Arnold Kling on the Unseen World of Banking, Mortgages, and Government

EconTalk

Library of Economics and Liberty

Ethics, Philosophy, Economics, Books, Science, Business, Courses, Social Sciences, Society & Culture, Interviews, Education, History

4.7 • 4.3K Ratings

🗓️ 5 July 2010

⏱️ 62 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Arnold Kling of EconLog talks with EconTalk host Russ Roberts about the weird world of banking. Why do mortgages look the way they do? What do banks contribute to economic activity? How does regulation and legislation change the structure of what banks do? What would banks look like and the housing market look like if government were less involved? Kling discusses these questions and more including the hidden subsidies built into the current structure of the mortgage market. The conversation is an imaginative exercise in the microeconomics of finance and credit.

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	other information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. Today is June 24, 2010, and my guest today is Arnold Kling, who blogs
0:43.7	at Econ Log. Part of the Library of Economics and Liberty, Arnold, welcome back to Econ Talk.
0:48.8	Thank you. Our topic today is an imaginative one. I want us to imagine a little bit about the
0:57.4	world without government, particularly in the financial and credit and mortgage markets, and try to
1:04.6	think about what the world might look like if government's role is different from what it is now.
1:09.2	There is a tendency, as you've noted many times, at Econ Log, it's a tendency to try to recreate
1:17.0	things that went bad during the crisis, and we might instead say, well, maybe we ought to move away
1:24.8	from that instead of trying to recreate what we had before, but better, of course. So I thought what
1:30.4	we'd do today is, and this comes, the idea for this conversation comes from a post that you did
1:36.4	imagining what a world would look like without government involvement in the mortgage market. I want to
1:43.3	start by the conversation by asking you about what banks do, or what they might do in a world that
1:51.0	was less government regulated. What is the role of banks in connecting people with money and people who
2:02.2	don't have money? Well, that's certainly a question that is pretty funny,
2:10.0	but my view on that is that people who are not in the financial sector, that is people who are
2:18.2	entrepreneurs who are looking to fund investments or households that are trying to save, would love to have
2:27.9	on their balance sheets risk-free liquid assets, things that look like checking accounts, and at the same
2:37.8	time, they would like to have on the liabilities side of their balance sheet risky liabilities. So
2:45.2	consumer debt that has no collateral behind it, or long-term investments that are illiquid, you
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Library of Economics and Liberty, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Library of Economics and Liberty and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.