European Banking Authority's 'Stress Teasing': The fallacy of capital adequacy requirements for commercial banks

EBA is stress-testing European commercial banks using questionable capital adequacy criteria, therefore the title ‘teasing’ instead of 'testing'. EBA is another behemoth like the BIS in Basel, run by bureaucrats who are at best economists in the ivory tower but don’t have the faintest about what is real money, let alone banking. Alas! The Global Financial Crisis is here to stay because it has always been here, and always will be here for the simple reason of basic misconceptions, not to say conspiracies. The misconception is well known. Thomas Jefferson, and after him Irving Fisher wrote about it, I repeated and expanded on it. But the theory and practice is not taught at schools of business, let alone departments of economics, because the knowledge would eliminate the abuse of so many thousand private mints run by the commercial bankers, many of whom don’t have the faintest idea about real money either. How do I know? I was one of them until I studied and learned. This booklet may be an eye opener for some, a painful admission for others. Like Henry Ford said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”