Volcker (68 page)

21
. See “Wall St. Faces Specter of Lost Trading Units,”
New York Times
, August 6, 2010, p. B1.

22
. See “Morgan Stanley Team to Exit in Fallout from Volcker Rule,”
Wall Street Journal
, January 11, 2011, p. C1.

23
. See “Wall St. Faces Specter of Lost Trading Units,”
New York Times
, August 6, 2010, p. B1.

24
. See “With Big Banks Forced to Exit, Look for Speculators to Step In,”
Wall Street Journal
, September 7, 2010, p. C10.

25
. See Michael Lewis, “Wall Street Proprietary Trading Under Cover,” Bloomberg Opinion, October 27, 2010, 4:48 P.M.

26
. Study & Recommendations on Prohibitions on Proprietary Trading & Certain Relationships with Hedge Funds & Private Equity Funds, Financial
Stability Oversight Council, January 2011, p. 4, at
www.treasury.gov/initiatives/Documents/Volcker%20sec%,20%,20619%,20study%,20final%,201%,2018%,2011%,20rg.pdf
.

27
. For a complete list of the metrics see ibid., pp. 39–43.

28
. Ibid., p. 44.

29
.
Prohibiting Certain High Risk Investment Activities by Banks and Bank Holding Companies
, p. 37.

30
. See page 2 of Volcker's letter addressed to Timothy Geithner as chairman of the FSOC, dated October 29, 2010.

31
. Study & Recommendations on Prohibitions on Proprietary Trading & Certain Relationships with Hedge Funds & Private Equity Funds, p. 3.

32
. Ibid., pp. 35–36.

33
. See “Volcker Rule May Work Even If Vague,”
New York Times
, January 21, 2011, p. B1.

34
. “Volcker Rule Should Require Sign-off by Bank CEOs, Panel Says,” Bloomberg, January 19, 2011, available at
www.bloomberg.com/news/2011-01-19/volcker-rule-should-require-bank-ceos-to-certify-compliance-panel-says.html
.

35
. Ibid.

36
. See “Volcker Rule May Work Even If Vague,” p. B1.

37
. Paul Volcker, Mais Lecture, Cass Business School, London, July 14, 2011.

1
. The
Wall Street Journal
ran an op-ed piece by Lewis Lehrman on August 15, 2011, the fortieth anniversary of the suspension of dollar convertibility, entitled “The Nixon Shock Heard 'Round the World.” The facts are mostly right, with one big exception. Lehrman writes (
Wall Street Journal
, August 15, 2011, p. A13), “At least one Camp David participant, Paul Volcker, regretted what transpired that weekend.” The suspension of convertibility was, in fact, Volcker's idea (see chapter 3), and he does not think it was a mistake.

2
. See chapter 2 on the gold cover. The requirement that the Federal Reserve hold gold certificates against bank reserves was removed in 1965, and the requirement against Federal Reserve notes was eliminated in 1968.

3
. This inscription appears on the face of every Federal Reserve note. Check your pocket.

4
. See Friedman's testimony in “Gold Cover,” Hearings Before the Committee on Banking and Currency, U.S. Senate, 90th Congress, 2nd Sess., February 1, 1968, p. 152.

5
. Irving Fisher was a professor of economics at Yale University from 1898
until 1935. His most important books include
The Rate of Interest
(Macmillan, 1907),
The Purchasing Power of Money
(Macmillan, 1911), and
The Making of Index Numbers
(Houghton Mifflin, 1922). In
Money Mischief
(New York: Harcourt Brace, 1994), p. 37, Milton Friedman calls Fisher “the greatest economist the United States has ever produced.”

6
. The quotes in this paragraph are from Friedman,
Money Mischief
, pp. 252 and 254.

7
. For a general discussion on the origins of the Great Inflation, see Allan Meltzer, “Origins of the Great Inflation,” and Christina Romer, “Commentary,” in
Reflections on Monetary Policy 25 Years After October 1979, Federal Reserve Bank of St. Louis
87, no. 2, part 2 (March/April 2005).

8
. See chapter 14 for the discussion of the passage of the Gramm-Rudman-Hollings amendment to balance the budget.

9
. Federal Reserve press release available at
www.federalreserve.gov/newsevents/press/monetary/20110809a.htm
.

10
. PIPAV.

11
. Paul Volcker, “A Little Inflation Can Be a Dangerous Thing,”
New York Times
, September 19, 2011, p. A27.

12
. According to Federal Reserve chairman Ben Bernanke, “Even after economic conditions have returned to normal, the nation faces a sizable structural budget gap. Both the Congressional Budget Office and the Committee for a Responsible Federal Budget project that the budget deficit will be almost 5 percent of GDP in fiscal year 2015, assuming that current budget policies are extended and the economy is then close to full employment.” See “Fiscal Sustainability,” Remarks by Ben S. Bernanke, Annual Conference of the Committee for a Responsible Federal Budget, Washington, DC, June 14, 2011, p. 1, available at
www.federalreserve.gov/newsevents/speech/2011speech.htm
.

13
. Paul Volcker, “A Little Inflation Can Be a Dangerous Thing,”
New York Times
, September 19, 2011, p. A27.

14
. See
WSJ.com
, October 19, 2011, 10:27 A.M.

15
. See “Fiscal Sustainability,” Remarks by Ben S. Bernanke, Annual Conference of the Committee for a Responsible Federal Budget, Washington, DC, June 14, 2011, available at
www.federalreserve.gov/newsevents/speech/2011speech.htm
.

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