Keep pulling the thread on Charles Calomiris.
Deposit insurance has reduced incentives for banks to manage risk, leading to larger eventual losses that are borne by the FDIC and taxpayers.
Since the 1970s, there has been a global pandemic of banking crises with extremely high losses, driven by government protection of banks.
The 2008 financial crisis was created by politically driven U.S. government subsidies for risky housing finance.
By the time of the 2008 crisis, Citibank's market value equity-to-asset ratio had declined from about 13% to about 2%, indicating it was effectively insolvent.
The Dodd-Frank financial reforms were intentionally ineffective, designed to create the appearance of reform while maintaining the status quo of protecting banks.
The U.S. regulatory and supervisory system is unserious, as evidenced by regulators pretending Silicon Valley Bank was well-capitalized when its own 10-K report showed it was borderline insolvent.
The Federal Reserve is unlikely to return to a scarce reserve system because the resulting sell-off of Treasuries would force up yields, particularly in the politically sensitive mortgage market.
Within approximately five years, the U.S. will enter a 'fiscal dominance' equilibrium where the Federal Reserve is forced to monetize government deficits to avoid default.
Charlie Kalamiars predicts that U.S. fiscal dominance will lead to sustained inflation rates of at least 10% per year, starting in about five years, unless entitlement and defense spending are curtailed.
Without financial repression, the implied steady-state inflation rate in the U.S. under fiscal dominance would be greater than 30% per year.
Imposing a 20% reserve requirement on banks would cut the implied inflation rate under U.S. fiscal dominance by more than half, to around 10-15%.
The future of the financial system is an unbundled model with stablecoins acting as narrow payment banks and separate lending entities funded primarily by market debt.