Josh Barro Says Abolishing Federal Deposit Insurance Is 'Kooky.' Will George Selgin Set Him Straight on April 12?

Come watch the Business Insider journalist debate the Cato Institute economist at this month's Soho Forum in New York City.

When Donald Trump was considering former Cato Institute President and ex-BB&T Corp. CEO John Allison as treasury secretary, Business Insider Senor Editor Josh Barro tweeted:

John Allison is opposed to federal deposit insurance. He's a nutcase.

— Josh Barro (@jbarro) November 23, 2016

Weighing in to defend his former boss was George Selgin, the eminent economist and director of the Cato Institute's Center for Monetary and Financial Alternatives: "FDIC started as a crutch for weak unit banks…"

"I am aware of the kooky views on monetary policy and banking that pervade Cato, thanks," Barro tweeted back.

"[E]asy to just sling adjectives; harder to prove you know what you're talking about," Selgin replied.

On Wednesday, April 12 , Barro will get an opportunity to prove just that when he goes face to face with Selgin at the Soho Forum, a monthly debate series that "features topics of special interest to libertarians" and "aims to enhance social and professional ties within the New York City libertarian community."

The Soho Forum runs Oxford-style debates, so at the beginning of the event attendees get to vote on the evening's resolution. After the debaters have had their say, the audience votes again, and the side that's gained the most ground wins the contest.

At Selgin vs. Barro, the resolution will be: "The Federal Deposit Insurance Corporation should be abolished in favor of private sector solutions for protecting the safety of bank deposits."

The event will take place at the Subculture Theater, located at 45 Bleecker Street in Manhattan. Tickets are $18 (10 for students) and must be reserved in advance. Get them here. Doors open at 5:45pm, and the event starts at 6:30.

As always, audio from the event will be available the same week on the Reason Podcast. (Subscribe!)

Comments

[JFree]

There's an even easier way to get rid of deposit insurance - but libertarians here won't like it.

Post office bank for non-interest checking. A GIRO system prevents overdrafts. Deposits are solely invested in short-term Tbills - so no deposit insurance necessary - and since it's short-term only no possibility of liquidity/solvency crisis. A post office bank can actually distribute circulating silver coinage to preserve cash for those who want no part of any banking system at all - which private banks have NEVER seriously done.

By providing competition for govt-issued debt, it lowers long-term costs for funding govt - AND it reduces the tax cronyism of mortgages and homeownership. And because it isn't at risk in the next financial crisis - and can be the basis for a monetary system, it eliminates the extortion demand for a bailout (give use your money or we'll kill the money market system)

[Scarecrow Repair & Chippering]

So eliminate one government waste program by creating a new one?

You've got a brilliant future in politics.

[JFree]

You won't say that when the next 2008 crisis hits. Libertarians bitch and moan about TARP - but the reality is that they have proposed not one fucking thing to prevent the next one

[JFree]

Not to mention not one fucking thing to stop the current housing bubble - or negative interest rates by banks - or the growth of the Fed balance sheet which is a public liability if it goes sour - or how to bring back actual silver coinage that circulates

[KBeckman]

Fuck, I think you might have a good idea...

[Juice]

but the reality is that they have proposed not one fucking thing to prevent the next one

Ha ha! Oh, ok.

[MarkLastname]

See, when people like you and Hihn say things like this it only demonstrates your own stupidity.

Read about market monetarism and sensible monetary policy; about proposals to prevent bank bailouts that incentivize risky behavior; about changing the tax code to eliminate incentives to overborrow to buy homes.

Read George Selgin for christ's sake, he's written on it.

Only idiot leftists believe this bulkshit that only leftists have 'solutions.' You believe it because you don't read anyone you do t already agree with and you don't believe a solution is a solution if it doesn't involve more government .

[JFree]

I've read Hayek on Denationalization of Money and its good. It will NEVER spontaneously appear in a crisis. When Greece had its financial/banking crisis a couple years ago, bitcoin was totally irrelevant. The only currencies that spontaneously appear in a crisis is - some other govts money.

A post office bank has nothing to do with monetary policy. It simply recognizes that short-term non-interest-bearing US govt debt IS a form of currency and is in fact the most accepted currency in the world. Who the hell else is supposed to control the distribution/settlements of the govts own currency? Nor does a post office bank require withdrawing from the IMF (gold coinage) AND changing the tax code AND eliminating the Fed AND amending the constitution AND reeducating the public in free market reeducation camps to occur first. There are roughly 100 working models in the world - Austrian theories have zero. The US had a postal savings (which I'm NOT advocating) system from 1910 to 1965. It could pass congress TOMORROW with a bipartisan alliance of the same people who voted against TARP the first time plus quite a few more who could vote that way without the imminent threat of extortion/revolution hanging over them. Opposed solely by those who are already cronyist whores of the FIRE sector.

I do understand the real objection from anarchos here. Because every depositor undermines the 'govt is always coercion therefore it must disappear' meme.

[Scarecrow Repair & Chippering]

All you understand is government control. In a practical sense, there's some sanity to your stance, since as long as there's government, only government can change things. But you conflate "change" with "fix", much as statists conflate "pass legislation" with "fix".

[SIV]

Fuck libertarians Post office banks with PLSAs and lottery bonds!

Beats the shit out of "social security".

[JWatts]

FDIC insurance is so low down the priority list of important Libertarian goals that it's probably counter productive to attempt to remove it.

Perhaps lowering the limit might be worthwhile. Most people would probably agree with the idea of lowering it from $250K down to say $25K. Then allow banks to provide private insurance for amounts above that. The majority of people would just assume that removing FDIC insurance is going to be bad for them, and they don't see the cost. However, if you drastically lowered the threshold, it would still be above the amount people care about.

[Scarecrow Repair & Chippering]

That's a much better and more practical idea than handing a new boondoggle to the incompetent post office.

[Ron]

"Then allow banks to provide private insurance for amounts above that"

And who will back up that insurance, probably the government

[Scarecrow Repair & Chippering]

Same as backs up all other insurance.

[Brandybuck]

Getting rid of any government program, no matter how minor, is "kooky". Just ask anyone in the mainstream media.

[MarkLastname]

Pretty much. Josh Barro was one of those "sensible" republicans who agreed with abstract canards about limited government but proposing a cut to any specific program or agency is invariably crazy.

There's something sickening about people who's goal in life seems to be being a good pet, or 'one of the good ones.'

[Juice]

When Donald Trump was considering former Cato Institute President and ex-BB&T Corp. CEO John Allison as treasury secretary...

...I got my hopes up for nothing.

[OzNoticer]

Let's all return to those golden years when sensible people kept their savings in a cookie jar, or hid it in the mattress.

Of course, few people have net savings these days, so it doesn't matter much. The end of deposit insurance will only affect a vanishingly small proportion of people. The vast numbers of the poor and stupid have no money to insure; and the rich are well over the limit of what deposit insurance covers. It's only the tiny number of people who make a working income and who practise what used to be common prudence and live within their means who have savings covered by this insurance.

Not enough voters to be concerned about.

[Tony]

Why do libertarians want to create the perfect conditions for a depression?

[MarkLastname]

What's funny is that we know you think the 2008 depression was caused mainly by banks being reckless, and what causes banks to be reckless? In large part it's things like the FDIC that reduce their incentive to be cautious.

[some guy]

Well, he's right about the banks being reckless, he just never follows up with answering the "why" part. People like Tony can't understand that the rich will always be the primary influence on the use of government power and so, the only way to reduce the practical effects of that influence is to reduce government power.

[Tony]

What about the even bigger crisis caused before any of these institutions were in place? Were banks just having an off day?