What a topsy-turvy world we live in thanks to Fed nonsense. Consider the outgoing NY Fed president’s latest brainchild.

Outgoing New York Fed President William Dudley has a new proposal to mock.

Dudley proposes paying bankers with long-term debt.

Wall Street should force banks to share the pain of regulatory penalties by docking executives’ pay, a move that would help discourage bad behavior, Federal Reserve Bank of New York President William Dudley said Monday.

If bankers were paid more with long-term debt, it could “better align senior managers’ interests with the long-term safety and soundness of the firm,” he said. Such a change might need to be pushed by regulators, he said, because the banks “may be reluctant to adopt such pay structures on their own for competitive reasons.”

Brief Payment History

  • Millennials may be shocked to discover that people used to be paid with gold.
  • Roosevelt ended the gold payment system during the Great Depression, illegally confiscating everyone’s gold. He should have gone to prison.
  • Following personal confiscation, international trade deficits were settled in gold until Nixon put an end to that in 1971.
  • After Nixon closed the gold window, people at least got paid in cash.
  • People collected interest on debt in US dollars and other currencies.
  • Lately, covenant-lite and toggle bond issuance has soared. Toggle bonds “pay” interest with more debt.
  • Now, Dudley proposes paying people with debt.
  • What’s the difference anyway?

    The dollar is in reality nothing but debt.

    Dudley Gems

  • Oh that “Elusive” Inflation! New York Fed President, William Dudley, says 2% inflation target will remain elusive even if price pressures pick up.
  • Confident Dudley Expects Rate Hikes Will Continue, Hurricane Effect to Provide Long Run Benefit: “Hurricanes will boost economic activity over the long run.”
  • NY Fed President Wants Consumers to Tap Home Equity: Didn’t We Try That Before? “People are leaving the wealth generated by rising home prices locked up in their homes.”
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