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been one of Modigliani’s points in his interruptions. Federal deposit insurance subsidizes cheap money and keeps lending rates low. Most tradition associates easy money with growth and prosperity. Higher interest rates are associated with restraint in investment and consumption both. Modigliani was right to worry. My guess is that the bank reform and money reform | propose would drive borrowing costs up, borrowing volume down, and equity investment up to fill the gap. Corporations would issue new stock to retire corporate debt. Newlyweds would rent, not buy, until their incomes were high enough to bring other options. Modigliani was also worried that monetary policy would become impossible. It would as we know it. | have argued elsewhere that fiscal policy can be made to work as well and as fast. And | will argue for an unusual and more direct form of monetary policy. But no one knows. These concerns are reasons to go slow. I think that the reforms I describe are developing now, with no input from me, and will continue if they succeed. Depositors will be attracted away from banks to ETF accounts of equal liquidity and full return. Federal deposit insurance will not be advantage enough to hold them. Banks will get the message and join the parade by spinning off their loan departments and investing deposits in ETFs. If Modigliani’s valid concerns haven’t found good answers, the parade will stop until they do. It could backtrack to the starting point. The reforms | believe in ought to work, but can be scrubbed without much mess if they don’t. I am not their only advocate. Others argue for splitting up commercial banks more or less as | would. Meanwhile many people maintain liquidity in ETFs or mutual funds rather than banks. There may be some originality in putting the two reforms together. This personal account can end with more thoughts about my father. My stepmother Teddy’s touching book about their marriage, out a couple of years ago, tells the truth, the whole truth and nothing but the truth. That what she does. He seems not to have Chapter 1: Recollections 1/06/16 23 HOUSE_OVERSIGHT_010939