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Richard Sylla

lines on the record: 83
first: 2018-08-16
most recent: 2018-08-16
sittings or episodes: 1
sources: podcast

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“Well, I wish I had known 50 years ago what these long-term market cycles were like, both in interest rates and stock returns. Now, we didn't have a lot of the data, and I myself have worked on creating some of these data, but I think that if I had known 50 years ago how stock markets bounce up and down, they really magnify the ups and downs of the economy by quite a bit, we can call it PE ratios increasing and decreasing. If I had known that 50 years ago, that there were these long cycles that have been going on for 200 years, I probably would have paid more attention to where we were in the market cycles then. And the same thing with interest rates. If I knew that there were like 20, 30-year movements of interest rates, I would try to see where we were in that cycle and then not make the mistake of investing all a lot of money in interest rates when they're very low because when they go up,”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Read Ben Graham's book, if you're a millennial, the new edition of it. And then mostly save, save money and invest it. The power of compound interest is so great, but we don't realize it because it happens slowly. So for any millennial, not just one who might want to be a professor, I would say you may not have a lot of money, but make sure to save 10% of it, like John D. Rockefeller did.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say that it's a very rewarding thing to study. I somehow think that economic and financial history, if you can make contributions there, they kind of last longer. In straight economics, you're often trying to tweak the last paper you saw in the journal, put another tweak on it, and then get a journal article which shows that you're on the cutting edge. But then somebody else tweaks you, and pretty soon your article isn't that important. If you write a really good book in economic history like Milton Friedman and Anna Schwartz did in their monetary history, or Bray Hammond did in his banks and politics book, those books last a long time. And you can read them half a century later. So I would say that going into economic and financial history, it may give you more long-term rewards than just being an ordinary garden variety economist. So that's what I would advise scholars. But of course, you know, there's other advice I'd give that, you know.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“But when you're there, people want to know right now what's going to happen in the next month or year. That's very tough to forecast. So I couldn't see in 2004 and 2005 that we would have this great financial crisis starting in 2007.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, right. And those rates in 2002 and 2003 and early 2004 were really the lowest ones on record up to that time. And so we turned up and after a year and a half of rates moving up, I said, okay, probably we've hit the low in 2003. And you'll read that in the last edition of the book. And so I think that was an obvious mistake. And what I learned from that is that forecasting is a tough business. I became an economic historian because it's a lot easier to forecast the past. Sure. We know what happened. We don't know exactly how it happened.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I failed and what I learned from the experience. Well, I think in the history of interest rates, I did make a bad forecast. In the last edition of it, which was the 2005 edition, in 2004, I thought we'd hit the low in interest rates. May of 2003 mentioned that earlier. That's”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what the Federal Reserve may have trouble containing inflationary pressures, and it may have to raise interest rates faster than it did in the 1950s when they could just move up gradually over a decade. And I think that bodes ill for probably overvalued stock markets and things like that. So I'm a little bit wary about the outlook for the next year or two.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Right now President Trump is changing that. So we got a tax cut in late 2017. And then there's a deal between the Republicans and the Democrats where each one gets a little more spending. That came up just in January 2018. And then Trump is talking about an infrastructure program. So what I see right now, and it bothers me a little bit, is that the sort of fiscal stimulus we should have had in... 2008, nine ten is taking place when the unemployment was, you know, in 2009, it was 10%. Now it's 4.1%, basically full employment or close to it. And we're getting the fiscal stimulus we should have had when unemployment was 10% when we're sort of fully employed.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, my historical perspective makes me think that the Federal Reserve now is kind of in the situation of the Federal Reserve around the early 1950s. It had kept interest rates very low for a long time. It realized that those rates were probably too low. They weren't normal. So they want to normalize. And I think that the goal of the Federal Reserve over the next few years will be to gradually increase our interest rates back to more of a normal level. Now there could be some problems with this that I foresee. Number one, the fiscal policy was basically nonexistent during and after the crisis. Obama had a little bit of stimulus, not enough in 2009. But since then, the gridlock in Washington prevented any sort of fiscal policy designed to help the economy.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I should mention that I happen to own the 27 volumes of the papers of Alexander Hamilton and the five volumes of the law practice of Alexander Hamilton. And I go in to read those a lot because that's just fascinating. They take up about 10 feet on my bookshelves.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And so then people began to rethink Keynesianism and later on economists, of course, came up with rational expectations and other things. But I think Friedman and Schwartz, the monetary history of the United States, was one of those books. I happened to be lucky enough to read it when I was 23 years old, and it influenced my career a great deal because it's really such a wonderful book.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“When I was in grad school, my first year of grad school was 1963. And one of the great books of economic history that came out then was Milton Friedman and Anna Schwartz, a monetary history of the United States. At that time, especially at Harvard, not at Chicago obviously, most people were Keynesians. And Milton Friedman made this powerful historical I wouldn't say it's an attack on Keynesianism, but there was something that the Keynesians hadn't paid much attention to, namely monetarism. And Milton Friedman's book sort of showed that there was a lot to monetarism.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's a book that influenced me when I was young about value investing and just a lot of wisdom that Ben Graham had. So that influenced me a lot. And then some books sort of combined economic history, financial history with investment advice. One of those that I remember a book from the late 1950s was Bray Hammond. He was the Secretary of the Federal Reserve Board. Bray Hammond wrote a book called Banks in Politics in America from the Revolution to the Civil War. And it's just a wonderful book. It's well worth reading half a century later because it captures the spirit of America. You know, the country was built by steam and credit, and fraudsters were there and all that. He'd go into financial frauds, how they took place. And at the end of it, he would say, thus did America grow great. It was got a sarcastic.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in the 1950s, when I was still in high school, I read something like it might have been the third edition of Benjamin Graham's The Intelligent Investor. And I learned a lot from that because there was a lot of wisdom in Benjamin Graham's work. My friend Jason Zweig is, you know, half a century later has brought out a new edition of it.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And those four, Braill Schmidt in high school, Otto Eckstein and Seymour Harrison College, and then Gershenkron in grad school, I think those were my mentors that mattered to me in my life.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Came later, but while I was in college, Harvard had a couple professors named Otto Eckstein and Seymour Harris. Otto Eckstein later on found a data resources, you know, which became a big data firm. And he was a young, very bright economist and knew all the things going on in Washington. He was a public finance economist. So I liked him. And Seymour Harris was an old Harvard professor, been there many years, and he was my senior thesis advisor, and he took a liking to me and I took a liking to him. He was a very prolific writer, wasn't so much original, but he wrote a lot of stuff about policy. And so those two professors were not only mentors, but sort of friends. And then Gershenkron was my mentor as a grad student, but he was also a friend. He lived near where I lived in the summer when he was, his wife was gone, we'd invite him over for dinner and all that. So he was a friend of the family.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“but a real good economics textbook as well. And I knew all about Paul Samuelson and Milton Friedman and people like that while I was in high school. So there was that high school teacher that kindled my interest in economics and it's never left. Now 60, 70 years later, I'm still interested in it. Then I mentioned, well, I should talk about college because Gershon Krim, my PhD advisor.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I got interested in economics in high school, and economics was not a subject in the late 1950s that was typically taught in high school. So I have to give a shout out to my high school economics teacher. His name was Ralph Schmidt. I used to keep up with him, but I haven't been in touch with him in recent years, and I'm not even sure he's still alive. I hope so. Ralph Schmidt was taught a really college-like course in economics while I was a senior in high school. And that just got me, we reread things like Robert Heilbrunner's worldly philosophers.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“It was just a, I was lucky with the timing. But here's what people don't know. They were so happy about what I had done and thought I was a genius that they made me the chairman of the board of trustees of the church. And so most people don't know that one of my greatest triumphs in life was being the chairman of the board of trustees of a church of which I was not a member.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And so they did that. And not only did they, for 15 or 20 years after that, get this 15% return on their money, but during the 1980s, interest rates came down and the bonds doubled in value. So they were getting a tremendous return on this investment. They thought I was a genius, even though...”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Most people don't know about my background. Well, I think I had one great financial triumph around 1981. That most people don't know about. And here's the situation. I'm in North Carolina at the time and my wife takes me off to her church. So I'm attending this church. And the church decides around 1981 to sell the parsonage and just pay a rent supplement to the minister. That gave him a bunch of capital to invest. And since I'm an economist from MC State going to church with my wife, they asked me, what should you buy? How should they invest that money? So in 1981, this is a church, I advised them to put all the money into long-term U.S. government bonds, which were then yielding about $14 or 15% interest.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Never happened. Yeah, but I think what Hamilton probably Even though his policies led to it, Hamilton couldn't possibly have foreseen the tremendous economic growth of the last two plus centuries. And when he Digested the growth of the last two centuries, he might say, you know, really gold and silver are fairly expensive ways to back money. You work very hard to dig the gold and silver out of the ground, refine. Lord Keynes made fun of that. And I think Hamilton would be a little more modern and say if you can control what the central bank is going to do, it's a lot cheaper not to base your money on gold and silver.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, he would be skeptical of it in the sense that he wrote that it's very easy to stamp numbers on paper and call it money. It's the stamping of paper, he said, is very easy and it offers a temptation to governments. He didn't, you know, the banks of the United States were private corporate corporations for the most part because Hamilton worried that if Congress controlled the central bank, it would just be printing money for Congress.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I think Hamilton was a student of economic and financial history. When you read his writings, which I do quite a lot, you see that he knew a lot of financial history when he was operating. And so one of the things he knew was that England had a strong currency anchored in gold, that the Dutch Republic had a strong currency anchored in silver. And so, you know, Hamilton called gold and silver the monies of the world And I think he wanted the U.S., which didn't have its own currency unit, to be like the other countries of the world. And therefore, that would ease international trade and eliminate a lot of currency risk and things like that. So in his time, he was trying to bring the U.S. up to the standard of that time.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and you mentioned Dick Full too, who's a stern school graduate, I believe. Dick Full, he had a lot of his ego tied up in Lehman Brothers. And there was a deal that was on the, you know, rumored that some Korean investors were going to. Take over Lehman before the failure. And apparently they asked for conditions that Dick Fool didn't want to accept because it wouldn't have left him running the company. And so his own ego got involved there. And that's kind of what happens”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“They were. And I think you mentioned that their balance sheet was hard to figure out. I remember on the Friday before Lehman shut down on Monday, Lehman announced that there was no problem and that it had 20 or 20 billion of capital after it paid all its liabilities. But that was only because they overvalued some of the securities they had. And that was the real problem. David Einhorn, a hedge fund guy in New York, had predicted all year long that Lehman was in bad shape. And it turned out he was right.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. I think they did have the authority, but for some reason they thought they didn't. But the moral hazard problem was there. And I think Hank Paulson actually made the decision not to help Lehman. Because it would send the proper moral hazard lesson. It turned out that he was probably wrong, that triggered this tremendous crisis and the Fed had to. And the Treasury did too. But yeah, I think that there's moral hazard. If you really worried about moral hazard, you might shut down the insurance industry.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's a fair statement that I think of course the authorities Hank Paulson who was the Treasury Secretary and Ben Bernanke was the head of the Fed at that time claim they didn't really have the authority to bail out Lehman.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“The government, the Federal Reserve came in, made a deal to transfer a lot of the assets to JP Morgan Chase. And I think then people said, well, okay, the Fed is going to do that for Bear Stearns. We don't have to worry about other banks like Lehman because Lehman was bigger than Bear Stearns. So the market's expected that if Lehman got into trouble, the same thing would happen. The reason the crisis became so bad in 2008 after the Lehman failure is that the markets didn't expect it. So that was a big shock. So I think, and the Fed can still, you know, have an ability to change its rates or do something when the markets weren't expecting it. And then you would have this. But I think the Fed, you might have an adverse reaction. But I think the Fed sort of thinks we really don't want to do that unless it's absolutely necessary. Let's telegraph what we're thinking.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think they can still shock markets. They have the power to do that. If they have an increase in rates or a reduction in rates when it wasn't expected, that's the whole thing. That what are people expecting? You know, for example, expectations really matter. I think when we're actually right around the 10th anniversary of Bear Stearns's failure.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's probably a good thing because the markets sort of get an advance warning of what the Fed is likely to do. And I think then you have more time. You're not shocked when the Federal Reserve raises its policy rate when you didn't expect it. So now they telegraph that they're probably going to have some rate increases. And I think then the markets adjust more easily. So I think the transparency is probably a good thing.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“And of course, the opposite side of that was that when the Federal Reserve was giving the banks a lot of liquidity, the banks weren't making those loans or making it harder to get those loans. So the excess liquidity just stayed on the balance sheets of the banks as excess reserves, and we didn't have the inflation some people forecast.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yes. You had to send in tax records. You had to send in new paycheck stubs. You know, the one you sent three months earlier wasn't a month earlier. That's right. And I think they had a checklist of things they had to do after the crisis. And it just meant that it was much harder to get a loan.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, I had a personal experience of that. I bought a condo on Roosevelt Island here in New York in 2007, and it was really easy in 2007 to get the financing for me to buy my condo on Roosevelt Island. In 2009 or 10, when I refinanced, I had to jump through all kinds of hoops to just get it refinanced, even though I had a good history of paying my mortgage payments by that time. So you're right. I mean, 2006 and 2007, it was very easy to get a mortgage loan, 2009, 10, it was much more difficult to refinance the same loan.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Why did the banks do that? Well, I think the 1930s, the same thing happened in the 1930s, that a lot of new base money was created in the 1930s, but the banks were sort of shell shocked from the experience of 1929-33. So they held a lot of excess reserves for a whole decade after the banking crises of 1930-31.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. More or less. We would have had the inflation some people forecast had the banks use the new base money the Federal Reserve gave them. They could have made a lot more loans, but they didn't do it. They held these reserves and the Fed was paying interest on them, so it was the kind of safe thing. Risk-free return. Risk-free return. And so I think this.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“But the banks didn't magnify that into a rapid growth of the money stock. They held the new money, the new base money, basically as excess reserves. And so excess reserves went from bank reserves, went from very low levels in 2007 to extremely high levels in 2012, 2013, 14.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think they have a considerable amount of power and central banking history, the checkered history of central banking in the US shows that people get suspicious of concentrated financial power. So the Fed has to tend its political fences. But I think that especially now that we're in a fiat currency world, the money isn't backed by gold and silver anymore, that increases the power of the central banks because they can create money with the stroke of a pen. And they decided to fight the financial crisis by creating a lot of new money, or maybe we should say a lot of new bank reserves because when you create a lot of money, people are going to think inflation is right around the corner. But in fact, what happened, the Federal Reserve created a lot of what we call high-powered money or base money.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“All right, well, we got rid of the second bank in the United States in 1836. There hadn't been many financial crises in the U.S. before that. Then right after the Second Bank disappeared in 1836, we had the financial panic of 1837, a related one in 1839. We had one in 1857, one in 1873, one in 1884, one in 1893, and then 1907. Right. I've actually done some research on this, and what I can say is that financial panics were at least twice as frequent when we did not have a central bank as they have been when we had a central bank.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“1907. And then, of course, there's always a trigger to a panic. There was some wild speculation going on in copper stocks and the shadow banks of that time were called trust companies. The trust companies were involved as shadow banks in financing some of the speculation in copper stocks. One of the copper speculators failed and that triggered a run on the trust companies. But it was the backdrop of it was financial conditions were tight anyway. And then you had a sort of bankruptcy and implication of trust companies as being involved so people rushed on the trust companies and took their money out. And that's what the financial panic.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a little, but the idea that the San Francisco earthquake of April 1906 might have something to do with the financial panic in 1907 was a fairly recent finding of financial historians and the mechanism was through the insurance payments. The insurance claims to fix up San Francisco led to a drain of gold out of England because a lot of those buildings were insured in England. It also led to a drain of gold out of the eastern United States financial centers because they had insurance companies there too. Most of our big insurance companies were in the East Coast, you know, Connecticut and New York. And this movement of gold or money to the West Coast U.S. sort of tightened financial conditions in the U.S. money markets and also the English money market. And then the Bank of England said, well, gold is leaving, so we better raise interest rates. And so that's the kind of backdrop for money is tight.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Also, East Coast US, too. There are a lot of big insurance companies, East Coast U.S. that had to pay off for the San Francisco damage.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Years later, it ran into a problem with President Andrew Jackson, who didn't like banks. And I think it was the same sort of politics as in 1811. Some people saw it in their interest to get rid of the second bank of the United States. So we had two central banks early in our history, and we got rid of both of them. For 70 years from, say, 1836 to 1914, we didn't have a central bank, but we had a big financial crisis in 1907. And it's just like the War of 1812 persuaded people that central banks might be good. The financial panic of 1907, by which time the US is the biggest economy in the world, is sort of embarrassing. And one way to get away from these panics is to start a new central bank. That's how we got the Federal Reserve.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Competed with the other base. In other words, it was a private corporation or 20% owned by the government, 80% by private investors. It made loans just like any other bank did. So it was a competitor, and this may have been one of the problems, that the state banks were much more numerous by 1811 than they were in 1791 when there were only three or four. And by 1811, they said, gee, if we got rid of the Bank of the United States, we would get rid of a regulator, we would get rid of a competitor, and we would probably then have to take over the government's banking business. So it was like a win-win-win situation. So the bank in the first bank in the United States disappeared, but then we got into the war of 1812 when the bank might have really helped us, and it wasn't there. And so the banks' worst enemies in 1811 by 1815 and 16 said, we really need a central bank. So they brought in the second bank of the United States, but it ran into 20.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“The Bank of the United States was much bigger than any of the state banks and had branches all over the country. One thing Hamilton gave us right at the start was interstate banking, which we got away from later, but we've brought back now. But basically, the bank in the United States differed from the Fed in this sense.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“If that is true that they were chartered for twenty years and in general, that was true of most corporations at that time. Even the Bank of England had a limitation on its charter. It had to come in and reapply to have its charter renewed.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I call the Federal Reserve with my historical perspective the third bank of the United States. That's because Hamilton established the first bank of the United States in 1791. And it lasted only for 20 years. American politics got involved.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“That's because the brokers needed a better trading system because of all the new securities that were being traded. So the securities markets are a result of Hamilton's policies. And the states, you know, he establishes the Bank of the United States and says the U.S. government's going to earn a profit by investing in it. State governments then say, well, we can start a lot of banks too and maybe take a position in them and earn some money. So we then have a banking system. And the bank in the United States was a very large corporation for its time. And so that encouraged the state governments to establish more American corporations. And in my career, I've studied a lot of these things in terms of the numbers. And you just see that the number of corporations rises rapidly in the 1790s, the states are establishing more banks. Hamilton basically modernized our finances. And I think the biographers of Hamilton in general don't recognize this as perhaps his greatest achievement.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“He defined the US dollar in terms of gold and silver. And part of his plan, I think, was, you know, if he creates these new securities, government bonds and stock in the bank of the United States, capital markets will be established to trade these securities. The New York Stock Exchange, we know, is established under the Buttonwood Tree in May 1792.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the key aspects of the United States Constitution, which Hamilton was one of the spearheads for in the 1780s, he was a delegate to the convention, was to get the national government, the new federal government, to have its own revenue. And the Constitution allowed that. And then Hamilton has appointed the first Treasury Secretary, and he wants to restore or really establish the public credit of the United States. So he basically restructures the U.S. national debt into the modern Treasury bond market with three different new securities. And then he uses the revenues that are coming in, mostly from customs duties, to pay the interest on that debt. And very quickly in the early 1790s, he turns the sort of junk bonds of the 1780s into prime government bonds that are purchased not only by Americans, but by foreign investors as well. So Hamilton basically establishes public credit, but of course he did a lot more. He found the first century.”
2018-08-16 · Masters in Business · Richard Sylla on the Lowest Interest Rates in Recorded History · IDENTIFIED FROM THE TRANSCRIPT · source