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Jimmy Stewart Is Dead: Ending the World's Ongoing Financial Plague with Limited Purpose Banking

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Larry Kotlikoff is a worried man on an urgent mission. He knows that the financial crisis that hit us in 2008 can come back with a vengeance, because our government so far is treating the symptoms, but not the underlying disease. By the time you finish this book you will be worried too. With brilliance, wit, clarity, and bravery, Kotlikoff explains how our financial system is "virtually designed for hucksters." Yet even more importantly, he shows us how to fix it.

As Kotlikoff makes clear, the litany of faulty incentives and opportunities for fraud in America's banking system is distressingly long: "limited liability, fractional reserves, off-balance-sheet bookkeeping, insider-rating, kickback accounting, sales-driven bonuses, non-disclosure, director sweetheart deals, pension benefit guarantees, and government bailouts." It's a system, in a word, in which bankers make promises they can't keep in order to collect outsized earnings unrelated to real productivity.

What a cast of characters we meet along the way! Kotlikoff is right to note that most bankers are "fine people doing their best by their clients," but he is also right on the mark to note that the top ranks of bankers "include a remarkably large number of fast-talking con artists, riverboat gamblers, and highway men." And why not? With regulatory loopholes a mile wide, the con artists found ways to abscond with tens, even hundreds of billions of dollars, before the entire economy went over the cliff.

I've taken my own special interest in the bankers' bonuses over the years, as I've witnessed up close how rather pedestrian Wall Street work on restructuring developing country debt could pull in millions of dollars in fees for the bankers. At the start of each calendar year, I've gone slack-jawed at a level of Wall Street year-end bonuses roughly equal to the total worldwide aid given to 800 million Africans.

At a recent dinner with bank executives to discuss African poverty, I surmised the depth of their concern with this heartbreaking issue as they steered the conversation to the relative size of their wine cellars, with several describing their collections as exceeding 30,000 bottles! The typical African could spend his whole life working and never afford a single one of those bottles.

These are signs not merely of moral decadence, but of regulatory collapse. Kotlikoff skillfully leads us through the various methods that the banking leaders have developed for taking their slice of the assets. Amazingly, none of the executives who we meet in these pages was technically equipped to understand the deeper risks in which they were placing their firms, and the world economy. But they were very well trained in cutting themselves extremely generous proportions of the action.

If Kotlikoff had stopped at explaining what just hit us, he would have performed a mighty service. Even with the many vivid and entertaining accounts of the great crash in 2008, of who said what to whom on the fateful weekend in September 2008 when Lehman, AIG, and Merrill hit the wall, no previous book comes remotely close to this one in offering a conceptual understanding of what has gone wrong. Through ingenious examples and stories, Kotlikoff gently instructs the readers in the core concepts of financial economics: coordination failures, moral hazard, intergenerational accounting, principal-agent problems, Ponzi schemes, and much more.

It is our great fortune, though, that Kotlikoff does not stop there, but proceeds boldly to lay out a novel, powerful, and ingenious set of remarkably simply reforms under the rubric of Limited Purpose Banking (LPB). As he explains, the motivation of LPB is to "limit banks to their legitimate purpose - connecting borrowers to lenders and savers to investors - and don't let them gamble." But Kotlikoff is no scold. He's not against gambling per se. He's only against others gambling with our money without our knowledge or permission.

This is the protection of LPB. If individuals want a completely safe bank account, their bank deposits will be matched 100 percent by money held by the bank. If they want something riskier, or some form of insurance, then appropriate mutual funds will be available to cater to distinct needs, and set up in ways to avoid systemic risk. In all cases, financial intermediaries will face not 115 different regulatory agencies asleep at the wheel, but a single Federal Financial Authority with a very limited assignment - to ensure that fund managers do not abscond with our assets and immediately, fully, and accurately disclose what each fund is holding. Imagine that - a financial market place in which we're actually told what we're buying!

Kotlikoff traces some of the origins of his ideas to proposals for Limited Banking that emerged in the wake of the Great Depression, and which have won the endorsement of leading economists over the decades. He does not shrink from pointing out continued controversies surrounding his ideas, so that the book provides an ideal jumping off point for further serious debate over the ideas.

There are lots of open questions and areas of doubt that require further discussion, notably around the issues of how fast, how far, and in what ways we would need to adopt LPB to reap its benefits. Still, the ideas are powerfully resonant and will find a growing group of adherents.

America is passing through a very difficult economic juncture, with high unemployment and even higher anxieties. Millions of people have seen their financial security lost in the Wall Street tsunami. We feel adrift, with a large majority sensing, correctly, that the country is headed in the wrong direction. Faith in the economic system, the lifeblood of the economy itself, has been badly broken. Kotlikoff knows that each of us bears a responsibility and has a role to play to help repair the damage. With characteristic directness and integrity, he says that every economist has "an obligation . . . to focus on this economic emergency." Let us thank Kotlikoff for a clear, convincing, and highly original call to action. With this book, he has surely fulfilled his obligation, and much more, to help the world reset its sights on a more stable, fair, and prosperous economy.

Jeffrey D. Sachs is Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University
Jimmy Stewart is Dead

First, I sincerely appreciate Professor Kotlikoff's honesty w/ respect to the incompetent and illusory efforts of the US Govt. For example, on pg 83 he writes:

"Hopefully, the FDIC won't end up w/ a [1980s] S&L-type crisis on top of its current debacle. W/ its new insurance obligations, it's now staring at $6.4 trillion in potential liabilities, yet it holds only $19 billion in reserves. Talk about financial malfeasance! Madoff was short $65 for each dollar he insured. The FDIC is short $337 for each dollar it's insured.

Were the public to digest this fact and withdraw its deposits en masse, Uncle Sam would likely have to print upwards of 24 trillion more dollars. Public knowledge of this action would surely trigger hyperinflation and extract a major loss in purchasing power for anyone who failed to withdraw and spend his or her money immediately.

So right here, right now, we have the basis for a national bank run. The run would not be to secure our money (dollar bills), but to secure our real spending power - the amount of goods and services our dollars can buy.

This concern is not new. We've had the basis for a national bank run ever since FDR introduced FDIC insurance in March 1933. Fortunately, Americans didn't call FDR's bluff by continuing their run on the banks (one-third had already failed). Had they done so, they would have demonstrated that, w/ respect to their real money balances, FDR was insuring the uninsurable."

Rest assured Keynes-inspired snake oil economists such as Paul Krugman & Brad DeLong - stars of the elite mainstream print & broadcast media - will never admit their Govt interventionist panacea is a delusion. The emperor truly has no clothes and fear the day when those bankrolling today's American Dream stop footing the bill. Kotlikoff does an excellent job describing the depth of the hole we're in. Clearly, Americans have forgotten Reality is absolute: nature, to be commanded, must be obeyed.

Second, while I support his Limited Purpose Banking (LPB) proposal, I fear Kotlikoff does not go far enough to uproot the causes of instability w/in our current financial system.

The fundamental problem is our money supply can be (and is) expanded & contracted at the whim of private banks (via fractional-reserve lending) and the Federal Reserve (through short-term interest rate changes, changes to the quality & quantity of capital reserve requirements, and by an assortment of other "monetary policy tools"). The disequilibrium created by this monetary expansion & contraction wreaks havoc on relative prices throughout the productive structure of the real economy; relative prices are the communication & coordination mechanism for determining what products & services to produce where, when & in what quantities. This short-circuiting (so to speak) of the price mechanism results in the misallocation of scarce resources and it is this "malinvestment" which has most recently expressed itself in the form of abandoned new housing developments from literally sea to shinning sea; CA to AZ, NV to FL. THIS is the physical manifestation of the wasted scarce resources of the boom bust cycle inherent w/in our NON capitalist economic system. To be clear, all countries - including Communist China - today use the same fractional reserve central bank operating model. In other words, ALL industrialized countries today use the same flawed US financial system & they too are susceptible to their own financial "Minsky Moment" meltdown. Americans do not appear to understand the US is NOT a "capitalist" country (correctly understood) nor is its financial system in any way, shape or form a "free market" when one Govt agency (the Treasury Dept) issues hundreds & hundreds of billions of new debt bonds which are then immediately purchased by another Govt agency (the Federal Reserve) w/ money literally created out of thin air.

While he says 100%, it's not clear (to me, anyway) if Kotlikoff's version of LPB will completely eliminate fractional reserve lending by private institutions. If it does - bravo!

However, even if it does, Kotlikoff expressly states on pg 174, "If the Fed wants to increase the money supply, it will print money and use it to buy assets from the private sector, typically the private sector's holdings of Treasuries."

And, as radical as this may sound now (before the US sovereign debt crisis), the only way to effectively remove the instability inherent w/in our current financial system is to abolish the central bank and free our currency from the political influence which has steadily eroded its value; the quantity of our money supply must be independent of a single political authority.

For these reasons, Kotlikoff's LPB proposal is an excellent, but only partial, solution at best.

Third, this book is about much more than LPB. Kotlikoff should either correct the subtitle ("Ending the world's ongoing financial plague with limited purpose banking") or remove the section of the book called "Fixing the rest of our economic mess." Don't misunderstand me: I like some of the Professor's other fixes; they're positive proposals for scaling the walls of the economic grave we Americans have dug for ourselves. Consequently, I believe too few pages of this book are focused on the implications of LPB and too many on "other fixes".

Fourth, LPB alone cannot mitigate the looming US sovereign-debt crisis and this appears to be why Kotlikoff has included his "other fixes" in this book. Now, whether the US Govt chooses to default by restructuring its debts w/ its creditors or by inflation (i.e., printing additional fiat money which reduces the purchasing power of every individual holding US currency), it would be a mistake to discard LPB as it can & should be part of the US financial re-structuring which will occur eventually. Let's face it: Americans do not have the stomach for the necessary austerity to reign in the Govt's borrowing binge; it's more likely the US Govt will inflate away its debt over the long term by hiding behind its printing press monopoly to create as much money as it wants. This is how the US sovereign-debt crisis will differ from Greece; Greece doesn't control the printing press. Not only does the US Govt control its money supply but its currency also happens to be the primary reserve currency for the entire world. This means when the Federal Reserve lowers the Federal Funds rate below what it would otherwise be and when it buys US debt bonds w/ money it has created out of thin air, the world is flooded w/ liquidity in search of yield; this inflation of asset values literally travels the globe. If only Greece were so lucky to have the monetary powers of the US... Consequently, the US is not susceptible to the same traditionally defined "solvency risk" as Greece; Greece can't print more Euros. Kotlikoff's LPB can help fix the US monetary system if it is combined w/ removal of the Govt's monopoly control over the money supply & Govt's setting the short-term "federal funds" interest rate via the Federal Reserve's open market operations.

Because I endorse 100% reserve banking, I'm very familiar w/ the arguments against it. I believe Kotlikoff should have addressed these arguments in detail. Example: it's widely believed 100% reserve banking (included in Kotlikoff's version of LPB) would significantly reduce the amount of available credit by eliminating the 40:1 (& more) leverage commercial & investment banks enjoyed during the run up to our most recent crisis which, in turn, would reduce economic growth as measured by GDP. Is this argument valid? Kotlikoff is silent. I personally believe this argument is fallacious, even in the short term if 100% reserve banking were implemented immediately following a financial crisis when banks are not lending anyway. And even if 100% reserve banking did lower GDP growth over the long term, is this lower but SUSTAINABLE growth (w/o the boom bust) more efficacious than our current roller coaster "junkie growth" which is dependent upon its next injection ("fix") of liquidity by bankers possessed by animal spirits and central bankers dispersing circulating credit via helicopter?

Fifth, Kotlikoff is right to point to loan initiation - not securitization - as a problem however, me thinks he whines too much about fraud. What about the en masse entrepreneurial error which resulted from the Federal Reserve's too loose too long short-term interest rate manipulation? Example: Mian & Sufi estimate at least 39% of total new defaults between 2006 and 2008 were from 1997 homeowners -- EXISTING HOMEOWNERS -- who borrowed aggressively against the rising value of their homes using Home Equity Lines Of Credit (HELOC) w/ rates set at 3% above the Federal Reserve's short-term interest rate. Is Professor Kotlikoff saying these were fraudulent? Really? About 2/3rds of US economic growth during the run up to the crisis was a result of existing homeowners borrowing 25 to 30 cents on every dollar of home value appreciation (itself fueled by demand resulting from the tidal wave of cheap credit via short-term adjustable & teaser interest rates). The point is these existing homeowners believed they could pay these loans based on the equity in their homes & the low interest rate. What's more, the evidence demonstrates these loans were NOT used to speculate; to "flip" homes or purchase second homes. Is it coincidence mortgage defaults began to rise and house prices began to fall in mid 2006 as the Federal Reserve was raising the Federal Funds rate? Are all the US & European empirical and counterfactual analyses documenting this causal relationship wrong?

I recommend this book & hope LPB is implemented. Too bad Kotlikoff didn't devote a few more pages explaining it. Moreover, Kotlikoff's discussion of the current US financial crisis demonstrates if waste is the litmus test for the morality of an economic system, look no further than the abandoned housing developments across America to judge the system we're living w/in today. Again, hat's off to Kotlikoff for detailing how our financial road to hell has been paved w/ Govt good intentions.

In his latest book, "Jimmy Stewart Is Dead," Boston University economist Laurence Kotlikoff says the fundamental soundness of our financial system is so compromised that nothing short of revolutionary fixes will save this patient, and set our economy on a healthier trajectory. Harking back to Jimmy Stewart's movie role as small-town banker George Bailey in "It's a Wonderful Life," Kotlikoff says the era of responsible banking has been replaced by the highly leveraged and morally bankrupt system whose crash brought on the worst downturn since the Great Depression.

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Remember the classic science experiment? A frog immersed in warm water will adjust so well as the temperature is gradually increased that it will allow itself to be cooked alive without jumping out of the water. Well, Kotlikoff says, we are the frogs in a financial experiment that's gone terribly wrong:

Jimmy Stewart, the honest, warm, kind, and trusting soul is not your local banker. Jimmy Stewart is dead. Your local banker is some underpaid clerk who's been in place for six months and knows nothing about you, your family, or your business, and frankly could care less. His job is not to apply personal knowledge in deciding to lend you money or call your loan. His task is to plug your credit rating, income, loan request, appraisals, and other data into a computer and tell you what the computer tells him, namely how much you can borrow and at what rate.

Our bankers are desperately attached to the current system for good reason. It lets them socialize risks and privatize profits. Socializing risk means having the public take the hit when things go south. Privatizing profits means earning big fees in normal times.

These thoughts are not original. But Kotlikoff (disclosure: I know Larry and have written about him before) provides a particularly chilling review of the problems that brought on the crash and how they are part of a larger series of calamitous economic trends. Washington, in his view, may well be the last place we should look for a solution. Its policies enabled and encouraged the reckless behavior of our financial institutions. Its proposed remedies fall far short of solving our problems. And there has been little progress in the past 18 months in enacting even these limited cures. "Nothing short of economic open-heart surgery will save the American dream," he writes.

If the Tea Party folks haven't discovered this book, they should. Larry says what's on his mind, is not particularly concerned with making friends in government or business, and has solid credentials to back up his conclusions. In reviewing our meltdown, he doesn't spare himself or his colleagues from criticism, either. "With rare exceptions, those of us manning the watch -- the economists hired by the government and the business world -- missed what was coming, were shocked when it happened, exacerbated the public's fear, and are now helping resurrect the system that failed so miserably."

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Such behavior, Kotlikoff says, is part of a broader pattern of financial malfeasance. The federal government is able to print money and spend its way out of jams. Unable to resist the allure of the next election, our leaders have literally promised Americans they will spend upwards of $80 trillion on future benefits that the government simply has no way of obtaining. Short of hyper-inflating the money supply with devalued currency, we will not meet those promises. We are, in Kotlikoff's less than humble opinion, bankrupt. Yet our leaders find it easier to look the other way or engage in political brinkmanship than get down to work.

Looking the other way also explains why financial firms were allowed to become too big to fail and put our money at risk and not theirs. They adopted and then over-dosed on highly leveraged financial instruments. These securities are still not fully understood by even sophisticated financial experts, and certainly not by the politicians who are supposed to fashion remedies. While tougher regulations are being sought in Washington, Kotlikoff notes that there are roughly 115 financial regulatory agencies already. The problem is not that banking is under-regulated; it's that the regulators looked the other way instead of doing their jobs.

Kotlikoff's antidote to what ails us would be very bitter medicine for financial firms to swallow. First, he wants to forbid them from putting our money at risk. Second, he wants to replace those 115 regulators with a single agency. Its major job would not be just to police the banks but to become, in effect, the information marketplace and traffic cop for a new kind of banking that he calls limited purpose banking.

In this system, banks wouldn't be able to take any risks themselves, so they could never put depositor or taxpayer money at risk. Every business transaction involving a financial firm would be treated as if it were a mutual-fund holding. For example. if you wanted to borrow money to buy a home, your demand for loan funds would be matched up with an investor interested in buying your loan on mutually known and acceptable terms. The bank would receive some fees as an intermediary but the home loan would never be on its books.

By settling up special mutual funds for all sorts of economic activities, borrowers and lender-investors could be brought together for literally any reason. Kotlikoff's single regulator would make sure borrowers and investors met certain standards. Transparency would be king in his world. Nothing would limit people from taking extraordinary risks, which Kotlikoff recognizes come with the territory in a market-based economy. But under limited purpose banking, those risks would never sit on a bank's books and thus would never come back to bite the public in the form of bailing out a failed institution. Even your bank deposits would be placed in such a fund. And because deposits would be fully backed, dollar for dollar, we would no longer need deposit insurance.

"Jimmy Stewart Is Dead" makes for provocative reading. We certainly have squandered much of America's business and economic strength in the pursuit of personal gain and huge if not obscene bonuses. Yet the odds of such a system reset as limited purpose banking are slim. One can only shudder at how much worse things would have to become to consider such extreme changes. It might just be easier to find another Jimmy Stewart. I'd call him Mr. Smith. And I'd ask him to go to Washington.

The point of Kotlikoff's title ('Jimmy Stewart is Dead') is to emphasize that the honest, trustworthy banker (George Bailey) played by Jimmy Stewart in the movie "It's A Wonderful Life" is no more. Instead, he's been replaced by an economic horrow show led by a large number of con artists at the top taking advantage of regulatory loopholes, whose orders are implemented by low-level staff inputting data into computers. The result has devastated millions of lives; further, without changing government's approach to regulation, this will be repeated. Kotlifoff's recommendation - 'Limited Purpose Banking' (LPB) holding banks to their basic purpose and replacing the numerous regulatory agencies with but one.

Per the Bank of International Settlements, the size of the global derivatives market is $600 trillion, and the CDS market is about $45 trillion. The banking industry spent $350 million in lobbying and donations in the runup for the Glass-Steagull repeal.

Robert Rubin was former chairman of Goldman Sachs; Citigroup sold $25 billion in CDO insurance. Joseph Cassano was CFO at AIG's Financial Products unit that sold $1.6 trillion in nominal CDO insurance; Cassano was paid $300+ million. There are over 115 financial regulatory agencies - 15-some at the federal level, and state banking regulators + state insurance commissioners in each state.

Seventy-three U.S. CEOs earned over $10 million in 2008 despite 67 of them generating negative income, most of the time substantially negative. Larry Summers was paid $5 million at a hedge fund for working one day/week - he later helped bail out hedge funds. (Harvard lost over $1 billion in interest rate swaps Summers pushed while president.) In the early 1980s, the average credit card agreement was about one page long - now it is over 30 pages.

Bush appointee Charles Millard at the Pension Benefit Guarantee Corporation (PBGC) decided to invest its underfunded reserves on Wall Street via Goldman Sachs - lost $3 billion. The Treasury has been recapitalizing impaired banks by buying their troubled assets and shares at above market prices and becoming a part owner. Banks can be leveraged far more than it appears by their buying leveraged assets - this means regulators would need to approve each risky asset purchase, essentially making them government managed. Bank of America's net in 2008 fell 71% from 2007, but it paid management no less.

Government insured mutual funds in 2008 so they wouldn't 'break the buck' - on the other hand, stock purchases were not insured. The author believes this was to bail out the Chinese - holders of large amounts of a mutual fund that had been holding Lehman. Supposedly this also motivated the bailout of Freddie Mac and Fannie Mae.

Under LPB banks would function only as middlemen, and not own financial assets or borrow to invest except in their own furniture and buildings. The proposed Federal Financial Authority would replace the existing 115 or so regulators and oversee 3rd-party custodial arrangements of mutual fund assets so there would be no more Bernie Madoffs. A very unrealistic proposal; also, not clear the interlocking nature of holding huge financial assets (too big to fail) would be cured.

Boston University economics professor Laurence Kotlikoff (NBER associate) has been presenting a very compelling reform proposal (first in the FT Economists Forum, and now in this new book) that would definitely solve any 'Too big to Fail' problems for Large Financial Firms and other moral hazard issues - under the name "Limited Purpose Banking". The long list of economists, politicians and finance experts favorably commenting on his proposal is spanning the whole spectrum of political views: from Nobel Prize winners Akerlof, Fogel, Lucas, Phelps and Prescott to British central banker King, Steve Ross and Cato Institute's Niskanen (even though Niskanen disagrees with having a central regulator for approving financial products). Outspoken and written for a general public, he highlights how to avoid a financial system gambling with public money as the current one.
I fully agree with his analysis of the issues, including the blunt language. His Limited Purpose Banking Proposal is a radical reform, which illustrates what would be needed to eliminate any incentives for executives of shareholder-owned banks to gamble with customers' and taxpayers' money given the implicit safety guarentees offered to banks and now also to the so-called shadow banking system by the government. So, whether you agree with Kotlikoff's vision for a safe financial system or not, you will be hard-pressed to formulate a comprehensive reform that addresses all the major incentive problems of deposit insurance, too-big-to fail guarantees and the lack of transparency on financial firm's balance sheets and activities.

If Congress will not agree on 'obvious & necessary' obligations like raising debt limits so U S can legally pay short-term U S debts,

nor move on a Volcker Rule to separate banking functions from 'proprietary' investing,

how can we even hope that LPB has any prospect as a financial reform?

No, the Fed will print dollars
& the Treasury will buy dollars, and,
the world will buy treasury bonds (dollars + the 'market' interest),
until the dollar depreciates....

I'm amazed that world investors keep us "afloat" (actually, treading water)
These must be 'institutional' (that is, they notice POWER more than ROI)

Note: Also, Bad Money by Kevin Phillips -- to understand globalization & financialization of American economy

Laurence Kotlikoff has something interesting to say, but he doesn't know how to say it. His idea is that most financial firms should become limited purpose banks, which would operate like mutual funds. They would collect investors' money and invest it in a stated group of loans and securities. Commercial banks would no longer invest -- Kotlikoff would say "gamble with" -- depositors money. Interesting proposal, but buying and reading this book is not the way to understand it. He introduces the idea on p. 5 and then returns to it .... on p. 123! The intervening pages are devoted to a snarky, meandering, stream of consciousness retelling of the financial crisis. Even when he finally gets back on point, his preference for snarky commentary over straightforward exposition leads the discussion down many confusing byways. If ever a book needed a good editor to rein in a self-indulgent author, this book is it.

Want to know about Kotlikoff's proposal? Read the interview with him printed on this page. Don't waste your time and money buying and reading this book.

Now that everyone and his brother has written a book about the Great Recession, and now that the initial financial regulation bill ("fin reg") has passed, here are a few things that make this book still worth reading:

- Most of the content is diagnosis, rather than the author's prescription. The latter was even less likely to be legislated than a rigorous Volcker rule.

- The book is broken into short snippets for those who prefer blogs to "old school" books. Compared to a blog, one has to actually look up references rather than merely clicking on hyperlinks. However, the notes list many good sources and interesting research. Also, the book has more central organization than a blog, and is quite readable and well-written (unlike what another reviewer claimed.)

That said, the utility of an (almost inevitable) paperback edition would be enhanced if the author did more than to just add a postscript to the tune of "see, everything I said is still valid, because fin reg didn't do what I said it should." Besides updating the status of the recovery (or lack thereof in terms of jobs and US debt), it would be great to have details on where fin reg is making partial progress (however tiny) in addressing problems mentioned here.

Then, when the next financial crisis hits, it will be time for a more updated second edition - though of the generational storm book rather than of this one, I fear.

There's no use pining for the good old days - "It's a Wonderful Life" was just a Hollywood movie, the town of Bedford Falls doesn't really exist and Jimmy Stewart is long gone. But earth-shattering economic tumult has a way of evoking nostalgia for the return of (what you think were) simpler, more honest fiscal times. Economist Laurence J. Kotlikoff delivers a salty, sometimes irreverent, but ultimately convincing remedy to cure you of the erroneous belief that banking should return to the past to make up for the sins of the present. He competently lays out his concept of how "limited purpose banking" would work while hoisting on their own petard the crafty bankers, sinister lenders and obfuscating bureaucrats who nearly crashed the economy. getAbstract recommends Kotlikoff's original interpretation of events resulting from the 2008 crisis and his exposition of the far-reaching solution he offers, but quibbles over just one point: George Bailey ran the Bailey Building and Loan, not the Bailey Savings and Loan.

The author has an ability to transmit knowledge very efficiently. This is useful financial knowledge that anyone living in America need to have today. His solution to the Healthcare mess is the most likely outcome of that sector. The sooner you read this the sooner you will become adroit at listening to the "talking heads", who by the way should read this as well....smile