• Laurence Kotlikoff

    Laurence Kotlikoff is a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research. He is a NY Times Best Selling author and an active columnist. In 2014, he was named by The Economist as one of the world's 25 most influential economists. He was formerly on President Ronald Reagan's Council of Economic Advisers and ran as a write-in candidate for President of the United States in the 2016 election. Kotlikoff is author or co-author of 19 books and hundreds of professional journal articles.

The Big Con – Reassessing the “Great” Recession and its “Fix”

Abstract: Most economists differ, not on the causes of the Great Recession, but on their relative importance.They concur, though, on the basic problem, namely human, not market failure. This study appliesthe evidence, some new, some old, to re-try the usual suspects. It finds none guilty. Instead, it identifiesbroadly defined multiple equilibrium, mediated by opacity, false rumors, and panic, as the real culprit.There are many models of bank runs. But each can trigger firing runs – firing someone else’s customersfor fear that others are firing your customers. Firing runs, in turn, exacerbate bank runs, producinga vicious cycle. This cycle can be manipulated by those who benefit from economic distress (shortsellers). If the banking system, not the banking players is the problem, the solution surely lies in fundamentalbanking reform. This paper concludes by pointing out that a reform that shifted to 100 percent, equity-financedmutual-fund banking with government-organized, real-time asset verification and disclosure couldpreclude financial runs and their ability to induce firing runs.

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