever was one), from something, to wit: our crummy, centralized monetary system!

Much as I'd like to take my leave from monetary tyranny lock, stock, and barrel, I don't want to burden my loved ones, or some elves, unnecessarily. So, at the risk of setting off another round of wailing by those hard-core libertarians who prefer uncompromising sloganeering to actual (but namby-pamby) change, I offer here a list of relatively modest requests, with the assurance that fulfillment of any one of them would make me as happy as any other present might — perhaps even happier than I was that first time I wrote to Santa, when he, generous fellow, interpreted "toy" to mean a Tiger Joe tank!


Dear Santa,

I've been a good boy this year, as usual. But this time, for Christmas, instead of more toys or other stuff, I'd like you to see about doing any or all of the following:

1.  Make the Fed follow a monetary rule. Any rule beats almost unlimited discretion, which is what we've got now, though a nominal spending growth rule would be best.

2.  Send the FOMC packing. It's simple: if you have a rule, you don't need them. All they can do is muck it up. Replace the FOMC with a computer that determines the open-market operations needed to implement the rule. Better still, develop a tamper-proof Bitcoin-style ("Bitdollar") protocol that implements the rule automatically.

3.  Abolish the Primary Dealer system: we don't need it any more than any other country does. Getting rid of primary dealers will also make it easier to

4.  End Too Big To Fail, which will in turn make it easier to

5.  End Fed discount-window lending, or at least "expansive" discount window lending.

6.  Consider making sure, while you're at it — and lest the Fed try more funny business — to close the "emergency lending" loophole.

7.  Since the Fed has no reason to keep an eye on banks that can't count on bailouts from it (and can't be counted on to keep an eye on them even when it does have a reason to do so), how's about getting it out of the bank supervision business altogether?

8.  Since these are all pretty tall orders, even for a fat fellow who manages somehow to clamber through who knows how many billions of chimneys in a single night, while you work on them perhaps you could get Congress to pass the Centennial Monetary Commission Act, so we can at least get them to start talking about these and other ideas for fixing the Fed.

9.  And finally, a real easy one for you: how's about sticking it to those zinc lobby liars by finally getting rid of all those stupid pennies?

10.  Oh wait, I almost forgot my most important wish of all, which is that you please see to it that all my pals, and all readers of this blog (including those who don't care a whit for me or my ideas) have a very


  1. "Sold at food markets only."

    I never expected to get such a hearty laugh from this site, the gift that keeps on giving.

    A merry Christmas to you, Professor Selgin, and to all the contributors!

  2. George, Your wish list seems to amount to abolishing all government / taxpayer support for banks, which I agree with. But if we’re to do that, strikes me we have to face an inescapable political reality, namely that households and small firms will object because they then won’t have a totally safe method of lodging and transferring money, or at least they won’t have WHAT THEY SEE AS a total safety.

    Therefor one item needs adding to your list, namely setting up the latter totally safe accounts: in effect giving every household and firm the option of an account at the Fed. Doubtless the Fed wouldn’t want the hassel involved in doing that, but that problem is easily solved by having private banks do most of the administration: i.e. act as agents for the Fed.

    The latter sort of totally safe account pretty much already exists in the UK in the form of National Savings and Investments, though NSI accounts aren’t QUITE AS flexible as a standard bank checking account.

    1. Actually, Ralph, Richard Salsman just wrote to me with the opposite complain, to wit: that I neglected to ask Santa to abolish the FDIC!

      As for having "safe" deposits, I'm absolutely convinced that, if the public must have such, having the Fed supply them is going in altogether the wrong direction. A postal savings or giro system would be a far better option.

      But let's also remember that, in the good old day's before deposit insurance (and despite the debilitating effect of laws against branch banking)there were in fact banks that specialized, as it were, in playing it safe, precisely because a market for such existed. If what you say is true about what many (all?) households and firms demand today, then in the absence of government guarantees I can see no reason why profit-seeking bankers wouldn't cater to that demand–the alternative, after all, would be to not get much if any business!

      The story of how some U.S. banks catered to risk-averse customers in the past in very well told by Jim Grant in his book, Money of the Mind.

  3. Thanks for this post, George. Aside from everything else about it that was great, imagining you as a small child was almost too adorable for words.

    A Merry Christmas to you as well, and let's hope some of the items on this worthy list are indeed brought to us soon!

    1. Thanks, Andrew! Here, then, is something that is bound to entertain you. I'm the one on the left; my twin brother Peter in on the right. The year must be ca. 1964. Notice the (plastic) knife stuffed into my swimsuit!

  4. Good List.

    I would add a new book by George Selgin.

    Any future works in the pipeline Dr.? What are you working on these days?

  5. For years, in my correspondence with others who pray for "real money" ((convertible at a fixed rate to gold, silver, zinc or other natural resource), I signed off with "Fed 13 delenda est" Latin scholars will recoognize my partial plagiarism of Cato the Elder (Roman Seator BC 72). Yes, I mean it. The Federal Reserve must be destroyed. Cheers an do destroy the Fed, F. William Ballou.

  6. Here is our new theory of automatic banking. We, the Alt-M group, has seen this in 2014, but now, the new theory is nearly complete.
    New Theory Cracks Open the Black Box of Deep Learning

    n the talk, Naftali Tishby, a computer scientist and neuroscientist from the Hebrew University of Jerusalem, presented evidence in support of a new theory explaining how deep learning works. Tishby argues that deep neural networks learn according to a procedure called the “information bottleneck,” which he and two collaborators first described in purely theoretical terms in 1999. The idea is that a network rids noisy input data of extraneous details as if by squeezing the information through a bottleneck, retaining only the features most relevant to general concepts. Striking new computer experiments by Tishby and his student Ravid Shwartz-Ziv reveal how this squeezing procedure happens during deep learning, at least in the cases they studied.

  7. When the processor 'bug' in the news is significant. Controlling that issue means that processors cna securely tell if a digit sequence represents real cash, independent of any third party in the exchange.

    This is a true digital bearer note, but it can include a whole class of asset tokens, not all of them money, including stocks and deeds and legal contracts from a small, finite grammar (read escrow instructions).

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