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who knows that husbands and wives will still be married in fifteen years? Who knows that if they are, their careers will not have taken them to another city? It seems to me that reducing the dangers of debt means reducing both term and amount, and that the solution had better find ways that still accommodate the short- term and long-term needs of firms and people. Now let’s look at how deposit banks might invest. The Omnibus Fund Idea If 1 were a couple of decades younger, | would try to create something | call an omnibus fund. It starts by seeming to contradict what I just said. I said that firms issue both stocks and bonds to reach different constituencies. The omnibus fund would first erase that separation. In principle it would reconstruct the firm as a whole, or put the pieces back together again, by assembling proportionate shares of the debt and equity claims on it in a single portfolio. Suppose for example that the market cap (number of shares times current market quotation) for a firm’s equity shares is one billion dollars, while the market cap of all debt claims together in half that. Then the omnibus fund, in principle, would buy each firm’s equities and debt instruments in that proportion at current market valuation. In practice it could realize the same effect in a simpler way. The omnibus fund would be a balanced index fund. Index funds are representative of all the funds in an index, such as the S&P 500, weighted again to market cap. The omnibus fund would pick a still more inclusive index, say the Russell 3000 or even the Wilshire 5000. It would add in a corporate bond index, since balanced means mixing stocks and bonds, and cap weight the two. The object would be to model the publicly-traded corporate sector as a whole. The simplest way to get there would be to buy index ETFs (exchange traded funds) directly, rather than duplicating their work of assembling portfolios of the underlying individual issues. Chapter 8 Banks, Money and Macroeconomics 2/8/16 3 HOUSE_OVERSIGHT_011092