This is the absolute worst way to teach your kids to read

Apps that force kids to log book time as a way to earn Internet and TV access are a huge mistake

Recently, while cooling my heels at the airport, I overheard a boy of about 6 begging his mom to let him play with the family iPad. “No screen time until you do an hour of reading first,” was her reply. The child flung himself back in his seat and opened a paperback book with a disgruntled sigh.

I winced. Of course parents need to supervise their kids’ use of digital devices and the Internet. God only knows, plenty of adults have a hard enough time managing their own screen time, including people with a fundamental investment in literary culture, like novelists Zadie Smith (who uses the Internet-blocking software Freedom) and Jonathan Franzen (who has disabled the Ethernet portal on his writing computer). The American Academy of Pediatrics recommends no exposure at all to television, computers and cellphones for children under the age of 2 and suggests that older children’s “total entertainment screen time” be limited to one or two hours per day.

Most parents are also acutely aware of the importance of good reading skills to their children’s academic future. If they’re particularly well-informed, they’re aware that a recent report from Common Sense Media indicates the number of children aged 8 to 17 reading for pleasure has dropped significantly in the past few years. Digital media is frequently blamed for distracting kids from books, and so perhaps it’s not surprising that some parents have gotten the idea of using screen time as an incentive for page time.

The site Reading-rewards.com, for example, was set up by parents who decided to “put a system in place whereby their kids had to earn TV or game console time by reading: 1 minute TV time for every minute of reading.” Recently, FreeTime, a user-profile control app on the Kindle Fire, introduced a new setting by which parents can require their kids to spend a certain amount of time reading e-books before they can access the device’s games. In essence, these are digital versions of a clever “game token” allowance system created by a contributor to the Instructables website; her kids earn handmade chips good for computer time by doing chores around the house.

But there’s the rub: Reading should not be a chore. Chores are tasks that nobody wants to do but that have to be done all the same. Life is full of such activities. Part of being an adult is learning to suck it up and take care of them, yet another thing parents have to teach their kids. Kids often have to be bribed to do this with an allowance or game tokens or some other treat because kids aren’t big on the long view. They don’t care that if they don’t wash the dishes tonight; there will be no clean ones to eat off of tomorrow because tomorrow seems so irrelevantly far away.

To make an hour spent with a book into the equivalent of loading the dishwasher is to send the strong, implicit message that reading is a similar task, one that will never be a source of pleasure. You may end up with kids who have logged in lots of hours of reading, but that won’t make readers out of them. There’s a vast difference between dutiful, grudging, joyless reading and the kind of hungry, engaged reading that makes for a good student and a thoughtful citizen. It’s hard to be good at something you don’t enjoy.

The FreeTime read-for-play control makes this bad idea even worse by shucking the enforcement of it off onto a mindless bot. It reinforces the idea that reading is the intellectual equivalent of the spinach you have to eat in order to get dessert, and it suggests that the whole transaction is so tedious your parents can’t even be bothered to enforce it in person. Is it any wonder, then, that reading rates drop precipitously once kids enter their teens and begin to scrutinize the double standards of the adults in their lives?

There’s abundant research indicating that the primary way children learn to love reading is by growing up with adults who frequently choose to read for pleasure. Having plenty of books around the house is another contributing factor. Just as important, though less discussed, is making an effort to help kids find books that appeal to them. Even parents who like to read can be discouraged when their own childhood favorites don’t win over their offspring. However, children are just like adults; each one is an individual with his or her own particular taste, and helping them find the books that speak to those tastes is the major part of improving their reading skills.

There are some digital tools that might help with this, such as Wandoo Planet’s “interest tree” generator, designed to coax out a child’s preferences and provide some tailored recommendations. Book subscription services, like Epic, the kids’ equivalent of Oyster and Scribd, can provide a broad selection of e-books to browse through. But the best guide will almost always be an observant and helpful adult: a teacher, a librarian, a children’s bookseller — in other words, the kind of person who has devoted her whole life to helping children fall in love with books and who appreciates just how personalized the process should be. (That’s who did it for me — thanks again, Mrs. Belden!) The way to get kids to invest their time in reading is to be willing to invest some time and energy in it ourselves

Revealed: NSA plans to hack potentially millions of computers

Snowden leaks reveal agency has tools to infect computers with malware on a mass scale with little human oversight

Reporting for the Intercept Wednesday on the latest revelations from Edward Snowden’s NSA leaks, Glenn Greenwald and Ryan Gallagher expose the spy agency’s plans to hack millions of computers.

According to classified documents, the NSA has developed new technologies with which to reduce reliance on human work and oversight and to enable the automatic infection of potentially millions of computers with malware. Via the Intercept:

In some cases the NSA has masqueraded as a fake Facebook server, using the social media site as a launching pad to infect a target’s computer and exfiltrate files from a hard drive. In others, it has sent out spam emails laced with the malware, which can be tailored to covertly record audio from a computer’s microphone and take snapshots with its webcam. The hacking systems have also enabled the NSA to launch cyberattacks by corrupting and disrupting file downloads or denying access to websites.

The implants being deployed were once reserved for a few hundred hard-to-reach targets, whose communications could not be monitored through traditional wiretaps. But the documents analyzed by The Intercept show how the NSA has aggressively accelerated its hacking initiatives in the past decade by computerizing some processes previously handled by humans.

Fracking suspended after earthquakes rock Ohio

Officials say the wells were closed “out of an abundance of caution”

A fracking operation in northeastern Ohio has been shut down by the state Department of Natural Resources following a series of earthquakes that may have been caused by the drilling.

The quakes were nothing major: a 3.0 and a 2.6 magnitude temblor that were followed, later Monday, by smaller aftershocks. But they were large enough to be felt in neighboring towns, and for the department to put a halt to drilling at the well, along with six others operated by Hilcorp Energy.

The department said in a statement that it acted “out of an abundance of caution” in suspending work at the wells, adding that it was too early to determine whether the drilling was directly responsible for the quakes.

As the New York Times explains, it’s rare for the process of fracking itself to be linked to earthquakes. But injection wells, used to dispose of fracking wastewater, are a different story. Back in 2011, a well in Youngstown, Ohio, was shut down for investigation after a wave of over 100 minor earthquakes were experienced in the previously stable area. A study later confirmed that the quakes were likely linked to a wastewater injection well.

FBI Agents Will Investigate The Disappearance Of Malaysia Airlines Jet

The Federal Bureau of Investigation will be deploying agents and technical experts to investigate the disappearance of a Malaysia Airlines flight, The Los Angeles Times reports.
While the multinational search continues for the whereabouts of the aircraft which carried 239 people, the FBI — citing at least three American citizens who were passengers — will investigate the circumstances surrounding the jet’s strange disappearance from radar screens in Vietnam airspace as it traveled at 35,000 feet.

The Times has more:

U.S. officials said they are looking at whether this could be terrorism, as they would with any plane crash until proved otherwise. Though two passengers apparently used stolen passports, “there is no indication this is a terrorist attack; stolen passports are certainly not indicative of a terrorist attack,” a senior counter terrorism official said.

The official said there was “no evidence” of terrorism thus far. Law enforcement officials were not authorized to speak publicly.

Two large oil slicks have been spotted near the southern tip of Vietnam that could possibly indicate the location of a crash site, although nothing has yet been confirmed.

FBI personnel will join others in the region already assisting in search-and-rescue, including planes, ships, and personnel from Malaysia, Singapore, China, Vietnam, and the U.S.

A U.S. law enforcement official speaking to The Times also said the NTSB would likely investigate the crash as well since the aircraft involved was made by Boeing, an American company.

Facebook cops are a horrible idea

Proof our system of government is broken: When private corporations start bankrolling public security

Mark Zuckerberg

All of a sudden, Silicon Valley corporations are falling over themselves to be good civic citizens. Last week Google donated $6.5 million to pay for free Muni passes for Bay Area youth and announced a $5 million grant program for San Francisco nonprofits. The latest act of beneficience? Facebook, reports NBC News, is paying for a full-time beat cop for the city of Menlo Park.

“This is a generous gift,” Menlo Park Mayor Ray Mueller told NBC Bay Area before the meeting. “And it’s a way to keep the community safe.” He noted that the contract states the officer will spend most of his or her time near the schools, and not patrolling the campus of Facebook.

I am all for corporations being good citizens of their communities, but private bankrolling of public cops sets a horrible precedent. For starters, it presents obvious conflict-of-interest challenges. How will police departments treat Facebook employees who might be caught in criminal behavior, when their own budget is partially paid for by Facebook? Everyone involved is swearing up and down that nothing of the sort will ever happen, but if this model spreads, there are bound to be abuses.

But much worse is what this news item reveals about the general bankruptcy of our system of government. Menlo Park is a rich town in one of the wealthiest regions of the United States. The median household income is $103,000, which is almost twice California’s median. The median home price is $925,000, more than double California as a whole. If a community like this can’t afford to pay for an adequate police force, then just imagine what’s happening in poorer communities that lack generous tech companies?

Sex at the Satan Club

At the height of ’60s counterculture, the sexual revolution found itself an unexpected bedfellow: Devil worship

JEFFREY SCONCE

A still from “Eyes Wide Shut”

Excerpted from “Sex Scene: Media and the Sexual Revolution”

A mining expedition in the South American jungle: Edward MacKensie, jealous of his business partner’s lover and wanting to keep the expedition’s riches for himself, engineers an “accident” that kills the partner and his lover. Twenty years later, MacKensie is a rich and successful man, married with a teenage daughter. Despite (or perhaps because) of his wealth and success, MacKensie finds himself bored with life, in particular, his sex life. He pays the office boy and secretary to have sex in front of him, and then cruelly mocks them when they do not perform to his expectations. He searches for hookers who might better understand his peculiar “tastes,” which center on sadistic forms of torture and humiliation, and longs for the Victorian era for the fabled abandon of its sexual underground. “Now there was an era,” he laments to himself, “when a woman like Mrs. Berkeley would earn a thousand pounds for inventing a whipping horse on which a pretty girl could be postured in a thousand different lascivious ways for the lash.” After another humiliating failure with a prostitute, MacKensie meets the mysterious Carlos Sathanas, a worldly, rich sophisticate. Their conversation quickly turns to “unusual pleasures.” “To put it bluntly,” he tells MacKensie, “for all this talk about the new sexual freedom, I for one fail to perceive it except in the huge dissemination of titallitory books and magazines and movies, which are nothing more or less than pure psychic masturbation. They depict fantasies that are not in existence, but perhaps were in another century.” Sathanas confides that he is the founder and sole proprietor of “the Satan Club,” an organization devoted to fulfilling the most bizarre sexual desires of its secret, exclusive membership. MacKensie joins eagerly and soon finds himself participating in a series of increasingly exotic sexual scenarios.

If you have trouble following “True Detective’s” dialogue, you’ll love this parody

Joel McHale and Jim Rash mock the hit show’s hard-to-follow-dialogue

There’s one problem (OK, a few?) with “True Detective,” the only show that might fill the void that “Breaking Bad” has left in your life: the dialogue is hard to follow. Although Matthew McConaughey as misanthropic detective Rust Cohle and Woody Harrelson as his self-righteous partner, Marty Hart, will draw you into the hunt for a serial killer in Louisiana, you will find this side dialogue happening a lot:

You: What did he say?

Friend: I don’t know.

You: Who are they looking for, now?

Friend: I don’t know.

You: Well, why didn’t you say anything earlier? I thought I was the only one who didn’t get it!

Friend: I don’t know!

You will scowl at your soft-spoken friend and question whether he is really as invested in “True Detective” as you are, but you will continue to watch it together because your friendship is strong, and because you both are transfixed by Matthew McConaughey’s gaunt face and you know some serious. shit. is about to go down.

How To Set It Up So That Facebook Will Warn You When You’re Being Hacked

It sucks to have your Facebook account hacked.

Unfortunately, it happens. An AP study from 2011 revealed that one in three teenagers have been victims. Usually, nothing serious happens. But sometimes something awful does. Once, a kid named Timothy Noirjean allegedly hacked into 13 women’s Facebook accounts and posted their photos on porn sites.

Fortunately, Facebook has a handy alert system that can warn you any time it suspects you are about to become a victim.

Here’s how set this up.

Go to Facebook and click on ‘Settings’.

On the Account Settings page, go to Security.

Click login notifications at the top. Based on your decision, enter your email or phone number to get alerted when someone is trying to enter your account from another location or device that isn’t authorized.

The Stupidest Mistakes That College Dropouts Make

Look at the headlines of big business sales, like WhatsApp’s $19 Billion sale to Facebook last week, and you know that 2014 is a time of unprecedented opportunity.
You have access to nearly everything around the globe thanks to the beauty and speed of technology and you can learn almost anything online.

With all this access to information, many are wondering if college is still the speedway to success. Stay in school or dropout? Some entrepreneurs are turning to the latter.

Take for instance the most recent Forbes Billionaire List, which ranks the top 400 wealthiest people in the world. Of the 400 ranked individuals, 63 were college dropouts.

The co-founder of WhatsApp, Jan Koum, will most likely make the 2015 list — and he too was a college dropout. Koum’s sparse and self-deprecating LinkedIn profile reveals he “did some work” for Yahoo, “barely graduated” from high school in 1995 and “dropped out” of San Jose State University.

Why are people choosing to go the dropout path? Well, another billionaire dropout, Sean Parker may shed some light on this trend.

“When these incredible tools of knowledge and learning are available to the whole world, formal education becomes less and less important, Parker told Forbes. “We should expect to see the emergence of a new kind of entrepreneur who has acquired most of their knowledge through self- exploration.”

It’s easy to look at all those zeros and commas and think you’d like to be the next Koum or Parker.

Before you do, you should consider some dos and don’ts of dropping out of college to do a startup.

Do ask yourself about your motivation.So you think college is a waste of your time and money … why? What seems to be clear in the billionaire dropout success stories is that there was a burning desire and passion behind the entrepreneur’s decision. Zuckerberg was already blowing the lid off of his early Facebook idea when he dropped. Michael Dell was shipping computer kits with backorders when he left college. The desire was there to continue something that had already started and for most of these people, it started in college.

This is not to say that’s always the case. For instance, look at Ray Kroc of McDonalds or Debbie Fields of Mrs. Fields cookies. Both had no college or formal business education but went on to form very successful companies. There’s nothing saying you can’t drop out and be successful but be willing to ask yourself the right questions first.

Why do I want to leave? What’s my burning desire that I’m already working on? How am I already performing in my business (or education)? Past performance is a good future indicator. If you don’t have the stomach for well-timed risk, discipline to hustle, stamina to persevere and strength to innovate, you may want to consider the formalized boundaries of college to help you develop those skills before cutting your teeth on a startup as a dropout.

Don’t use your university resources.Let’s say you’re already attending a university and you’ve asked yourself the tough questions but have enough personal empirical data to back your position up. Remember that when you leave school, you’ll need to consider the ethics of hanging up your associations with the school’s resources too. Leaving campus means you’ll need to represent yourself honestly to the public. Don’t use your school-generated email to try to seek access to resources or people that you wouldn’t otherwise be privy to.

For example setting up meetings with clients who share your alumni or pressing for internships when you’ve dropped out. If you are considering ditching the education route and aren’t able to join a university organized internship, try mentoring as an alternative option. Offer to apprentice or assist a mentor in exchange for his or her tutoring and help. In effect that’s the true essence of an internship anyway and you may get even more real-world experience working one-on-one with a mentor.

Something else to avoid if you decide to dropout is using your Student ID to gain access to school property, computer labs, sporting events or other entitlements of school enrollment. If you don’t have the tools you need to succeed in your startup without utilizing school property, you will need to get creative in finding resources. Consider looking into shared workspace options which can keep the overhead of an office low, but still give you dedicated, professional space for working. Options like Sharedesk and Nextspace offer flexible office resource space for shoestring budgets.

Do talk through your plan with your family.Discussing your dropout plans with your family is important for many reasons. It helps you formalize your plan with older, experienced people that you know and trust. They can help you see blind spots in your ideas and support you through the process. Being honest about your decision to dropout shows maturity and courage on your part, while being dishonest with your family and concealing your plans to skip college shows irresponsibility. You will also likely need your loved ones support, both emotionally and financially, at certain times during your startup experience, so having their backing is important.

Despite the drive and undeniable genius of Bill Gates, even he needed his family’s support during tough times in the startup world after dropping out of college. The family support was one reason Gates decided to move Microsoft to Seattle, where he settled into a house close to his parents. His mom helped arrange a maid to clean for him and his father helped guide Microsoft as a startup with his own experience as a lawyer guiding small companies.

Don’t commit fraud with your student loans.One of the biggest challenges startups face is money. It’s challenging to get investment capital, particularly so if you’re unproven and now, a college dropout. It’s tempting to take your student loan deposit for the semester and then stop going to class to use that cash for startup capital. However, according to the Federal Student Aid handbook, “You may use the money you receive only to pay for education expenses at the school that awarded you your loan. Education expenses include such school charges as tuition, room and board, fees, books, supplies, equipment, dependent child care expenses, transportation, and rental or purchase of a personal computer.”

While you may be able to “get away” with using your student loan money for a semester or two after dropping out for your own living expenses and needs, this is not an ethical or intended purpose for the money. Your loans won’t be renewed and will likely go into repayment — meaning loan payments will be added to your monthly business and living expenses.

Borrowing money from your student loan to fund your life or business as a startup is not an intelligent business decision. Far better to start your business on the side, while still attending school or to leave school and get your funding through an angel investor or kickstarter campaign. In fact, a crowdfunding campaign for your product idea might be a great way to test the water before you leave (or decide to skip) college.

There are plenty of reasons to argue the need for education or the benefits of dropping out to pursue your entrepreneurial path. Whichever route you decide, the most important decision is to commit to yourself with an honest assessment of your skills, aptitude and drive. Both roads will have their rewards and challenges, but it’s up to you to make the decision that best fits your ability to succeed.

Nationalize Money, Not Banks by Herman Daly

WRITTEN BY MIRA TEKELOVA ON AUGUST 6, 2012.

We Don’t Have To Be In Financial Crisis

In the article below, Herman Daly, Emeritus Professor University of Maryland and former World Bank economist, makes the case for 100% reserves. This reform, once a principal goal of important economists, would terminate the ability of the banking system to create credit to finance its own speculations and return the power over money to the government from private banks.

Herman Daly is one of the few economists who are capable of thinking outside the box and who can devise reforms that benefit the people rather than the vested interests.
_________________________________________________________________________

Nationalize Money, Not Banks

If our present banking system, in addition to fraudulent and corrupt, also seems “screwy” to you, it should. Why should money, a public utility (serving the public as medium of exchange, store of value, and unit of account), be largely the by-product of private lending and borrowing? Is that really an improvement over being a by-product of private gold mining, as it was under the gold standard? The best way to sabotage a system is hobble it by tying together two of its separate parts, creating an unnecessary and obstructive connection. Why should the public pay interest to the private banking sector to provide a medium of exchange that the government can provide at little or no cost? Why should seigniorage (profit to the issuer of fiat money) go largely to the private sector rather than entirely to the government (the commonwealth)?

Is there not a better away? Yes, there is. We need not go back to the gold standard. Keep fiat money, but move from fractional reserve banking to a system of 100% reserve requirements. The change need not be abrupt—we could gradually raise the reserve requirement to 100%. Already the Fed has the authority to change reserve requirements but seldom uses it. This would put control of the money supply and seigniorage entirely with the government rather than largely with private banks. Banks would no longer be able to live the alchemist’s dream by creating money out of nothing and lending it at interest. All quasi-bank financial institutions should be brought under this rule, regulated as commercial banks subject to 100% reserve requirements.

Banks cannot create money under 100% reserves (the reserve deposit multiplier would be unity), and banks would earn their profit by financial intermediation only, lending savers’ money for them (charging a loan rate higher than the rate paid to savings or “time-account” depositors) and charging for checking, safekeeping, and other services. With 100% reserves every dollar loaned to a borrower would be a dollar previously saved by a depositor (and not available to the depositor during the period of the loan), thereby re-establishing the classical balance between abstinence and investment. With credit limited by saving (abstinence from consumption) there will be less lending and borrowing and it will be done more carefully—no more easy credit to finance the leveraged purchase of “assets” that are nothing but bets on dodgy debts.

To make up for the decline and eventual elimination of bank- created, interest-bearing money, the government can pay some of its expenses by issuing more non interest-bearing fiat money. However, it can only do this up to a strict limit imposed by inflation. If the government issues more money than the public voluntarily wants to hold, the public will trade it for goods, driving the price level up. As soon as the price index begins to rise the government must print less. Thus a policy of maintaining a constant price index would govern the internal value of the dollar. The external value of the dollar could be left to freely fluctuating exchange rates.

Alternatively, if we instituted John M. Keynes’ international clearing union, the external value of the dollar, along with that of all other currencies, could be set relative to the “bancor,” a common denominator accounting unit used by the payments union. The bancor would serve as an international reserve currency for settling trade imbalances—a kind of “gold substitute”.

The United States opposed Keynes’ plan at Bretton Woods precisely because under it the dollar would not function as the world’s reserve currency, and the US would lose the enormous international subsidy that results from all countries having to hold large transaction balances in dollars.

The payments union would settle trade balances multilaterally. Each country would have a net trade balance with the rest of the world (with the payments union) in bancor units. Any country running a persistent deficit would be charged a penalty, and if continued would have its currency devalued relative to the bancor. But persistent surplus countries would also be charged a penalty, and if the surplus persisted their currency would suffer an appreciation relative to the bancor.

Keynes’ goal was balanced trade, and both surplus and deficit nations would be expected to take measures to bring their trade into balance. With trade in near balance there would be little need for a world reserve currency, and what need there was could be met by the bancor. Freely fluctuating exchange rates would also in theory keep trade balanced and reduce or eliminate the need for a world reserve currency. Which system would be better is a complicated issue not pursued here. In either case the IMF could be abolished since there would be little need for financing trade imbalances (the IMF’s main purpose) in a regime whose goal is to eliminate trade imbalances.

Returning to domestic institutions, the Treasury would replace the Fed (which is owned by and operated in the interests of the commercial banks). The interest rate would no longer be a target policy variable, but rather left to market forces. The target variables of the Treasury would be the money supply and the price index. The treasury would print and spend into circulation for public purposes as much money as the public voluntarily wants to hold. When the price index begins to rise it must cease printing money and finance any additional public expenditures by taxing or borrowing from the public (not from itself). The policy of maintaining a constant price index effectively gives the fiat currency the “backing” of the basket of commodities in the price index.

In the 1920s the leading academic economists, Frank Knight of Chicago and Irving Fisher of Yale, along with others including underground economist and Nobel Laureate in Chemistry, Frederick Soddy, strongly advocated a policy of 100% reserves for commercial banks. Why did this suggestion for financial reform disappear from discussion? The best answer I have received is that the great depression and subsequent Keynesian emphasis on growth swept it aside because limiting bank lending to actual savings was too restrictive on growth, which became the big panacea. Also there is the obvious vested interest of commercial banks in retaining the privilege of creating money and lending it at interest.

Now suppose for a moment that aggregate growth has begun to increase environmental and social costs faster than production benefits, thus becoming uneconomic growth. There is much evidence that this is the case. Then a financial constraint on growth (balancing investment with abstinence) would be much needed, and 100% reserves would be a good way to accomplish it. If, however, growth remains the summum bonum of the economy, then we will inevitably borrow against our hoped for larger future income to finance the investments needed to produce it.

Financing investment by saving would require less present consumption, which many will deem to be an unacceptable drag on growth. But real growth has encountered the biophysical and social limits of a “full world.” Financial growth is being stimulated ever more in the hope that it will pull real growth behind it, but it is in fact pushing uneconomic growth- — growth of ”illth.” Since illth is negative wealth it can hardly redeem the growing debt that is financing it.

The original 100% reserve proponents mentioned above were in favor of aggregate growth, but wanted it to be steady growth in wealth, not speculative boom and bust cycles. Soddy was especially cautious about uncontrolled physical growth, but his main concern was with the symbolic financial system and its disconnect from the real system that it was supposed to symbolize. The result was confusion between wealth and debt. One need not advocate a steady-state economy to favor 100% reserves, but if one does favor a steady state the attractions of 100% reserves are increased.

How would the 100% reserve system serve the steady-state economy?

First, as just mentioned it would restrict borrowing for new investment to existing savings, greatly reducing speculative growth ventures—for example the leveraging of stock purchases with huge amounts of borrowed money (created by banks ex nihilo rather than saved out of past earnings) would be severely limited. Down payment on houses would be much higher, and consumer credit would be greatly diminished. Credit cards would become debit cards. Long term lending would have to be financed by long term time deposits, or by carefully sequenced rolling over of shorter term deposits. Growth economists will scream, but a steady-state economy does not aim to grow, for the very good reason that growth has become uneconomic.

Second, the money supply no longer has to grow in order for people to pay back the principal plus the interest required by the loan responsible for the money’s very existence in the first place. The repayment of old loans with interest continually threatens to diminish the money supply unless new loans compensate. With 100% reserves money becomes neutral with respect to growth rather than biasing the system toward growth by requiring more loans just to keep the money supply from shrinking.

Third, the financial sector will no longer be able to capture such a large share of the nation’s profits (around 40%!), freeing some smart people for more productive, less parasitic, activity.

Fourth, the money supply would no longer expand during a boom, when banks like to loan lots of money, and contract during a recession, when banks try to collect outstanding debts, thereby reinforcing the cyclical tendency of the economy.

Fifth, with 100% reserves there is no danger of a run on a bank leading to a cascading collapse of the credit pyramid, and the FDIC could be abolished, along with its consequent moral hazard. The danger of collapse of the whole payment system due to the failure of one or two “too big to fail” banks would be eliminated. Congress then could not be frightened into giving huge bailouts to some banks to avoid the “contagion” of failure, because the money supply is no longer controlled by the private banks. Any given bank could fail by making imprudent loans, but its failure, even if a large bank, would not disrupt the public utility function of money. The club that the banks used to beat Congress into giving bailouts would have been taken away.

Sixth, the explicit policy of a constant price index would reduce fears of inflation and the resultant quest to accumulate more as a protection against inflation. Also it in effect provides a multi-commodity backing to our fiat money.

Keynes bancor scheme or a regime of fluctuating exchange rates would automatically balance international trade accounts, eliminating large surpluses and deficits. Thus, there would no longer be any need for the International Monetary Fund and the austerity its “conditionality” imposes on weaker economies.

To dismiss such sound policies as “extreme” in the face of the repeatedly demonstrated failure and fraud of our current financial system is quite absurd. The idea is not to nationalize banks, but to nationalize money, which is a natural public utility in the first place. The fact that this idea is hardly discussed today, in spite of its distinguished intellectual ancestry and common sense, is testimony to the power of vested interests over good ideas. It is also testimony to the veto power that our growth fetish exercises over the thinking of economists today.