I Don’t Know How to “Solve” Banking, and I Doubt Anyone Does

Unless I’m wrong, and you know how to solve it, in which case let me know in the comments. I’m curious. Or get it published in an Economics journal, and get the Nobel prize.


Consider this scenario: Vinny the Loan Shark, whom you owe $50,000, came up to you at 9:00 this morning and said, “Gimmee my fifty back by 5:00 tonight or I’ll break both your legs.” Vinny is a very direct guy. Isn’t it great to get away from stuffy circumlocutions?

Fortunately, you own a house worth $100,000. No problem! You’ll just sell it by 5:00 this evening, and you’ll have enough money to pay Vinny back and then some. You and your legs will be fine. What’s that? You can’t liquidate your house that quickly? Or dear, you do have a problem. I hope your health insurance is paid up.

Before you censure Vinny too harshly, grok this: When it comes to banking, you and I are Vinny.

See, we all want banks to offer checking accounts so we can use them to pay for stuff. Obviously this only works if you can spend the money in those accounts any time you want. So, from your point of view, the funds in that account are a zero-maturity asset. From the bank’s point of view, since they have to make payment whenever a check is cleared, those funds are a zero-maturity liability.

The problem, of course, is that most of the bank’s assets are in rather illiquid forms like 10-year loans they made to businesses, 30-year mortgage loans they made to families to buy houses, etc. They can’t liquidate all that instantly. So if a bunch of checking account owners – Vinnies – come up to them at once and say, “We all want our money back right now,” the bank can’t comply.

This is called a bank run and leads to that exciting scene in the movie It’s a Wonderful Life in which the bank where the hero works suffers a run and he has to deal with the emergency. It also leads to the same thing happening in real life, which is more exciting but less entertaining.

“OK,” you say, “just prohibit banks from holding very much of their assets in 10-year business loans, 30-year mortgage loans, etc.” Alas, that won’t work, because you and I demand that banks provide mortgage loans so we can buy houses. And businesses need loans for various purposes, etc.

So here’s the problem: You and I, the public, demand that banks borrow money from us with zero-maturity checking accounts and lend to us with 30-year mortgage loans. This is called “maturity mismatch,” for obvious reasons, and it’s not just an unfortunate accident that banks are set up this way. The public demands that they be set up this way. How are we supposed to square this circle?

I don’t know. So far, no one else knows, either.

Deposit insurance has greatly reduced the problem of bank runs, but as the crisis of 2007-2009 showed, we are far from Eden.

I once heard an economist say that he thinks the current system— riven though it is with occasional banking panics, waves of failures, etc.— may actually be the best that can be achieved! It was much worse in the bad old days. At the start of the Great Depression, there was a banking crisis that forced about 30% of the nation’s banks to shut their doors! Believe me, the regulators are very aware of the maturity mismatch problem. We’ve been tinkering away with banking policy in the last 80 years and seem to have improved things, but certainly haven’t achieved perfection.

So: If you know how to totally fix banking, send a quick email to Jerome Powell. He’ll appreciate it.


Just Some Inside Baseball

Update: Alf links here and weighs in with:

“No room for blue pilled men, which is to say, they are free to join in on other topics, but if they start spouting off bs about women, they are put in place. See Neurotoxin.”

Jesus, you’re still butt-hurt about losing a debate that ended more than a week ago. If it bugs you that much, don’t engage in debates.

Most readers of this blog won’t know or care what this is about; it’s in reference to some horseshit from another forum where my posts are likely to be deleted. Just getting some stuff on the record. I regret that this clutter is necessary. Regular posts resume next time.

You (you who know who you are): “I demand examples!”

Me: “OK, here.”

You: “That’s not an example of what I’m talking about! Provide examples!”

Me: “Yes, it is. Also here’s another example.”

You: “No it’s not! Also, where’s your argument? I demand that you make an argument.”

Me: “The argument is (etc.)”

You: “Hey, stop rambling for screen after screen.”

Cute. This kind of behavior is characteristic of malignant narcissists. Caught.

And… bye.

Funny, I thought I’d feel regret exiting that forum. Instead I feel this flood of relief.

Screwtape and Trump Black Pillers

C.S. Lewis, in The Screwtape Letters, notes that many human endeavors start out as a kind of exuberant 50-yard dash, but soon settle into a marathon. There’s a lesson here for supporters of President Trump, when they freak out too readily that he’s cucking out. 

We are now past the “Oh thank God!” euphoria and relief of his 2016 victory, which saved us from a civil war with Hillary Clinton as President. We are now in the “settling into the hard work” phase. It’s still joy, but it’s marathon mode.

For those of you who haven’t read The Screwtape Letters, this wonderful little book consists of letters from an older demon, Screwtape, to a younger demon, Wormwood. The subject is tempting humans.

Screwtape mentions the distinction between early euphoric sprint and later steady marathon in the context of Wormwood’s target becoming a newly-enthusiastic Christian. From the demons’ point of view this is a disaster, but Screwtape reassures Wormwood that all is not lost: the renewed enthusiasm of Wormwood’s target (“patient”) won’t last forever; he eventually will have to make the transition to a religious commitment that is calmer and more enduring. If the target had thought that his new euphoria would last forever, that necessary transition affords opportunities for the demons:

Work hard, then on the disappointment or anticlimax which is certainly coming to the patient… It occurs when the boy who has been enchanted in the nursery by Stories from the Odyssey buckles down to really learning Greek. It occurs when lovers have got married and begin the real task of living together. In every department of life it marks the transition from dreaming aspiration to laborious doing.

We are in power now in the White House (and increasingly in the judiciary as Trump gets his nominees confirmed). That is wonderful! But to exploit this to its fullest potential we can’t let ourselves get too carried away with emotion. We have to create long steady progress.

And it may help to remind oneself occasionally, “Thank God, Hillary Clinton will never be President!” Yes, that was a couple of years ago and we must press on, but it’s a real morale booster to remind oneself that she’d still be President right now if, God forbid, she had gotten into the White House. The fact that she is not in the White House is a continual victory.

Furthermore, anyone who thinks Trump is actually a secret agent for the other side (WTF?) need only remind himself of our enemies’ attitude toward him: Hate, terror, and rage, and an unceasing attempt to remove him from office, long after it ceased to be merely stupid and descended into the realm of the clownish. All the right people hate him.

Yeah, yeah, Trump’s not perfect, but nobody is. And he’s pretty close to perfect for the war that we’re in now. He actually hits back against our enemies! This still freaks them out, they’re so used to that never happening! We got immensely lucky that he stood as a candidate in 2016. He’s pretty much our best-case scenario. What else do you want!?

And he has to work against the preponderance of the nation’s government at the federal, state, and local levels. Were you expecting total victory 12 seconds after he took the oath of office?

Trump should not be immune from criticism— he needs to hear from us when he strays off, to put him back on track— but before criticizing him too readily, remember this:

People out of power can afford to be purists. People in power have to deal with the realities of it.

A Holiness Spiral in the Art World

In The Painted Word Tom Wolfe skewers art theory as it developed during the mid-twentieth century. A notable aspect of the affair was a holiness spiral. Once Theory became hip, if you were an artist or critic your best career move was to hop on the bandwagon. The whole episode is quite amusing – man, the pretentiousness! – and provides a good example of how people behave when they’re caught up in a holiness spiral, optimal strategy for rebels who want to attack it from within, etc.


Wolfe starts his account in the early 20th century, when realism in painting started to fall out of favor (some quotes edited for brevity):

The general theory went as follows: As Cubists and other early Modernists had correctly realized, a painting was not a window through which one could peer into the distance. The three-dimensional effects were sheer illusion (et ergo ersatz). A painting was a flat surface with paint on it.

Since “a painting was a flat surface with paint on it,” it should present itself as such. As the painter Georges Braque said, “The aim is not to reconstitute an anecdotal fact but to constitute a pictorial fact.”

Notice the bizarre notion that realistic effects in painting are somehow deceptive or dishonest. What, does anyone actually think, when viewing a painting, that they’re looking out a window? Does the painter intend to fool them? Is written fiction somehow dishonest because it depicts events that never happened?

The whole thing was stupid. But it became an intellectual craze in the haute art world in the early 20th century, becoming mandatory by the 1940s if you aspired to be a Name in that world. No illusory 3D effects! Flatness was In, baby; Flatness was It.


This business of flatness became quite an issue; an obsession. The question of what an artist or could not do without violating the principle of Flatness—“the integrity of the picture plane,” as it became known—inspired such subtle distinctions, such brilliant if ever-decreasing tighter-turning spirals of logic, that it compares admirably with the most famous of all questions of the Scholastics: “How many angels can dance on the head of a pin?”

What we have here, folks, is the early stage of a holiness spiral. (Later, inevitably, black knighting arose in response, as we’ll see.) The new Flatness theory got serious traction when art critic Clement Greenberg used painter Jackson Pollock to push it:

[Greenberg] used Pollock’s certified success to put over Flatness as the theory—the theoretical breakthrough of Einstein-scale authority—of the entire new wave. “Pollock’s strength,” he would say, “lies in the emphatic surfaces of his pictures… in all that thick, fuliginous flatness… [I had to look up fuliginous. It means dark or sooty, in case you were wondering.] “It is the tension inherent in the constructed, re-created flatness of the surface,” Greenberg would say, “that produces the strength of his art… his concentration on surface texture and tactile qualities.”

One notices certain problems with this, like
It makes no fucking sense,
How can flatness be “thick” or “tactile”?
You slope-browed vulgarian! How dare you question an Art Theorist when he’s working up a good head of steam! You probably went to public school, you slack-jawed commoner!

[A] Washington, D.C. artist named Morris Louis came to New York in 1953 to try to get a line on what was going on in this new wave, and he had some long talks with Greenberg. He went back to Washington and began thinking. Flatness, the man had said. Louis saw the future with great clarity. The very use of thick oil paint itself had been a crime against flatness, a violation of the integrity of the picture plane, all these years. Even in the hands of Picasso, ordinary paint was likely to build up as much as a millimeter or two above mean canvas level! And as for the new Picasso—i.e., Pollock—my God, get out a ruler!

Louis took no chances violating Holy Writ:

So Louis used unprimed canvas and thinned out his paint until it soaked right into the canvas when he brushed it on. He could put a painting on the floor and lie on top of the canvas and cock his eye sideways… He had done it! Nothing existed above or below the picture plane. Did I hear the word flat? Well, try to out-flat this!

Wolfe notes,

A man from Mars or Chesterton, Pa., incidentally, would have looked at a Morris Louis painting and seen rows of rather watery-looking stripes. (The book’s photo of a Louis painting confirms this.)

Now the spiral has acquired serious momentum. A painter named Barnett Newman

spent the last twenty-two years of his life studying the problems (if any) of dealing with big areas of color divided by stripes… on a flat picture plane.

But the question that makes us ache with its urgency is… have we gotten as flat as we can get? Might there be frontiers of flatness we haven’t yet explored?

Why, yes. And this lets the new generation of younger artists leapfrog over the older guys. All without ever getting heterodox, mind you. This takes us to the 1950s and Pop Art icon Jasper Johns:

The new theory went as follows. Johns had chosen real subjects such as flags and numbers and letters and targets that were flat by their very nature. They were born to be flat, you might say. Thereby Johns was achieving an amazing thing. He was bringing real subjects into Modern painting but in a way that neither violated the law of Flatness nor introduced “literary” content. On the contrary: he was converting pieces of everyday communication—flags and numbers—into art objects… and thereby de-literalizing them! “An amazing result,” said [art critic Leo] Steinberg.

(I love the word “result” in this context, as if Johns had proven a new mathematical theorem.)

And those old guys like painter de Kooning and critic Greenberg: What a bunch of frauds! They’d been violating the sacred principles of Flatness all along, the hypocrites! You see, Greenberg had righteously called out the Old Masters for creating “an illusion of space into which one could imagine oneself walking.” And Flatness got rid of that benighted practice. But…

Just a minute, said Steinberg. That’s all well and good, but you’re talking about a “pre-industrial standard of locomotion,” i.e., walking. Perhaps you can’t walk into an Abstract Expressionist painting—but you can fly through! Just look at a de Kooning or a Rothko… Look at that “airy” quality, those “areas floating in space”… all that “illusionistic space.” It was aerial “double dealing,” and it did “clearly deny and dissemble the picture’s material surface”—and nobody had ever blown the whistle on them!

Well, it was all now blown for Abstract Expressionism. Steinberg, with an assist from [other critics and painters], removed the cataracts from everybody’s eyes overnight.

The Black Knights had arrived. It is like a man posing as a male-to-female transvestite online and calling lesbian feminists “hate-filled bigots” for refusing to date transvestites, i.e., men. The holiness spiral winds up in a place the feminists had not anticipated, but they’re at a loss how to counter-attack and still remain within left-wing orthodoxy. Johns and Steinberg did something analogous to the Pollock-Greenberg crowd. As Wolfe notes,

Steinberg could attack Abstract Expressionism precisely because he was saying, “I’ve found something newer and better.” But one will note that at no time does he attack the premises of Late-Twentieth-Century Art Theory as developed by Greenberg. He accepts every fundamental Greenberg has put forth. Realism and three-dimensional illusion are still forbidden. Flatness is still God. Steinberg simply adds, “I’ve found a new world that’s flatter.”

In other words, “You’re not radical enough. I’m holier.” Greenberg, the original Flatness guy, made a blunder here: He tried to counterattack the New Theory head on. You fool, Greenberg! You can be as heterodox as you like, but you have to say that you’re not being heterodox. It’s as if he tried to take on the transvestites with the equivalent of a feminist saying, “But you’re a man and I don’t want to date men!” Rookie mistake, Greenberg! What he should have done is said something analogous to, “Male-to-female transvestites are appropriating women’s gender identity in an act of gender silencing, violence, and erasure.” This is incredibly stupid and obviously non-sensical, so it’s impeccably left-wing-orthodox.

Back to Art World: Soon after the New Flatness took over, art in the style of comic books became a prominent feature of Pop Art. You know, those 8-foot-by-8-foot works that depict, e.g., a woman in a couple of old-fashioned comic book panels holding a phone and thinking “Who’s the other woman on the line that Joe’s talking to? Is he… cheating on me!?!?!


The idea is to put quote marks around this art form, as it were, so it is turned into an ironic commentary on itself or whatever. “Don’t worry!” art critics assured the aficionados: “It’s okay; it’s not a comic book page telling a little story. It’s commentary on comic books!” One critic said, reassuringly: “Pop Art is neither abstract nor realistic… it is, essentially, an art about signs and sign systems.” Note the “art as commentary on art” aspect. That comes back in a big way later.

In the meantime, as Wolfe sums it up: “You are hereby licensed to go ahead and like these pictures. We’ve drained all the realism out.”

By the way, this is still hip among a certain crowd, at least the last time I checked several years ago. I knew someone with a PhD in literary criticism from an English department that has hard core post-modernist leanings. She had one of these large comic thingies on her wall. It’s kinda cute, in a way. But that’s the great thing about Black Knighting: You kill off the enemy with his own weapons.

Theory was still accelerating.

Of course, Greenberg had started it all with his demands for purity, for flatness (ever more Flatness!), for the obliteration of distinctions such as foreground and background, figure and field. Now, in the 1960s, Greenberg made a comeback.

He had learned a thing or two in the meantime about strategy… All along, he said, there had been something old fashioned about Abstract Expressionism: its brushstrokes. The characteristic Abstract Expressionist brushstroke was something very obvious, very expressive… very painterly, like what you find in Baroque art.

Greenberg was still unbending in his opposition to Pop, but now he knew better than to just denounce it. Now he added the obligatory phrase: “—and I can show you something newer and better, way out here.”

Reductionism was the word of the day.

How far we’ve come! How religiously we’ve cut away the fat! We got rid of nineteenth-century storybook realism. Then we got rid of representational objects. Then we got rid of the third dimension altogether and got really flat. Then we got rid of airiness, brushstrokes, and most of the paint…

…because Minimalism was getting rolling.

Bourgeois connotations, they argued, still hung on to modern art. What about all those nice “lovely” colors? They invited as many sentimental associations as painterly brushstrokes had. So Minimalists began using colors like Subway I-Beam green and Restaurant Exhaust-Fan Duct Lint gray that nobody could accuse of sentimentality. And how about all those fuzzy, swampy, misty edges that Color Fielders went for? They invited you to linger over a painting for all its emotional “evocations.” Henceforth a paint should be applied only in hard linear geometries, and you should get the whole painting at once, “fast.”

Visitor in front of Turnsole in 2004.
Wolfe’s caption: “Noland was known as the ‘fastest’ painter alive (i.e., one could see his pictures faster than anybody else’s). The explanation of why that was important took considerably longer.”
Frank Stella’s Tampa. “Where’s the hidden meaning?” you ask. There is none. The goal was to do away with “bourgeois sentimentality,” and boy did they!

Faster and faster art theory flew now, in ever-tighter and more dazzling turns. [Clement] Greenberg [the guy who had started the whole thing] accused the Minimalists of living only for “the far-out as an end in itself.” A little late to be saying that, Clement! Rosenberg tried to stop them by saying they really weren’t far-out at all—they were a fake avant-garde.

LOL, no dice, Mr. Trotsky, I mean Rosenberg. The Revolution Eats Its Own!

Theory spun on and chewed up the two old boys like breadsticks, like the Revolution devouring Robespierre and Danton.

And as art got rid of more and more in an inexorable turn to reduction, to eliminating elements of art, and as theory grew larger and more powerful, more influential, more prominent, the minnow of theory finally swallowed the whale of what the theory was supposedly about:

So it was that in April of 1970 an artist named Lawrence Wiener typed up a work of art that appeared in Arts Magazine—as a work of art— with no visual experience before or after:

1. The artist may construct the piece
2. The piece may be fabricated
3. The piece need not be built
Each being equal and consistent with the intent of the artist the decision as to condition rests with the receiver upon the occasion of receivership.

Wow. It’s not clear what the hell this is supposed to mean, but it is clear that it’s intended as a statement of Art Theory. But note as Wolfe says that this was published as a work of art. That is, the distinction between art and art theory had been eliminated.


In that moment, Art made its final flight, climbed higher and higher in an ever-decreasing tighter-turning spiral until it disappeared up its own fundamental aperture… and came out the other side as Art Theory! Words on a page, flat, flatter, Flattest, a vision ineffable, as ineffable as the Angels and Universal Souls.

The holiness spiral had finally gone as far as it could. Game theoretically, it couldn’t avoid it. Let’s extract some lessons from this:

1. Once the spiral gets rolling, there is no incentive to stop and every incentive to continue.

2. You can’t, from within the relevant community, fight it by denying its terms. That can be done, but it requires an all-out war. If you want to take down the reigning champion without a scorched-earth war, you have to attack it on its own terms; you must couch your attack in language which appears orthodox. From within the art world, they couldn’t attack Abstract Expressionism by saying, “The old art was better and Abstract Expressionism was a mistake!” But schools like Pop Art successfully attacked it by saying, “Abstract Expressionism doesn’t go far enough; it’s not holy enough! I have something newer and holier over here!”

3. That last part, “I have something newer and holier!” is important. You can’t just accuse the current reigning champion of not being holy enough. You have to offer an alternative. (Alinsky: “The price of a successful attack is a constructive alternative.”)

4. The Revolution Eats Its Own.

5. The Spiral will continue until it has gotten as extreme as it actually can get.

Implication of all this: If you’re in a holiness spiral, assume that it will continue until it gets to Terminal Holiness Spiral. Don’t think that might happen. Plan for it to happen.

Red Pill in Fiction: The Best Red Pill Scene I’ve Ever Seen in a Movie

Also the wisest and most joyful.


Via the Dark Herald, https://darkherald.net/2019/06/25/things-that-will-give-sjws-a-heart-attack-the-love-scene-from-bahubali/, a scene from an Indian movie called Baahubali: The Beginning. The point of the scene is entirely physical, so you don’t need the dialogue. Believe me, you don’t.

Here’s a direct link to the vid:

Watch it up to the 4:00 mark. (After that it’s just a love song/dance, which is fine as far as it goes.)

Whoever wrote this scene knows the concept of amused mastery cold. And the importance of passing shit tests. And negs/being unimpressed, since his changing her hair etc. says, “You need to look more feminine before I’m willing to sex you.” And understands that everyone is happier when natural male-female sexual polarity is respected and honored. Very nicely done; absolutely beautiful.

Index page for my Red Pill in Fiction posts: