Click here for full video"It's not enough to regulate the money supply because monetarism is part of this false paradigm, credit and money don't go hand in hand. If you increase money supply you can have an asset bubble developing. So you cannot regulate credit purely using monetary means so you need other instruments......." He gets into China's capital requirements.
"We need to arrest and reverse the collapse of credit and on the other hand we have to rebuild the global financial system because it was fundamentally flawed and we can't put Humpty Dumpty back together again....."
"To arrest the collapse of credit there's only one source of credit and that's the State. So you have to increase effectively the money supply or Governmental guarantees to compensate for the collapse of credit and that's what we have done in America where the balance sheet of the Federal Reserve went from $800 billion in 9/2008 to over $2 trillion now with something between $7 and $8 trillion worth of guarantees of various kinds. And even then this has not been sufficient to arrest the pressure as reflected in the fact that the Dollar is so strong because the strength of the dollar is not due to the fact that people want to hold Dollars in preference to other assets, it's because people owe dollars and they can't roll over their obligations" (15:33-16:56)
"The collapse of Lehman brothers set in motion a rapid course of events which really brought the financial system to a standstill....."
"And even if all the banks kept their balance sheet there's a tremendous amount that is in the hands of non-banks like hedge funds which are not under the control of the banking authorities. So that is still an unsolved problem."
He also touched on self-reinforcing super bubbles, divergence between housing/willingness to lend, market self-correcting failures fueled by excesses and distortions, Alan Greenspan, monetary policy/money supply, Eastern Europe's inability to guarantee their debt like the US and EU and special drawing rights.
