Hi, everyone. Welcome to our presentation, Looking Back, Moving Forward. During Open Ed 2020, Wanda, Jim, and I discussed the challenges and successes with opening education in a remote community college. We're back again to discuss what we've learned over the last two years and to examine some of the changes that we've made. We'll also discuss limitations that we've not yet overcome and new opportunities on the horizon. I'd like to begin by introducing our small group. Wanda Roberts is the program head for health programs here at our college. Jim Stover is the adult learning specialist and our very own ethical ed tech guy in our center for learning and teaching innovation. And I'm Tammy Sones-White, also in the center for learning and teaching innovation as an adult learning specialist in instructional design. And now Jim and Wanda will provide our land acknowledgement. We respectfully acknowledge that Aurora College is situated on the traditional territories and homeland of the Denny, Inuit, and Métis peoples of the Northwest Territories. We are grateful to the many Indigenous peoples of the NWT for allowing us the opportunity to learn, work, and live on their lands. We are also deeply grateful for the generous sharing of traditional knowledge, wisdom, and ways of knowing, being, and doing with our students and employees. I would like to acknowledge that Tammy and I join you from Yellowknife, located on Chief Dry Geese Territory, traditional home of the Yellowknives Denny. These are also the traditional lands of the North Slave Métis. Jim joins us from Wati, a community on the self-governed territory of the Clichot people. We extend our respect and appreciation to the Yellowknives Denny, North Slave Métis, and Clichot people for sharing their land with us. Thanks Jim and Wanda. So Wanda's going to start us off here by looking back and providing us with a recap over the past two years. Thank you, Tammy. In the 2020 Open Ed Conference, I spoke about the personal support worker education in the Northwest Territories. The personal support worker program prepares graduates to work as part of the healthcare team, and unlike many places in Canada, graduates are frequently offered full-time work with this designation or paid a fair wage that includes benefits and pension opportunities. I spoke in 2020 about systemic barriers preventing women from traveling to Yellowknife to attend school. A shortage of student housing units in the city often means that those accepted to the campus-based program cancel their seats at the last minute when they are not able to secure housing. In 2020, the PSW program was initiating a distance learning program in an effort to reach individuals in remote communities and to support them to complete their certificates at home. I was optimistic about the program and the impact we would have for people who otherwise might have limited access to post-secondary education. Another point I made at the last conference was about the measurement of success. If graduation is the only measurement we are using to determine what success looks like, then we are missing the learning and growth that takes place for every person who access education. I've supported many learners in the past who did not complete their designation, but talk about the positive impact their experience at school had. And finally, meeting people where they're at to help them get to where they envision requires relationship building, getting to know students and come to understand their lived experiences, strengths and challenges. When we come to know each student as an individual, we can better support them during their educational journey. Over to you, Jim. At our last conference appearance, I described learners at our satellite learning centers as adults with tremendous courage and hope, people who have overcome their fears far enough to give another try at education in spite of a system that's not only failed them, but has traumatized them in the past. I was looking at imminent co-facilitation of a literacy and essential skills course with a colleague who helped me adapt it for online participation from a really well-designed face-to-face curricular resource. In 2020, I also shared my vision for designing more free online courses with a practical focus that don't depend on extensive synchronous teaching sessions, and that meet requests from employed learners for evening classes. Over to you, Tammy. Thanks, Jim. So in our presentation in November, my concerns were about students' challenges and the barriers they needed to overcome to be successful in their chosen areas of study. I spoke about how upwards of 50% of our students are Indigenous in the School of Business and Leadership, and that approximately 80% of the graduates were women. I also identified two levels of helping students overcome barriers. The systemic barriers are broader issues such as broadband capacity and leadership resistance, and the personal relate more to the personal, pedagogical, and technical needs of the students. I spoke about how all of our students must have access to stable, fast, affordable, and equal internet, and the importance of equitable approaches to create openness and education. Lower costs for internet needs need to be negotiated so that the limits to internet are not cost-prohibitive or inaccessible. I also spoke about how we could use pedagogy to ensure that students progress through our programs. I spoke about the importance of leadership and the need for adaptive practices to be entrenched in policy so that would improve our systemic issues. With regard to the personal, I think we were very underprepared to deal with all of the unresolved and unresponsive needs of our students. Every student and their need took much more effort and time than anyone could have ever imagined, and this also, I think, took a toll on our instructors as well. So now what we'd like to do is continue looking back a little bit of reflection. Wanda, can you tell us your reflections on the past and a little bit about your successes, your challenges, and the lessons you learned over the last two years? Thanks, Tammy. Reflecting on the last two years, it's been quite a ride, filled with successes, challenges, and lessons learned, often the hard way. First, the successes. For the first time ever, we graduated 14 students from the Personal Support Worker Distance Program. These learners were situated in five remote communities across the Northwest Territories. When speaking with students about their experience in the program, every one of them expressed enormous gratitude for being able to complete post-secondary education from home and provide support to elders in their community. In addition to that benefit for learners, optimal healthcare delivery by Northern people for Northern people ensures clients and healthcare workers are connected by culture, language, and common history. The more Northern healthcare workers we can educate, the less we need to rely on local healthcare workers from outside the territory. Like-minded faculty teaching in the distance program was key to supporting students. The individuals teaching in this program valued establishing genuine relationships with students and viewed this as integral to student success. If a student missed a few live classes or the instructor noticed a change in the student's established communication pattern, they picked up the phone to call the student. They checked in to find out how the student was doing, asked if they had any questions, and offered assistance. This mitigated any fear or hesitation students might have had about reaching out and asking for help. They didn't have to. It was offered without having to ask for it. The third success I'm going to speak of today is community adult educators. These folks were key to supporting distance students, calling and checking on students, offering assistance locally. When one student talked about how integral the community adult educator was to her success, the educator was a bit taken aback. He said, Wanda, all I did was print learning materials for her when she asked me to and I left the monitor step on my way home from work each day. This is a great reminder that we may think small acts such as printing material is not that important, but it could mean the world to the student. Despite the successes, we also had some challenges. Once students began their practicum placements in long-term care and home care organizations within their community, it became apparent that existing relationships between them and the organization could be both beneficial and detrimental to student learning. Some students reported feeling bullied by staff within the facility as there was history between them and some of the staff working there. Instructors were challenged with teasing out the details in order to ensure students received fair evaluations. Other students working within the same facility that they were completing practicum hours. This worked well for one student as the employer developed a schedule in collaboration with a care supervisor so he could complete practicum hours while continuing to work and support his family. In addition, there were some systemic challenges. For instance, when a student is accepted into the program, our IT department has to manually create a computer account for each student. So the IT department is chronically under staff and we often face situations where students were accepted into the program. Classes were beginning and students did not have access to their computer accounts. As you may imagine, being able to access Moodle and email are pretty important in distance education. We lost several students each year as they had fallen behind in coursework long before they had access to their college accounts. An additional challenge is that we rely heavily on communicating via email with students. Data, internet and cell phone fees are expensive in the North. If we rely on internet as our sole way of contacting students, we are excluding a significant number of people who live without these class C services. Of the many lessons learned in the past few years, I decided to focus on two. Among them, trust the learner. They often understand their own needs and have goals that they're striving for and we may not be aware of. It's not necessary for us to surveil and control students. Rather, we walk beside them on their learning journey. Trusting learner also means listening when they decide distance learning isn't working for them. Rather than trying to talk them into continuing by distance, help them find the path that fits their learning needs. We cannot have a cookie cutter approach to education. The second one, distance can be done even in the North. I know that Tami spoke to some of the challenges with broadband and internet, but we have succeeded on some levels. We have some graduates, we have some people who have experienced education for the first time. An abundance of patience is required for both students and faculty for it to work. Building and maintaining trust with students is key. Listening to them, ensuring they feel supported and offering flexibility in ways that they can engage with learning activities. Over to you, Jim. Thank you, Wanda. Reflecting back on our past few years, I have to say that while not all of my 2020 vision items are fully realized, we did see more essential skills and adult basic education courses adapted for online delivery in remote communities. I still stick by my description of learners who enrolled in our online courses and who persisted in spite of horrible circumstances. One was supporting her sister through the trauma of a murdered young niece. These learners are the real heroes of our attempts to open education in the North. For me, the biggest success is that our Office Skills course worked. It is possible to design distance courses for adult learners who have not had opportunities to achieve higher levels of education. I remember the excitement and the big smiles as participants in my community met me at their doors when I delivered laptops and course binders. We designed most of the instructional readings and videos as asynchronous activities and we tried to save the valuable live synchronous time for discussing what we'd learned in solving problems. One participant who had almost no previous computer experience taught herself enough PowerPoint skills over the weekend from our course videos to complete the slideshow assignment. I was going to call you, she said, but I decided I could do it on my own. That we had serious challenges is revealed in our retention rates. We had eight completions out of 31 participants initially registered in both iterations of the Office Skills course. Some left for job offers or because they had experience to change life situation, but there were also those who left because of limited infrastructure and other challenges. Bandwidth problems meant our video conferences were often reduced to teleconferences, so learners were unable to share their screens to work through problems as we had planned. Family members of one participant took the college supplied turbo stick and used up the month's data so she could no longer log into course resources or meetings. By the time we figured out a workaround, she was discouraged and no longer responded to our outreach. We learned that distance learning is not only possible but can be designed to work well with adult learners who do not have previous distance learning experience. That said, we learned to be ready to provide massive amounts of our own time to support learners at the point when they need it. Dedicated learners, especially those new to distance learning, also need questions answered late at night when their kids or grandkids are sleeping. That required a more immediate means of connecting than just email. Many of us gave our personal cell numbers to learners and I even enabled notifications for Facebook Messenger, normally a hard no-go for me. I learned to take the time to be interested in sometimes rambling reasons why they needed an extension.  Believing learners is one way of caring and technology will fail. We'll stop. Decide first if that will mean eliminating learners affected by the tech failure or if you will have a plan B, plan C, plan D, and so on to include them by other means. We only had a plan B when we started. We formed some plan C and D on the fly to adjust our ideals to reality but it wasn't enough to retain everybody. And we also learned that distance learning is not for everyone and participants who leave the course are not failures, not theirs nor yours. Learners need the freedom to choose how and when they will engage with the learning. Over to you Tammy. Thanks Jim. I'd like to start with the successes. The successes of the past two years have shown the deep caring and compassionate care of instructors to get their students to the finish line. Many faculty have found new ways of connecting with their students and have grown professionally and many of the students have done the same. Nothing like Jim said is a failure and all of us have learned regardless of if the programs were completed or not and these two past years have forced us all to find these multiple ways to connect and new ways of engaging with our students. Unfortunately, there have been challenges so unfortunately the broadband issues are still unresolved and many of the communities have the same or similar access to broadband capacity as they had before. And personally, I won't be happy until we can actually reach the woman in her slippers at her kitchen table with her five kids in New La Havtec. Since we last spoke in November of 2020, the School of Business and Leadership has discontinued its video conferencing to connect students and has decided to rely strictly on teams video conferencing. The downside is that students don't see the necessity of going to campus to attend classes. More students are becoming self-reliant on internet connections of their own and this of course creates less of a necessity of being present in the physical campus locations. For example, one of our students recently relocated to a campus and during a regular reoccurring power outage she lost her connection to her instructor in another community. The student actually went home and connected through her mobile device to the class and later she called a parent at home and said I don't know why I moved here. I could have stayed at home in my own community and done my work there. Also changes to leadership and leadership responsiveness to open and accessible access have had varied results over the last two years. These responses have been varied because of the return to the way we did business to pre-COVID. Many leaders want to go back to the way things used to be and then others of course are saying that there is no way back to the past. We've learned these things and we can't unlearn them. On a positive note there have been many more people in leadership demanding positive innovative change to improve the learning conditions. What I've learned is that advocacy begins with a classroom of one student. What this means for me is that as I work to create openness I must focus on each student and figure out what's the best way to reach them. That change is incremental and it requires partnerships and collaboration with those who are willing and able to contribute and nothing will ever replace that relational need or in the importance of the connections to our students. Moving forward my role has become one more of advocacy and partnership building. I'm working to create deeper awareness of potential solutions that can be used to leverage and improve systemic issues. My involvement with students is based on a better understanding of what makes students successful and what stands in the way of their success. By moving forward I hope to improve broadband access and create meaningful connections through my current role with the college. So now we're going to go and look at our moving forward. Wanda can you tell us a little bit about how you've moved forward? Thanks Tammy. What's new and exciting with personal support worker education? Well in addition to having campus-based education in a new vacant yellow knife and a distance learning program I have a story for you. This fall we were unable to fill nine seats in the yellow knife in-person program due to a shortage of student housing for the campus. When looking at my admissions statistics there were 10 to 15 people from nearby the nearby community of Bechico who had applied to the program but were waitlisted or did not get housing over the past two years. There were also about a dozen people from the same community who signed up for distance courses but did not complete them for various reasons. So I emailed all 22 people from Bechico who had expressed interest in the program within the last two years. I asked them if they are interested in attending in-person classes on a part-time basis at the community learning center in their community. Guess what 15 people said yes. So now rather than sit and stew about the lack of housing in yellow knife we're taking our show on the road. Bechico is an indigenous community one hour from yellow knife by road. Faculty from the PSW program will drive out to the community and learning center one day per week this year to provide in-person learning to people within the community. Students completing all of the courses that are now planned for the community learning center will complete their certificate in two years. So meeting students where they're at offering varied formats for delivery and receiving education really helps us to to open education in the north. On to you Jim. Thanks Wanda. I am going to be retired by the time you view this but I have the honor and privilege of being asked to take a casual contract to help design an online course for online teachers. With a design specialist as team lead we are taking an organic rather than a linear approach to the material and we're finally getting to implement ungrading or as I prefer to say assessment is a conversation in this course. As we transition from a community college to polytechnic university there is a very real need for consistency across courses and programs for accreditation and articulation agreements but it is so easy for fear of not meeting these targets to stifle innovation and instead keep doing things the tried and true way because that's perceived to be safe. I've been privileged to serve on several policy review working groups as well as an equity diversity and inclusion committee. It's really encouraging to see the values of EDI converging with a willingness to make policies more humane, more learner centered and less controlling. Over to you Tammy. Thanks Jim and Wanda. My role in the college has changed as I said earlier I'm now with the Center for Learning and Teaching Innovation and I'm now working with program heads like Wanda and instructors to improve course design and to look at look critically at pedagogy. I'm now focusing on trying to resolve systemic issues as I've said earlier that are perennial for us here in the north. I've also began raising awareness outside of the college by developing partnerships with industry and by writing and publishing about these problems. I've begun collecting data and I'm creating a GIS mapping database to document these inequities in the hopes of politicizing needs and elevating these needs to the awareness of higher of the higher ups in our organization and outside to those with power and authority to advance these changes. Openness still eludes me. Equity though has taken on a new meaning for me. I now want to know what does equity look like for a community? How is open reflected to learners that don't currently have access? What steps would contribute to advancing community's needs and their desires for education? I've stopped creating standardized approaches and putting the cart before the horse and I asked the questions. What do you need to improve educational options for yourself and your community? Coven opened me up to a deeper understanding that openness looks different for each of us and to really make these connections we need to ask these important connections and deeply contextualized questions and then we need to act. We'd like to thank everyone for joining this presentation looking back and moving forward and we'd like to join you now in the virtual space for a real-time discussion. Thanks for watching.


Desire your housing project was just like five and a half miles away from our housing project. Okay.  Okay in that situation the life that was taken they give it Charge to me and my two co-defendants Wow saying that we committed the crime and all but you weren't there at all In fact, we was on the back of a cop car. We thank God. We got stopped in the traffic stop right doing the Proceedings of this murder if it wasn't for the proceedings of this murder, uh, I Mean I was being in the traffic stop during the proceedings of this murder. I probably wouldn't be talking to y'all today But so tell me about a time I know you the first time you got in trouble. How old were you? Well, really I was the first time I got in trouble. Well, my first juvenile judge. I was 13 13 13 yeah, but uh, I had a couple of and what happened at 13 Uh, I stole the vehicle in a pistol pistol side just basically John right, okay Did you finish high school? No, no, no, I was a Time I was released from Scotland a juvenile judge. I was I mean it wasn't too long before I was right back in on this adult charge For something that I had no idea and how old were you when you went in for this adult charge? 17 and tell me what happened Literally, it was an altercation in my neighborhood, which is the I feel housing project We had altercation in that neighborhood at our DJ with some on neighborhood friends or whatever and During all Why this was taking place something else was taking place in desire your housing project Which is like five and a half miles away from our house a project. Okay? Oh, I can't necessarily explain to you what took place in the desire, but a life was taken Okay, in that situation the life that was taken they give it Charge to me and my two co-defendants. Wow Saying that we committed the crime and all but you weren't there at all In fact, we was on the back of a cop car week. Thank God. We got stopped in the traffic stop right doing the Proceedings of this murder if it wasn't for the proceedings of this murder. Oh, I Mean us being in a traffic stop doing the proceedings of this murder probably wouldn't be talking to y'all today Yeah, because then if it was It's a law enforcement officer who was there so they can't say he's lying to help you if it was a friend It'd be like well he lying. He'd you know how they be doing well We did have an officer that ought actually made the traffic stop He literally told him that our traffic stop was in Intentionally a traffic stop. Oh, it didn't have anything to do with a murder. Okay They had officers in the fifth district. I was saying that it was actually a sentence involved in the crime Five and a half miles away and the time okay So what time did it stop happening? What time did that crime happen? Okay, what a crime happening at dying like exactly like 922 that was one of the first calls came in about the crime shots Being fired. Okay, y'all and then your stop happened at what time no later than 927 930 we was in a traffic stop. Yeah, you couldn't make it that far in that sort of a time Okay, all our name was being all well one of my co-defense name was being broadcast over the radio While we was in the traffic stop and it was saying that we was fleeing from a scene In the desire housing project headed towards the interstate So was it somebody that looked like y'all that they saw that they thought it was y'all no No, no, no, no, this was because I'm like, why did they where did they get y'all's name from? That's this was not a mistaken identity This wasn't this was but who told him the name. It was the cops. They just came up with y'all names Cops literally give the names up To the actual victim who was in the car and he actually Mentioned our names to them. They have documents. This is public records. Do you know which police officer? Told him this name Lynn Davis did he have something against y'all? That's the part that I'm confused about yeah, cuz I'm like if you had your name on the tip of his tongue like that No, yes, yes So if it was it was through something that was happening in the streets. Did you know him personally? Not at all Did you ever have any running with him before not at all not with him personally not not that I could recall I don't have a few run-ins with cops Not that I can recall actually or your or your friend did your friend have any run-ins with him Not that we can recall. Okay. Yes by him working in a field district when we are the first different first district We don't too much encounter field district cops. Mm-hmm for that situation to go like that. I mean I don't know how I played out on how the narrative was drawing up. Yeah, but he was That's just crazy that he just came up with you know y'all's name picked y'all name knew your names to say Yes, so were there witnesses at that? This is that the feds had the whole thing tap Okay, this was what a shooting was yet the whole thing everything It was under federal investigation for operation shadow shield, which they was investigating a lot of crooked cops That was working under the branch or Lynn Davis or whatnot and all They actually had everything on record. They actually knew that we didn't commit the crime But that has filmed footage or just I really don't know what it footage, but I know they had audio for you Okay, I know they had audio or Maybe a few things from they sell phones because this is how they used to communicate Right phones was given to them by the feds and they did literally didn't know that they had phones from the feds at the time So this is how a lot of the information was being tapped. Oh, okay, so This was highly publicized So just let me mention is it in a song it mentioned you guys in a song. How does that work? What time period was this? Well, so it's them all I'm running to so it's been probably made around 96. Oh He was incarcerated with me in Orleans, Paris. He was incarcerated for this charge 94 So we actually come through on the charge while we was on till already. Wow, so well, how was he? Just dealing with him.  Just just firm right gonna stand firm on what he believe in, you know Yeah, we on boss talk one-on-one. Yeah, we gonna talk


This is Jeff Deist, and you're listening to the Human Action Podcast. All right, ladies and gentlemen, welcome and happy New Year to all of you. This is the first Human Action podcast of 2020. It is, in fact, January 1st, New Year's Day. And our guest is none other than Bob Murphy, Dr. Robert Murphy. So Bob, great to talk to you. Happy New Year to you. Happy New Year to you, Jeff. I made a resolution. I want to talk to Jeff Deist more, and I'm getting off to a good start. Well, I want to just give a little background about what we're talking about today. And our subject is actually money mechanics. Now, what do we mean by that? You know, a few years ago, I happened to come across an old article. It's out of print now, but it was produced by the Fed Reserve Bank of Chicago up until about the 1990s, and it was called Modern Money Mechanics, a workbook on bank reserves and deposit expansion. So if you look at this article, which there are still old PDFs of this out there on the internet, we'll actually link to one of those. But if you go to the introduction of it, it says the purpose of this booklet is to describe the basic process of money creation in a fractional reserve banking system. And so when I worked through this a little bit, it's actually kind of tough sledding this particular article. I wouldn't say it's aimed at an academic audience, but it's certainly aimed at an audience that has some understanding of central bank operations. So I set it around a few different professors and academics in our circles, and some of them actually began using it in their classrooms, et cetera. So it got me thinking that those of us who have some sympathy towards the Austrian School of Economics tend to be very critical of central banks, and particularly the Fed, for those of us who are Americans. But yet a criticism that's often weighed against us with, I think, some validity is that we don't necessarily understand the commercial or mechanical side of banking as well as we do the theoretical. So I shouldn't say we, I'm not an economist, but I'm the conduit between economists and the audience. In other words, we understand a lot about theory when it comes to money and credit creation. Austrian business cycle theory is obviously a big part of the Austrian worldview, but we don't understand as much how central banks and commercial banks and retail banks actually operate, how money comes into being, how interest rates are set, how it all flows throughout the economy, how this has an interplay with treasury debt. It's all very complex mechanically, and I thought, well, what if we had our own version of an article or a book that helped explain this and give it some visuals, give it some graphics, make it very understandable for a layperson? I thought that that would have a lot of value. And so I reached out to Bob Murphy and said, hey, let's discuss this idea of creating an article or a series of articles on money mechanics. And so as Bob and I fleshed this out, it became clear, hey, why don't we have a bunch of short chapters, have them come out in a serial manner, and then when this is all done, we'll have a book or an e-book or something where we want to keep it pretty short, maybe 100 to 150 pages, and that this will really help people understand Fed money mechanics. So we worked out if Bob produced an outline of chapters, and so we think that this book is going to be a bunch of really short digestible chapters. And so the series of articles which Bob is in the process of writing are going to begin coming out on Mises.org here now in January 2020. They will continue for every other week, bi-weekly, for a period of months until we've gotten through all about 13 to 15 chapters, and then at the end, we'll put them together into a book. So all that said, I hope the audience understands where we're going with this and sees this as a worthy venture. I think it's going to be, Bob, a book that really simplifies and demystifies this process, and in that sense, I think it's going to be very valuable. So just give us your sort of overarching thoughts. Well, sure. So I was real excited, Jeff, when you pitched the idea to me, and I thought, yes, there is a need for this. And I had independently come across that Chicago Fed primer on money mechanics or whatever, you know, however they described it. And I thought that was great at the time. Like it actually sort of encouraged me that, because it was compatible with the stuff Rothbard did in his work that, you know, that I was more familiar with. And so just kind of reassured me that, yeah, this isn't some weird little Austrian thing. This is what the standard canonical view is of these topics. And so, yeah, I think also too, because central banks are now doing so much more than they were before the financial crisis of 08, that more and more sort of regular people want to know, yeah, what's going on with this? And so it is, especially in the age of the Internet, short attention spans, you know, people aren't going to read 300-page treatise on banking. And so I think, yeah, that this is going to, what I would like this to do, number one, is just to be a reference so that any college professor would be comfortable, you know, giving it to the kids in this class. I would say, okay, now in Chapter 8, they get into the Austrian theory of the business cycle. I don't particularly agree with that, but those first seven chapters, that's just all standard. That's great stuff. Let you know the organization of the Federal Reserve. Like what's the open market committee? What's the difference between, you know, the presidents and the board of governors? There's little things like that that we all hear referenced in the news, but we probably don't actually know exactly how it all fits together. That's one of the things that I want this series to answer. Yeah. And I don't think, for the most part, it's going to have an Austrian flavor. It's going to be descriptive just how this stuff works. I mean, that's obviously the idea behind the book. Right. Exactly. That I want it to be very, you know, non-controversial. Just these are just factual statements that it's all in one nice spot, like you say, with good graphics. So it's not just a bunch of dense text, just so people can very quickly get up to speed on this is how the Federal Reserve works and central banking more generally. How is money created? Because that's something too that I mean, it's, it really is a, you know, I think that's why, you know, it was called the mystery of banking. When you really understand like the, how there's a sense in which a commercial bank by granting a loan to give an example, Jeff, the kind of thing. I've seen a lot of libertarian hard money types. Sometimes they act as if it's only fiat money, central banks that can quote, create money out of thin air. But actually there's a sense even when regular old commercial banks when they advanced loans do the same. And so just things like that, that there's a lot of sort of nuts and bolts that I think it would help people if they just had a sort of, you know, one spot where they could go and just see it all spelled out clearly and it will click for them. Yeah, of course, some people with perhaps very superficial knowledge will just say things like, oh, the Fed just prints up the money to cover the deficit or that sort of thing, which is obviously grossly factually untrue. Right. In terms of, I mean, there's two things concerning about that. I don't know which one you meant, like the fact that they are literally running printing presses now for a lot of when the Fed creates money, but also too. And this, this is some of the stuff that we're going to get into, you know, perhaps later in the series, but issues about, you know, modern monetary theory and is it correct that like when the federal government runs a budget deficit, do they just instruct the private, you know, the, there's a treasury just say create more money. Well, lots of things like that where we will just sort of get in and just lay out the material just to try to help people make sense of current policy debates and things like that. Because with a lot of these things, I think part of the problem is there's a lot of talking past each other and the layperson doesn't really know what the underlying reality is. And so it's hard to understand when certain people, you know, push a political recommendation under the guise of, oh, this is just standard. You know, this is just the way the world works. Well, actually you're smuggling some stuff in there. Well, I hope our listeners will seize on this opportunity because I would argue not only do many, maybe most economists not understand money and credit creation in a fractured reserve system or how the Fed or the ECB or whatever actually operate on a mechanical or technical basis. I would even argue a lot of monetary economists, people who specialize in this stuff don't really understand. So there's, there's an opportunity here. And I also think that, you know, sometimes our critics will say, oh, you know, the Austrians don't really understand this stuff. You just, you just look at it theoretical. So, you know, all that said, I guess first and foremost, you and I had discussed having some sort of article or chapter discussing money creation, money and credit creation in the U.S. before the Fed, which is obviously a big part of our history. So you intend to address this. Right, exactly. So the period to the, which would be the gold standard and just, you know, how does that relate? And also to, this is another misconception. A lot of times Austrian school economists or I should rather say lay people who are fans of the Austrian school will say things like, oh, yeah, the business cycle is caused by central banks. And then that leads you open to the criticism. Oh, well, wait a minute. So before the Federal Reserve, there were no recessions in the United States. You know, that kind of stuff. Yes, definitely want to get, bring in some historical material there, partly to explain how did the gold standard actually work or what was the relationship between the gold standard and these other things we're talking about. But yeah, just to know how did this stuff happen before the Fed even existed? And also too, Jeff, I might add, I don't want to forget to say this. You mentioned, to me, one of the things that we definitely want to tackle in this series is there's a recurring critique when you see the Austrians or just any, you know, mainstream economist even giving the orthodox explanation of, oh, well, the Federal Reserve buys assets and that creates reserves and then banks go out and they lend in a lot of people.  If you knew anything, if you left your textbooks, you'd know that banks make loans first. That creates deposit. So we're going to definitely tackle that particular objection. I'm sure many listeners have heard that and maybe are sympathetic to it just to just try to reconcile that because it does seem like there's two camps out there. And I think there is a way to reconcile those two views, but in practice it often comes off that, oh, no, you guys are just looking at your textbooks and you don't know how banking actually works. Right. And so a series like this I think needs a little bit of history and background on money and banking. And so even listeners who maybe even haven't read Rothbard's What Has Government Done to Our Money or haven't read much in the world of monetary policy or monetary economics, they'll get a little bit of history and background here, but in a nice, succinct fashion. Right. Yeah. So there's not going to be any... Everything that's in here will be there because it needs to be in there. Put it that way. We don't want to waste your time. We know we're going to give you as much as we think is necessary to get the point across so that, yeah, when you read the chapter on a certain issue, it's digestible, it's quick, but it's comprehensive. Some treatment of money early in the U.S., some treatment of the classical gold standard, some treatment of history like Bretton Woods and that sort of thing will be included. Oh, yeah, definitely. Okay. Let's sort of put that aside for the moment and move into the Fed and its creation in the 1910s. First and foremost, let's just talk a little bit about the basic structure. So you have the Federal Reserve Bank itself, which is headquartered in Washington, D.C. That's where the chairman of the Fed sits and works. That's where a lot of economists sit and work. So what about the 12 Fed member banks? What are they? Where are they? Why are they? Well, I mean, they're spread around the country and, of course, we may get into some of the history that originally it was based. So there could be banks right now that are in areas that you might not have picked and that's because back then that was more commercially relevant. And also, one of the things we're going to cover in terms of the history is to show that originally it was more decentralized, right? That they were the governors. They were called governors and then they got changed to being just bank presidents. So in other words, the regional heads used to have more authority and then it was in the 1930s under the Roosevelt administration that power was more migrated towards the board of governors in D.C. and that the other members now were called president because among bankers, governors are more prestigious title than president. And so that's part of what happened. So yeah, there's a lot of history even just in there. It's not that the Federal Reserve was in its modern structure and form at the outset. And of course, too, there's a whole, you know, and here we got to be sure because I'm sure many of our listeners know the genre of, you know, the creature from Jekyll Island and it's, you know, it is, you know, that is true. Like it really was a secret meeting with people and they really, you know, why are they called the Federal Reserve?  And so that was the issue that, you know, the Americans would have been very skeptical of a central bank and so they were trying to make it look like, no, it's this decentralized thing. So all that stuff is the fascinating history that of course, you know, is a lot of people have seized on and, you know, taken in strange places. But, you know, that's stuff that people aren't making that up. There really is this background history here that's pretty scandalous. Well, and listeners need to come out and meet people like me and Bob. We're going to have an event at Jekyll Island this coming October 2020. So go to Mesa.org, check your calendar, come see us, come meet us. It's going to be fascinating to be, you know, right there and talk about all of this stuff. So the 12 Fed member banks as you indicated, that's where the economic power was early in the history of the United States. I don't think you'd have one in Cleveland today. You'd probably have one in Phoenix or something, some big population center, right? I mean, they sort of show an East Coast bias as to where the 12 are located. Right. And so, yeah, I think that's a combination of, again, you know, the economic power structure back then but also, yes, it's just there were politics involved even back then. And you can see it's like even so to this day, like, you know, it's still the case obviously that the head of the New York Federal Reserve Bank, you know, it has a lot more power whether, you know, in terms of both officially in terms of the structure but also in practice. So you see all those elements too. And that was certainly true back then as well. And some of the structure, you know, might be a legacy of the political power dynamics back then and sort of carry towards it today. So I just want to stress the idea of the podcast today is to get people interested in this series of articles and reading it so that we're not here, you know, in today's podcast to understand, to explain everything about the mechanics of money to you because we would be here for the next, you know, 10 weeks or something like that. But so you're going to have some information about the structure of the Fed, how it's made up, the Board of Governors and all that. So I'm very much looking forward to that because I think people are murky about that. I certainly am. And, you know, another term I've always been murky about is this concept of primary dealers. So these aren't actual Fed banks. These are commercial banks like Goldman Sachs, for example, but they trade directly with the Fed. And so I think we have this idea that primary dealers are somehow closer to new money and credit creations.  Well, sure. So I think, you know, in practice, the issue is when the, when the Treasury runs a deficit, you know, so the government, and this is something too though, again, these are real simple things. And we have got experts and the listeners who know the stuff with the back of their hand, but other people might be murky for them. And this is also too, why I want to be clear, you know, to try to sort out the MMT claims, the modern monetary theory people, because I think sometimes they blend this together and act like it's all the same thing when in practice, you know, it is technically different. But yeah, when the federal government runs a budget deficit, so the US Treasury spends more than they take in a tax revenue, they have to borrow money to cover the gap. That's a budget deficit. They issue bonds. And we know that simultaneously, the Federal Reserve often is in a sense creating money out of thin air with which to go into the market and buy bonds that are issued by the federal government. But they can't just do it all in the same operation. And because both in appearance, you know, both in the letter and spirit, that would look like, oh, wow, they're just monetizing the debt. Look at that. And so, yeah, the primary dealers, one way to think of it, you know, they're the ones that are buying the bonds at auction and then, you know, in turn, then can sell them to the Federal Reserve. So the Federal Reserve can't literally just cover the Treasury's deficit. They have to go through intermediaries in the private sector. So to the extent that, you know, those players can, you know, perhaps it acts early on a Fed and out, you know, do things before it's actually announced or just sort of get ahead of the market. There's a lot of allegations that they have a special, you know, relationship and they benefit from that cozy relationship, that it's not just a frictionless, pure market the way it's often depicted in a standard textbook. Right. In the market perspective, they're, you know, they benefit, of course, but also there's a task assigned to them, which is to make a market, to be there available to purchase Treasury debt at a reasonable bid price. So, you know, that's not a free market if there is an implicit or de facto backstop for Federal debt, right? I mean, for Treasury debt, if that's always there, that would seem to me to be an artifice of sorts that props up, you know, Treasury debt, the value of it. Oh, right, exactly. Yeah, I hope I wasn't coming off like I was disagreeing with that sentiment. I'm just saying in practice, yeah, that's partly what's going on there that they want to give the appearance. And that's why too, that during, so especially it was from like 2009 through 2011 or so, that you had the Federal government was running, you know, trillion-dollar-plus deficits while the Fed was engaged in its various rounds of quantitative easing. And so I always thought, huh, that's kind of a coincidence, isn't it that the Federal Reserve has decided its monetary policy objectives for unemployment and inflation happened to coincide with massive bond buying right at the period when the government is also issuing huge amounts of new debt. So, yeah, I think in practice, obviously, there are independent decisions. But again, just strictly speaking to understand the mechanics that, yeah, it's supposed to, the Treasury has to auction it to the private sector first, and then those in turn get sold. And as you say, it's not just, you know, Joe Schmoe who gets to go and get it, and then the Fed buys it off of him. So the whole thing, yes, the Federal government benefits from that backstop. And also, there is a benefit to being, you know, a privileged few that get to handle those contracts. So in your articles, are we going to, you know, start to understand the relationship between the central bank and then primary dealers and then regular commercial banks and then maybe your local hometown retail bank? I mean, how this money or credit creation sort of flows out to a credit union, let's say, in Auburn, Alabama? Right, exactly. Yeah, that's one of the goals that for sure we want to accomplish with this is to try to, you know, using graphics and perhaps a numerical example. But yeah, just to, but also as you say, to keep it real, you know what I mean? Maybe document an actual string of transactions that really happened in history just to kind of show this process so that people can see enough of the theory so that the reader has a framework. You know, it's not just a bunch of statements about them. This happened and this happened and this happened. So you have to interpret it and file it away, but also to keep it realistic enough so they can, you know, hang that theory or that framework onto real world events so they understand what's going on because you're right that there is that gap that right now you can read stuff in the Wall Street Journal about Goldman Sachs or whatever. But and then you look at a standard money and banking textbook and it's too abstract. And so that's what I think this is trying to do among other objectives is so that the reader can understand how is it that Fed policy is impacting, you know, when I go to get a car loan or something, you know, what the interest rate is? Well, there's so much opacity there. I think it's just because there's so many steps involved. I mean, if you go into the credit union in Auburn and borrow 30 grand or whatever it costs to buy a Honda Accord, where does that money come from? Where did it originate? Where does it reside on a balance sheet? Is it an asset? Is it a deficit? It's really pretty fascinating to think about what ought to be a very simple operation has been made so complex. I think that's the reason we have the title, The Mystery of Banking. Yeah, I agree, Jeff, and I would just say too that yeah, it's for people who know how balance sheets work and stuff like for a regular business like, you know, regular accounting, when I show them, I can very quickly if they already have that knowledge and how assets and liabilities work for a regular business. When I show them what goes on with commercial banking the way it's practiced, you know, in modern times, it's, for some people, it's mind blowing because it looks like it's magic or like, wow, they shouldn't be allowed to do that kind of thing. And that's where, of course, you know, the wing of the Austrian school that is against fractionaries or banking, you know, that's partly where that's coming from is just to say, look at this, there's something weird going on here.  But yeah, that is part of what goes on and the people haven't really understood it. And that's kind of what I meant earlier when I said I think some libertarians even have this idea that, oh, the only kind of weird stuff going on is with the federal, with the central bank creating money out of thin air. And I'm going to say, no, even at the local level, there's something going on that a lot of people, when they see it and don't understand it, think that's just unusual. It's mysterious, put it that way, as you say. So we will have, in one of the chapters of treatment, not only of fractional reserve banking versus full reserve banking, but we'll also have some explanation of the money supply. In other words, what is the money supply? What are the various different aggregates? Most people are probably familiar with things like M1, M2. So we're going to have that kind of nitty-gritty detail. Yeah, exactly. Because again, one of those knowledge professors who's teaching undergrads on money and banking that if somebody says, hey, you know, is there some good primer somewhere? Oh yeah, that thing's fine. Even if someone who's not an Austrian would just say, oh yeah, the factual statements they make about the organization and the monetary aggregates and the way to think about it, yeah, go read that. That'll get you up to speed real fast. But what we won't have in this series of articles is any argumentation about fractional reserve banking versus those two things without getting into it because that's a whole other topic. You know, I want to touch on interest rates. Sometimes we say colloquially, oh, the Fed sets the interest rate. Well, it doesn't really. It targets what's called a federal funds rate. So can you talk about that for us? What's the federal funds rate and how and why does the Fed target it? Okay, sure, yeah. So the definition of the federal funds rate or sometimes it's called the Fed funds rate or short, is it's, so commercial banks have reserves and that consists of money that's either deposited, that the commercial banks have on deposit with the federal reserve system itself or with actual currency like in the vault. So that's very high powered money as it were and commercial banks can make loans of those reserves to each other and so the federal funds rate is the interest rate that's charged on non-collateralized overnight loans of those reserves. So it's an interest rate that banks, regular commercial banks charge each other when they lend reserves and there's various reasons like why would one bank want to, you know, get more reserves and things like that but at various times banks for various reasons some want more reserves than they have and other ones have excess reserves and so they borrow and lend those amongst each other and the interest rate that they charge is what's called the federal funds rate. So that's what it is and then like you say Jeff the, for various reasons it wasn't always this way but for a while now that's one of the primary things when the press says oh yeah the Fed set interest rates at such and such or you know they held Pat, that's what they're referring to and as you say it's not a price control it's not like raising or lowering what landlords in New York City can charge and run control departments where in a sense you say the government set the price so here it's not a price control the way the Federal Reserve ultimately tries to affect those interest rates is by buying and selling assets primarily and now since the financial crisis they're using new tools as well which we're going to cover at some point in the series as well but that's what goes on and one last thing I'll say is this is another area of criticism that the conventional not just Austrian approach but even just standard textbook money and banking approach gets hit with is people to say oh yeah in the grand scheme central banks don't have any power to control interest rates anymore it's all international global commerce and Chinese savings and stuff like that so there's a lot of claims but before you get into trying to refer to any of that stuff you need to know exactly what the terminology is and what do you mean by these terms and what can the Fed do right and readers may or listeners may be familiar with John Tammany who writes at Real Clear Markets and he's kind of in that camp although he's sympathetic to us and to Austrians he's in that camp that the Fed doesn't really matter yeah if I might just because I realize I might love to see people hanging there so to finish that train of thoughts so because what the commercial banks are doing is lending and borrowing reserves from each other the Fed has the direct power to create or destroy reserves through its buying or selling off of assets so if the Fed wants to create more reserves it just buys more assets so that's the lever through which the Fed can affect the federal funds rate is because they can affect the supply reserve so to go back to the rental price controls and the rental market if somehow the government could magically create or destroy apartment units then that would be a way they could affect the rental price of a unit in Brooklyn without you know putting an actual price control in place so that's kind of what goes on and that's the weird thing with money and banking is there's a you can quote create reserves out of thin air and that functions just like regular money in a way that you know just snapping your fingers and saying oh here's claims to more apartments doesn't create more apartments right and they're not flipping the switch overnight that affects the interest rate you pay at the car dealership let's say I mean it's it's a little more of a hoost than that but ultimately the Fed funds rate the rate at which banks borrow can borrow overnight from one another for to meet reserve requirements that does filter out to us right I mean that affects the so-called prime rate which is the rate given to really good high quality borrowers and that ultimately the Fed funds rate which was very high during Paul Volcker's tenure and you know 79 1980 when Jimmy Carter was president Reagan was coming in but ultimately it does affect retail interest rates that you and I pay on our mortgage let's say right exactly so I mean obviously a commercial bank if it can if some other commercial bank on an overnight loan of reserves is willing to offer certain interest rate the commercial bank would never loan those funds out to a regular person from the public at a lower rate right in other words lending to another commercial bank for an overnight loan is a much safer risk so clearly the federal funds rate is going to be a floor on most types of other and as you say Jeff that if the federal funds rate goes up then that means clearly all the other rates have to go up and usually there's going to be some some spread in there because there's more risk involved if somebody takes out a mortgage or whatever that's a riskier loan than just lending reserves overnight to somebody else to another commercial bank so that is the sense but there is slippage it's not that a mortgage rate is always x percentage points above what the federal funds rate is and people saw this too during the in the immediate wake of the financial crisis even though the federal funds rate came down to basically zero or a little bit above and was held there for seven years it's not that regular consumers who were drowning in credit card debt all of a sudden you know saw their APRs go down to two percent or something you know I mean so there is that element too and that's partly why so many people are hostile towards you know the banking system or the big banks is that they know something was kind of fishy with all that and the ostensible goals of those rounds of QE to sort of keep credit flowing the main street that yeah I think there is some justification for the people that thought that that wasn't really what was going on there well Bob I hate this disconnect though I mean even today with interest rates at historical lows even negative on European corporate and sovereign debt you still have you know here in America you have poor people subprime borrowers going to these shady car lots going to these rena centers they're paying you know 20% plus so I mean there is a populist argument here that this doesn't benefit average people so much as it does the banking class yeah and I mean I think that's true more generally with government intervention so for example I've done some a lot of work on you know the energy sector and there's like in the 1970s there were price controls that were put in place on crude oil and there were a lot of arguments that accounts were making showing that that wasn't actually the ostensible goal was oh we don't want the Arab oil embargo to be making you know Americans have to pay more at the pump and so you know we don't want the owners of oil deposits to be pocketing that windfall gain so let's limit and that wasn't suppressing prices at the pump it was more that the refiners and the intermediate stages they were just pocketing the gains rather than the owner of the oil deposit it wasn't trickling down if you will to the consumer so I think there's a similar thing here that that yes if somebody is a poor credit risk you know that no matter what happens in terms of the Fed buying mortgage backed securities or treasuries and showering trillions of dollars you know into the financial sector ultimately if somebody is a poor credit risk nobody is going to lend them money at a low interest rate that's just not going to happen and so that people need to realize that when political figures and others try to justify those bailouts saying oh we got a bailout Wall Street to keep credit flowing to Main Street people need to realize there often is that disjoint well and of course we're talking about the federal funds rate we have to point out that something very important happened in 2008 around the time of the crisis the then Treasury Secretary Hank Paulson really helped push a bill through Congress which we call it the bank bailout bill but it was called the Economic Stabilization Act of 2008 and as a result of that it sped up earlier legislation by Congress this wasn't the Fed just deciding to do this this was congressionally authorized that the Fed would start paying interest on excess reserves held with the Fed this is the first time in history so a lot of people have argued from different spectrums of the econ sphere that you know when the Fed started paying interest on excess reserves this was a big game changer so is that true what should we think about this okay so it's definitely true that they started doing that right in October I think it was October 2008 and certainly that it drastically altered Federal Reserve policy in terms of what they were allowed to do and so in particular and this you know I'm not speculating here like if you go and read what the Federal Reserve was saying in its statements at the time and what you know what economists were commenting on it the idea was they wanted to continue to buy Treasuries and mortgage backed securities to try to stabilize the housing sector you know that was the thought they remember they're calling them toxic assets that those bundled securities that had mortgages that were building on them and so once the housing market crashed those things all of a sudden nobody wanted to touch them and so to prevent a sort of cascade effect where one investment bank goes down and then because they go down it started dragging everybody down the Fed comes in starts buying up all these mortgage backed securities to try to stabilize that sector but normally in terms of textbook open market operations and monetary policy that would flood the market with a bunch of reserves and normally that would push down interest rates and since they were still worried about price inflation because remember oil prices had been really high the previous summer the Fed was saying okay we want to be able to divorce those two aspects of what we're doing we want to on the one hand buy and sell assets because of our objectives in terms of stabilizing the housing sector for example but on the other hand we also want to set the federal funds rate at a certain level that we think will quell inflationary pressures and so again normally it's you do one or the other and the lock sit and so that's what they were trying to separate and again the mechanism they used was they for the first time in October of 08 started directly paying commercial banks saying if you have reserves we will start paying you interest on them and so that was a way so they could effect that and so they could sort of keep it bottled up at the bank the bank would not go out and lend reserves to a regular borrower unless the person was paying a higher interest rate than what they could get for sure from the Fed so it's like the Fed started paying you know on a checking account balance to the commercial banks keeping their money part of the Fed that's a way of thinking about it whereas before the Fed was paying 0% and so by doing that again that allowed the Fed then to flood the market with new reserves and the QE program when they wanted to buy assets for other reasons but it didn't allow them to independently set the interest rates so in practice for a long time afterward it didn't matter because the Fed funds rate was basically 0% but then once they started raising rates that's really where you saw Jeff the distinction and the importance of that new tool was originally when the Fed started quote tightening and raising interest rates they didn't sell off assets because they were afraid if we start selling off mortgage securities we're going to crash the housing market so they were able to raise rates without selling assets which normally you wouldn't think would be possible and that's because they just raised the interest rate they were paying to the commercial banks and currently the interest on excess reserve rate it stands at 1.8% and so Bob as you say this is a de facto floor no banks going to lend overnight and they'll get at zero risk from the Fed right exactly so that's the way if the Fed wants to lift all the spectrum of interest rates they can just raise that floor with the rate they're paying because you say the Fed's not going to default the Fed can just create money electronically without legal constraints so a commercial bank the safest thing they can do is keep their money the reserves parked at the Fed according to that guaranteed rate right and according to my google search this morning there's about 2.4 trillion of so called excess reserve parked at the Fed and you can understand a guaranteed 1.8 in today's environment maybe isn't the worst thing in the world from a bankers perspective I mean you can't just snap your fingers and find all kinds of credit worthy projects out there to lend to reserves aren't lent but the point is is that you have to have a certain amount of reserves on hold with the Fed in order to lend and so it's interesting to me though as an aside when you talk about this panic around housing prices at the time what's so infuriating Bob is that there's a lot of young people out there a lot of less affluent people who might very well like to see housing prices crash you know nobody cries big crocodile tears when oil prices crash and the oil companies make less money or when grocery prices go you know it's just what makes housing this magic form of humor durable that we should all be so sad I mean yeah it's tough if you're a homeowner I get that but you know what about it's that's just half the equation what about all the would-be buyers yeah it is very interesting how that has occurred and I mean I guess it's understandable because a certainly in the United States Americans in practice that's like your one of your major assets that you always oh your house and so you wouldn't just like you wouldn't you wouldn't normally people wouldn't say oh well you know the my asset portfolio had all these different stocks and they all went down 10% but that's good because now stocks are more affordable like people don't normally think of the way if electricity becomes cheaper gasoline becomes cheaper like that's considered a boon to the average person that so it is interesting that that dynamic and I think again this stuff all plays together I think that's one of the insidious consequences of leaving the gold standard and well you know other related measures is that there's such instability that people can't you know just go buy bonds or something and that's a real say they get you gotta go oh you gotta get in the real estate otherwise you're gonna get killed by inflation and then of course when that volatile asset crashes that's that's considered unmitigated disaster when like you say Jeff if interesting people simultaneously complain about how everyone's living at home and young people today you know they can't afford a new house and that there's overcrowding and on the other hand they also complain if housing prices go down and like the Federal Reserve's explicit policy wisdom to quote you know rescue the housing market which in practice means making a house more expensive yeah it is infuriating but I want to touch a little bit more on QE Quante B's and you've mentioned a couple times this was the process begun after 2008 under in an era of what VAT officials themselves called extraordinary monetary policy whereby they create bank reserves out of thin air and purchase those grant those to commercial banks and buy either their treasury debt in the best case scenario but oftentimes much worse in other words mortgage back securities that they were holding mortgages which hadn't been marked to market I mean imagine if when B of A was forced to buy countrywide during the crisis period imagine if B of A had been made to mark to market at the moment all of the real value of those mortgages that now held under its subsidiary countrywide that would have been quite ugly and of course that didn't happen but so what I struggle to understand is with QE you give banks reserves in exchange for taking their mortgage back securities or their treasury securities off their hands isn't that in effect a sort of de facto recapitalization of the banks in other words they get bank reserves in exchange for assets that might have been dodgy yes that's a great question so one thing let me just clarify too is where that you see different explanations for it like why do they call it quantitative easing like what's the quantitative mean in that I mean easing is pretty obvious and what I've seen enough places I think is the generally accepted explanation is what they were trying to do is focus on the scale of asset purchases because remember up to that point whenever the Federal Reserve did something the press would just report oh this is what they did with interest rates and so the problem was that by the end of 08 the target interest rate that we talked about before was basically at 0 to 25 basis points or 0.25% so they had already pushed that down as low as it would go which was unprecedented by the way obviously the economy was still on the ropes and so in terms of standard Keynesian monetary theory like oh gee well once you push into zero what else can you do and so that's why they said oh okay instead of now telling the public this is what we're going to do with interest rates let's start telling them this is how much money we're going to inject into the system and so that's why they were calling it quantitative easing so that I think that's important because up till then I think they actually like the fact that a bit mysterious and probably the average person didn't understand that oh yeah when the Fed announced today they were going to cut interest rates that meant they were going to buy more assets and quote create more money out of thin air whereas you know by 2009 that had become a virtue like the public is like oh please tell us how much money are you going to create out of nothing throw at us so yeah there's that element and then you're right Jeff it is interesting there were different justifications given so I think you know one of the real ones that cynic would say is oh yeah because a bunch of these banks as you say we're sitting on assets that if they had just let market forces ensue they would have been marked way down and a lot of firms would have been insolvent and also too there was this whole fire sale problem that the concern was even firms that originally were fine once you know Morage Back Security started crashing they would be in trouble or they held credit default swaps issued by somebody that was also vulnerable like it was going to be this cascade effect where everyone was going to have to start selling assets and that was just going to further push the prices down so by the Fed coming in and buying them up at a floor price that kind of calmed everybody down because they knew the Fed was sitting there as a backstop so that's I think what was really going on and then as you say in the mechanics of it yeah that were taking assets yes it wasn't alone and I think that's what you're trying to get at Jeff that the the direct quantitative easing thing was different from just letting banks borrow money so you know letting banks borrow money from the Fed is a subsidy if they're getting it on better terms than they would get from the private sector but that's not recapitalizing them but whereas an asset that originally was going to fall to a million if the Fed's buying it from you at 5 million then yeah that's that's giving you more equity as it were well with respect to the mortgage backstop though let's say a bookie had a bunch of outstanding debt obligations owed him and some of them were of dubious collectability and the Fed just came along and said don't worry about it Mr. Bookie just give us your book and we'll give you the cash nominal cash value of all those bets good or bad and you'll get U.S. cash okay well you know in other words what industries get recapitalized and what don't apparently banking insurance do and and autos by the way so you know the whole period if you want to read an excellent sort of day by day week by week account of what was going on in those terrible months around the crisis pick up David Stockman's a great deformation now of course he goes farther and argues that this Wall Street crisis would not have spread to Main Street he argues that all you know QE and and all of this was unnecessary that's a matter of opinion I share it but nonetheless if you just want to know what was happening behind closed doors with people like Hank Paulson and AIG and countrywide and B of A and layman brothers and Bear Stearns I mean it's a really really good book so I recommend it yeah his Stockman's chapter dealing with the 08 crisis and in Stockman's Stockman I think makes the best case I've ever seen just armed with facts you know overflowing of why it wouldn't have been armed again right people were saying oh we don't bail the banks out in the fall of 08 you know your ATM card isn't going to work anymore stuff like that or your life insurance policies aren't going to be and Stockman just goes through and shows why or at least I would say it's the most persuasive case I've seen to show that that was largely just fear mongering so the public went along with something that was crazy and also if I could just come back yeah I like your book example that was probably I was trying to say that but yeah you just said it very succinctly that was the issue and one thing too I was trying because there were a lot of economists some libertarian-ish economists even who were trying to say like QE wasn't a big you know it wasn't a bailout it was just a asset and I was saying things like I use the analysis I said what if I was a car dealer and the Fed came in and did quantitative easing on my inventory and they were buying cars from me and taking it on their balance sheet you're saying that wouldn't help me out you think that would just be neutral in the long run because money's neutral you know I mean like it did seem like they had a bit of a naive interpretation they weren't being practical about that yeah clearly if the feds coming in and buying assets from you that's a huge increase in demand for those assets and other things equal you would expect that's going to help you out and that's that's going to help recapitalize you well since QE is such a bizarre thing really unprecedented you know the feds balance sheet went up over four times in the period of less than eight or ten years I just wonder you know I'm looking at this old article that I mentioned at the outset of the show understanding Fed monetary mechanics it was written 1991 I wonder how much of this stuff is out the window Bob and you actually have a section or you're going to have a section in this series of articles about post 2008 monetary policy and how it's different right exactly we've already touched on some of the stuff with the interest on reserves but I mean the idea just what I said a minute ago that the Fed was trying to divorce the asset purchases from setting interest rates because they needed the asset purchases to do specific things like oh let's we need to facilitate or at least salvage stabilize would probably be a nice soothing verb they would have used the housing sector I mean that's kind of unusual right like I think 30 years ago or something the idea that oh yeah should this Federal Reserve be intervening in specific markets to rescue certain asset classes I think that would have been heretical to a lot of people so what are you kidding me that that's you know first of all that they don't have the ability to do that in an expert fashion like they would be bungling but also look at the corruption that involves that they got the printing press you don't want them to be able to intervene and selectively bail out certain asset classes that's crazy and yet that's where we are there's even elements too I'll touch on this a little bit in the series Jeff where it's a dubious legality as to what they actually did because of the there were you know there was statutory language to try to prevent against this sort of thing and they were doing things like establishing a land LLC because that you know that was a street Wall Street and like that that LLC was going and buying these things and the Fed was just sort of lending money to the LLC you know I mean so there was like some weird hijinks they had to do just because the legality of it because there were you know in the original enabling legislation for the Federal Reserve that you know there were protections put in place that they wouldn't just want them giving money to their buddies well we can call that the fog of war I mean let's face Hank Paulson was a war time consigliore that's for sure so I want to just touch on something that's been newsworthy lately and it ties into later chapters or later sections of this series of articles what's repo what are the repo markets and what was this big hubbub a month or two back about banks seeming to not have enough overnight cash to fund their operations sure so the phrase is from the term purchase agreement and they just shorten it to repo and yeah in terms of the simple definition the idea is it was just a sort of quick version to have a sort of standardized loan contract that was easily that you could market it to other people instead of just having an actual loan contract signed up between two people so the idea would be that oh I have whatever a treasury or something and so some outside person they're going to buy my treasury for a certain amount of money and then I'm going to buy it right back from them tomorrow or next week or two weeks for more money so if you think about what's going on there the person's giving me cash today and then in the tomorrow or two weeks I'm going to give them back more dollars and if I don't for some reason then they keep my asset the treasury or whatever it is they bought from me and so really it's just a way of of synthetically you know creating a collateralized loan right instead of them just borrowing money and me paying back or instead of me borrowing money and paying them back at a certain interest rate and if I default they seize the treasury it's just a quicker way of doing that right so that's that's what it is and for various reasons so here now people have more speculation as to why but that market the interest rate on that started shooting way up back in September right and you know and the Federal Reserve was very alarmed and they came in and had to basically flood the market with very short term injections of credits to try to push down those interest rates they're like oh everything's fine and they just they had to kind of institutionalize that process now that this was supposed to at the time people say oh that's just a one off thing there were a bunch of corporations that had to pay their tax bill and whatever and that just puts them up with pressure but don't worry about it and yet you know now this is a recurring thing so it's I think it's just indicating that there is something going on with the global interconnected monetary system where you see these little pockets of problems jumping up in central banks and keep sort of doing whack-a-mole but I think it is indicative that there's the system right now is not you know slowly returning to normal I think that there was a lot that kind of swept under the rug by just drowning the world in artificial credit from 08 onwards and they didn't really solve the underlying problems but if we get away from the technical details doesn't it just seem crazy that we've had all this expansionary monetary policy since 2008 and here we find ourselves 11 years later and we still have these banks stressed out for cash I mean why do we have liquidity problems that seems crazy to me yeah I think you're right and it's I mean it's sort of like with every major government intervention right like if the public had known this is how much work how long we're going to be in Afghanistan how much money we're going to spend and what the accomplishments will have been 10 years later 13 years would anybody do it no of course not so yeah I think it's a similar thing that if people had been told in 2008 okay this is the things we're going to do and yet we're still going to be needing to come in years later otherwise there's going to be a global liquidity crisis I think people would realize okay well then let's not do that let's just get it over with now because it looks like you're not really solving the problem well so once again I think this is going to be a great series of articles I think it's going to help all of you tremendously to read and know and understand this stuff and at least in simplified format we're very grateful to Bob Murphy for agreeing to do this and rolling up his sleeves and applying some of his knowledge of money and banking to the really practical real world operation of how this stuff works and we very much look forward to reading it and that said ladies and gentlemen as promised you know put on your thinking caps because in the over the coming months we are going to tackle both Human Action by Ludwig Van Mises and Man Economy and State by Murray Rothbard in podcast form in a series of podcasts with a few different guests so if you haven't read those books you were thinking about reading them you were a little apprehensive about tackling them 2020 is really the year to arm yourself with some new substantive knowledge and so once again we want to wish all of you a very very happy new year and thank you for tuning in to the Human Action podcast The Human Action podcast is available on iTunes SoundCloud, Stitcher, Spotify, Google Play and on Mises.org Subscribe to get new episodes every week and find more content like this on Mises.org


The Mutual Broadcasting System in cooperation with Family Theatre Incorporated presents Footsteps in the Night starring Lawn McAllister with Kay Christopher and Jean Reynolds. Kate Smith is your hostess. Things are wrought by prayer than this world dreams of. Hello everybody. This is Kate Smith. I'm glad of the opportunity to speak to you through this Family Theatre program. You know, living good, helpful, homey lives doesn't make many headlines, but let me tell you I haven't known any finer people anywhere than most folks in show business. And a whole lot of them want to try to get more families to kneel down together in daily family prayer. They know that's the answer, or at least the beginning of the answer, to what's wrong with the world in these troubled days. All of us know that there's no sure way to happiness for individuals, for families, for communities and nations, than to call on God to help us in our daily struggles. It's true indeed that the family that prays together stays together, and a world at prayer is a world at peace. Kate Smith speaks again following tonight's Family Theatre story, starring Lon McAllister with Kay Christopher and Jean Reynolds in Footsteps in the Night. And it came to pass when Cain and Abel, the sons of Adam and Eve, were in the field together that Cain rose up against Abel, his brother, and slew him. But the Lord said unto Cain, Where is Abel, thy brother? And he answered, I know not. Am I my brother's keeper? Footsteps. Footsteps keeping time together. My brother's in mine. Listen to them. Robin's footsteps in mine. His that lead and mine that follow. His that are positive. Mine that are only an echo. You are your brother's keeper. It's strange that these words should ring in my ears, now that I know I hate him. It's close. Thanks, Robin. I want to talk to you. Sure, Johnny. What's on your mind? Now, don't act so innocent. I'm not impressed. I heard you. You heard me what? What are you talking about? Listen, Robin, you may be my brother, but if you don't cut it out, so help me, I'll kill you. Okay, that'll make you happy, but I sure would like to know what I did. This is one thing you can't take away from me. I'm warning you. Johnny, this is pretty silly. Tell me my crime, and I'll either admit it or explain it. You know darn well what I'm talking about. Hey, Rob, want a lift? Yeah, Dick. Thanks. Where you going? To take the dog for a run in the hills. That is, if it's okay with you. So long. It is phony charm. I knew what he was up to, and somehow I'd make him pay for it. What I needed now was time to think, time to plot my revenge. So I went down to the lake where the lashing waves kept time to my thoughts. Strange how much alike we are, you and I, my brother. Our features are about the same, only you are handsome, and I'm what they call attractive. You are six feet two, and I'm a bit short of six. We both have high IQs, but yours is five points higher. I'm liked by my own few friends, and you are loved by your many friends. And also by old women, and little children, and all stray dogs and cats.  I remember the day I entered first grade. It was September, and the breeze from the lake was brisk, but warmed by the Indian summer sun. You took me to school that first day, Robin.  You have a lot more, Johnny. You getting tired? No.  Not by much, you didn't. It wasn't a fair race anyway, because I got the longest legs. Okay, you got the biggest ears. Wow, come on, we'll be late for school. Gonna be.  And there's something else you want to know. What? Whenever she says anything funny, you laugh real hard. That's the way to get on the good side of her. I can see this is going to be a fine, let's get to know each other. My name is Miss Tabor. We'll go around the room, and everyone tell his or her name. We'll start over here. This little girl is, that's a nice name. I hope you'll live up to your name, Mary Lee, and be a champion in all your subjects. What are you laughing at, young man?  Yes, I did.  What's your name? Sean Winslow. Winslow? Winslow. Oh, that explains why you're so bright. You must be Robin's brother. I'm not his brother. He's my brother. Well, either way, you have a lot to live up to. Robin was one of my best pupils. I hope your work would be as good as his. Yes, ma'am. He had nothing but A's last year. Will you make such good grades, too? Sure, sure I will. I can do anything that he can do. Maybe better than him. Then he, John. Then he. Well, that's fine. I'm sure you'll do as well as Robin if you try as hard as he did. Now, this next little girl over here. I tried all right. I tried my best. But I entered that first grade with mostly B's. Now, a B average wasn't bad only. I was trying to be like you, Robin. I wanted you to be as proud of me as I was of you. As time passed, fear grew slowly within me. The fear that I would always fall short of the mark that you had set for me. I failed often. And each time I did, I died a little. And so it was through grade school. And then came high school. And still I tried to follow in your footsteps, Robin. Of course, the girls all went for you in a big way. And some of them, some of them even liked me a little. An early champion had grown up to be one of the prettiest girls at school.  I spent months working up courage to ask her this. Could I see you for a minute, please? Of course, Janikens. What do you want to see me about? Well, it's the spring dance. Of course, I guess you already have a date, but just in case you don't, I thought maybe... Why, Janikens, this is an invitation. Well, yes, I guess you could call it that. Jean-Marie, will you go with me? Well, I planned on wearing a long dress, Janikens. So I couldn't go on a bus or anything like that. Of course, if you had a car. Well, my brother already asked Dan. He said we could use his. Oh, Robin's going with you? Well, if you'd rather go alone, we could take a taxi, maybe. No, no, Janikens. The car will be just fine. And thanks just oodles for asking me. Thank you, Marilee. Gee, thank you.  That's because I have such a smooth partner, Janikens. That old brother of yours hasn't asked me for one single dance. So? Well, I just thought since we came together in the same car and everything... Well, what's that got to do with it? Nothing, except... I know what you mean. You don't have to spell it out. I'd rather be dancing with him.  I could probably fix it up for you. Johnny, stop walking all over my feet. People are looking at us. I'm sorry, but if you like him so much, why didn't you come to the dance with him? Because he didn't ask me if you really want to know. Oh, so you were just using me to get to him, is that it? Yes. It's about time you got wise to yourself.  Every year we had a tennis tournament. Remember, Robin? By the time you were a senior, you had been runner-up once or twice. And I decided that here I could beat you at your own game. Every morning I was up early and on my way to the courts. I practiced my serve, I perfected my strokes. And always my unseen opponent was you. And in my imaginary games, I always beat you, Robin. And the crowds were cheering for me. For me, John Winslow. Tell me, how about a soda? The guy's room at the drugstore. No, thanks, Robin. I have to work on my backhand. The tournament starts next month.  I bet we could win the cup together. Well, I've got my heart set on the singles cup. Okay. Guess I'll enter the singles too if you won't be my partner. Swell, I'd like a chance to beat you. Well, John, just two more days before the tournament. Yeah, I know.  And no hard feelings no matter how the tournament comes out, okay? Why should there be any hard feelings? Oh, I don't know. I just... Oh, forget it.  Robin, did you hurt yourself? I don't know. What's the matter with you? I'm sorry, Robin.  Here, let me help you out. It's un-muddle. Are you okay? Yeah, sure. I've got my wrist a little. That's all. Oh? Well, I'm supposed to be stopping at the doctor's and let him take a look at it. No, it's just a little sprain. Forget it. As principal of Lakewood High School, I have the pleasant task of presenting the athletic awards. First, this beautiful silver-loving cup goes to the winner of the tennis tournament, John Winslow. John, stand up so we can see you. Congratulations, John. Thanks. And this plaque goes to the runner-up in the tennis tournament. You all know him, Robin Winslow. Well, Robin would have won it if it hadn't gone for that bad wrist. I hope that things would be different when we went to college. I guess I should have known better. You were always around me. You even hovered over me at the fraternity rushing party. The older brother who knew all the ropes and was determined that his kid brother should be treated right. Are you Winslow's brother, aren't you? That's right. He's a great guy, that Robin. That's supposed to be news. Well, I just meant that you ought to be proud of him. Who said I wasn't? I'm fully aware that he's the fastest man on the track team, the best-looking actor in the Shakespeare Club and the sharpest debater in the whole darn state. Hi, Dick. How's everything, Johnny? Hi, Robin. Well, um, I'll be seeing you. So long, Dick. What's the matter, Johnny? You look sort of down. Don't you like the fraternity? I'm not going to join, Robin. Of course, I mean, I'll ask me to, but even if they do, I won't join. Oh, sure they'll ask you. You're my brother, aren't you? I'd like to see them not ask you. Why, I'd quit this fraternity so fast. Thanks, Robin. Don't do me any more favors. You were right, Robin. They did ask me. But like you said, I was your brother. So what else could they do? And in spite of what I had said, I accepted. Still, I was never really one of them. I was tolerated only because of you. And then, just this spring, something happened that made me really happy for the first time. I met Kathy. You know what a wonderful girl she is, don't you, Robin? We used to take long walks together down to the lake, Kathy and I. Look at that little sliver of a moon. You want it? No. No, I just want to sit here with you and look at it. Kathy. Yes, darling, what is it? Kathy, I love you. You know that, don't you? Well, I rather suspected. And you know, it's a good arrangement because I feel the same way about you. Tell me. Tell me how you love me. Putting it into words would only make it sound foolish, Johnny. Well, then tell me why you love me. Johnny, you know I don't believe in the paralysis of analysis. Kathy, next year when we finish school, will you marry me? Yes, Johnny, I will. Oh, Kathy. Kathy. Yes, John? I was just going to ask you if... If what, darling? Well, if you had the choice between Robin and me, which would you pick? Which one of us would you rather marry? Oh, that's so silly. I'm not even going to bother answering it. Kathy, I have to know. This time I have to be sure. Johnny, I've told you that I love you and those words don't come easily or often with me. Just for the record, I'd like a direct answer. I'd rather marry you, of course, darling. So I took a few odd jobs around town after classes and finally I saved enough money to buy Kathy a ring. A week ago today I gave it to her. And then early this evening I started into the drugstore for a coke. But I stopped and stood behind a booth because you were coming toward me, Robin. Arm in arm with Kathy. Kathy, it's a wonderful idea. You don't think Johnny suspects, do you? Why should he suspect anything? We've been so, shall we say, discreet. Then I'll see you in an hour. I have a lot to arrange now. Same place? Right. So long, honey. Bye, Robin. I've stood everything else from you, Robin, but this I can't take. Kathy is a new life for me. You can't have her along with everything else. That's why you're so bright. You must be Robin's brother. He made nothing but ease. Ask me if you really want to know. Why should he? So shall I say, discreet. The end of you or of me. I'm coming after you. And up there in the hills we'll have it out. We'll settle this thing once and for all. Me? Leave me alone, Kathy. Johnny, what's the matter? You look so strange. I said leave me alone. But Johnny, we were going to study together tonight. Over at my house, remember? There's something else I have to tend to first. Where's Robin? Come on, show me where he is. And then I found you, Robin. You were lying all crumpled up in a deep crevice.  And you were unconscious. So the scorer had been settled for me. And who was I to interfere with fate? So I left you there, my brother. All alone to die. I didn't want to be alone. I wanted to be with someone, anyone. My steps seemed to echo the protests of my conscience. How could I leave Robin, my own brother, there to die? And suddenly I found myself at Kathy's house. All the lights in the place were on and I could hear music. I walked up to the window and I looked in. Hey, what's happened to Robin? Well, he had to stop and pick up the food, Dick. He'll be along. And where the heck is Johnny? Well, he said he had something to do and then he'd be over. Well, fella can't even get to his own engagement party on time. Fine thing. He'll probably miss your wedding altogether. Well, Robin and I went to so much trouble planning it. We wanted to surprise Johnny, you know. Great as all get out. That was it. You were planning a party for me, Robin. And I thought as I ran back to the hills, I remembered a lot of other things too. It wasn't a fair race anyhow because I got the longest legs. Or says anything funny, you laugh real hard. Let you and me be a doubles team. Hi, Johnny. I bet we could win the cup together. Why, if they don't ask you, I'll quit this fraternity so fast. Captain, you was a wonderful idea. Robin. Robin. Where? Robin, you're a lot. Thanks, God. Forgive me. Oh, my head. Do you think you can walk? I don't know yet. Here. Here, I'll help you.  I think my leg's broken. Lean on me, Robin. You're going to be all right. Oh, boy.  Robin, you're the best brother a guy ever had. A fine time to get sentimental. This is Kate Smith again. Almost all of us can sympathize with the young fellow in the story we've just heard. Maybe it isn't always an older brother or sister who seems to be just a bit more successful than we are who makes us envious and sometimes frustrated. At times, it's the fact that the Joneses seem to do better than we do that rubs us the wrong way. Really, it's not enough just trying to excel the other fellow. Experience tells us that when we begin to be generous to the other fellow when we try to do something for him instead of to him that's when you begin to feel better inside. It's just common sense, too, to realize that the best help in keeping the proper spirit is in getting God on your side through the habit of daily family prayer. Remember, the family that prays together stays together. God bless you all and good night, folks.