When you combine ignorance and leverage, you get some pretty interesting results – Warren Buffet

Posted on September 23, 2010 by


Policymakers around the globe are still wondering how to reform the banking sector, instead of more worthless regulatory schemes, we now have the answer: Limited Purpose Banking as presented by Dr. Larry Kotlikoff in his book Jimmy Stewart is Dead: Ending the World’s Ongoing Financial Plague with Limited Purpose Banking.

 Dr Larry Kotlikoff and Orphe Divounguy

Challenging the policies of almost everyone from FDR to President Obama, Jimmy Stewart Is Dead: Ending the World’s Ongoing Financial Plague with Limited Purpose Banking calls for a new banking system called limited purpose banking (LPB). LPB would transform all financial institutions — traditional commercial banks, investment banks, hedge funds, insurance companies, credit unions, brokerage firms, you name it — into mutual fund companies. Checking accounts would be replaced with all-cash mutual funds, while savings accounts would be scrapped in favor of short-term mutual funds that invest their money conservatively. People seeking higher return but riskier investments (in, say, derivatives or mortgages) or who wanted to buy insurance could choose funds serving those purposes.

LPB would deny banks the ability to borrow, hold assets, and make financial bets; the banks would simply manage mutual funds. Kotlikoff also would replace our 115 government regulatory agencies with one — a Federal Financial Authority — that would verify, disclose, and supervise the ratings of all securities in these mutual funds.

Some people rock the boat; Kotlikoff shakes it to the breaking point.”

Read more of this article by Rich Barlow at http://www.bu.edu/today/node/11107

Don’t be IGNORANT like your “elected” politicians, pick up a copy of Larry Kotlikoff’s new book!

“Larry Kotlikoff is that rare economist who comes up with the most original ideas when the stage is crowded with pedestrian analyses by other economists.  He does it again with the current financial crisis.  This is a marvellous book that will repay a careful read, even if you are as smart as Larry Summers and Ben Bernanke.”

–          Jagdish Bhagwati, University Professor of Economics and Law, Columbia University

Praise for Jimmy Stewart is Dead by 5 Nobel Laureates in Economics!

“Jimmy Stewart Is Dead is a page-turner, as fast moving as the Simpsons, with new insights on every page. As fun as it is, Jimmy Stewart is also deadly serious. It describes the deep problems of our financial system, with its ubiquitous and dangerous overhangs of different forms of debt. Laurence Kotlikoff prescribes the regulatory and banking overhaul needed to prevent another financial crash. His book should be read by everyone who wants to ensure that such a crisis will never occur again.”

— George Akerlof, Koshland Professor of Economics, University of California at Berkeley,
Nobel Laureate in Economics

“Larry Kotikoff’s book makes an impassioned, coherent, and (to me) convincing case for Limited Purpose Banking.”

— Robert E Lucas, Jr., Professor of Economics, University of Chicago, Nobel Laureate in Economics

“This book is ‘must’ reading for everyone who cares about the future of the American economy. “

— Robert W. Fogel, Charles R. Walgreen Distinguished Service Professor of American Institutions, The University of Chicago Booth School of Business, Nobel Laureate in Economics

“Kotlikoff is right. Unless we institute fundamental reforms, there will be an even greater crisis than the current one. This well-written book is a must read for those concerned with reforming the financial system.”

— Edward C. Prescott, W. P. Carey Professor in Economics, Arizona State University, Nobel Laureate in Economics

“Certainly we need to abandon the hazardous financial system we have. Kotlikoff’s Limited Purpose Banking plan, with its ban on borrowing by financial limited liability companies, is one of the best visions to surface so far.
— Edmund Phelps, McVickar Professor of Political Economy, Columbia University, Nobel Laureate in Economics