326: 200 Years of Financial Panics
Wealth Formula by Buck Joffrey
The Fed's Balance Sheet Was 800 Billion Dollars
The national debt is probably the most prominent evidence of what we're doing to ourselves. In two thousand eight, before the two thousand eight financial crisis began, the fed's balance sheet was 800 billion dollars. Now that doesn't look to me like a real economy in functioning onwith real economic factors. Every crisis is caused by a triggering event no one anticipated that sucks the confidence out of the market. And once this confidence is gone, that's it.
When I think about all of what has happened to our economy over the past two decades, it’s quite astounding. National debt has gone up by about 5x. Interest rates hovered at nearly zero for multiple years and we went through multiple shocks to the system like the 2008 meltdown and Covid. Again—all in the last two decades!
This week’s guest on Wealth Formula Podcast has seen a lot more than I have as he served in the Reagan administration at a time when Paul Volker used significant interest rate increases to bring down hyperinflation and he was deeply involved in the response to the Savings and Loans Crisis of the 1980s as well.
Thomas Vartanian saw it all happen from the front row. His recent book, 200 Years of American Financial Panics: Crashes, Recessions, Depressions, and the Technology that Will Change it All captures the major themes of American Economic History.
Tune into this week’s show as we find out what he thinks about the economy today and what lessons from the past we can apply to try to get ourselves out of the mess!
Thomas P. Vartanian is a former regulator, legal adviser, academic and author who has worked in the financial services industry over six decades. He is currently the Executive Director of the Financial Technology & Cybersecurity Center.
He previously was the Executive Director of the Program on Financial Regulation & Technology at George Mason University’s Scalia Law School, and before that, he chaired the Financial Institution’s practices at two international law firms, Dechert LLP and Fried Frank LLP, through four financial crises. Both as a regulator and private practitioner, he has advised parties in 30 of the 50 largest financial institution failures in American history, developing a deep understanding of the causes of financial collapses. He has been described by clients in Chambers as “one of the best financial services lawyers in America.”
Mr. Vartanian served in the Reagan Administration as General Counsel of the Federal Home Loan Bank Board and the FSLIC, where he authorized the receivership, sale, or liquidation of hundreds of failed institutions in the S&L crisis, including the first national and cross-industry financial institution combinations in the country. Prior to that, he served in the Carter Administration in the Office of the Comptroller of the Currency as Special Assistant to the Chief Counsel.
Mr. Vartanian is a futurist and expert in financial technology. He was Chairman of the American Bar Association’s Cyberspace Law Committee between 1998 and 2002, where he chaired an international task force of lawyers from twenty countries which issued a seminal report on the novel issues created at that time by doing business over the Internet.
Since leaving government service in 1983, Mr. Vartanian has been approached by the Reagan, Bush, Obama, and Trump Administrations to head federal financial regulatory agencies, including being interviewed to become the first Vice Chair for Supervision of the Board of Governors of the Federal Reserve System. Rather than return to government service, since the 1980s, he has represented a variety of government entities, financial companies, and their investors, as well as informally advised several Presidential Administrations.
Mr. Vartanian has authored more than four hundred articles and eight books. He is a frequent lecturer and media commentator on the financial services industry, having appeared on Bloomberg TV, CNN, Fox News, PBS and a variety of radio shows. He has taught banking and electronic commerce law at Georgetown Law School, George Washington Law School, and Boston University School of Law, and has been a guest lecturer at Harvard Law School.
In 2008, Mr. Vartanian was named “Washingtonian of the Year” based on his use of music and sports to raise money for charities in the D.C. metropolitan area. As a musician, he appeared in the first production in the United States in 1970 of Joseph and the Amazing Technicolor Dreamcoat. His classic rock band, The Johnny Esquire Band, has helped raise approximately $5,000,000 for charities in the Washington D.C. area over the last twenty years. Mr. Vartanian founded and plays on the Washington All Stars, a senior baseball team that has raised $500,000 for Special Olympics since 1998.
Shownotes:
- What kinds of similarities are there in our current economic environment that contribute to the higher inflation?
- How has Covid changed the economic functioning of the United States?
- Can we just print as much money as we want?
- 200 Years of American Financial Panics: Crashes, Recessions, Depressions, and the Technology that Will Change it All
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