 Ladies and gentlemen, the founder of the Medici banking dynasty, Giovanni di Bicchi di Medici, said to his children on his desk bed, quote, stay out of the public eye. His words certainly beg the question, what do bankers know about money and banking? And to develop a meaningful answer to this question in the Austrian economic tradition, I have to start right at the beginning, and that is with the process of civilization. It denotes the developments through which man substitutes the state of division of labor and specialization that is peaceful and productive cooperation for the state of subsistence, that is violent hand-to-mouth existence. In his magnum opus human action, Ludwig Mises put forward a praxeological explanation of the process of civilization, making us understand the cause of social evolution. To Mises, two factors are at the heart of the process of civilization. First, there must be an inequality of wants and skills among people. This is a necessary condition for making people seeking cooperation. Second, man must recognize that higher productivity is possible through a division of labor. Mises thus assumes a minimum intelligence among human beings and the willingness to adhere to this intelligence in practical life. Once people engage in the division of labor and specialization, the need for interpersonal exchange arises. The primitive form of this exchange is bartering. A barter economy has its limitations, though. For instance, it makes people's exchange opportunities dependent on a double coincidence of wants. Assuming a minimum intelligence, people will realize that using an indirect means of exchange is economically beneficial. Using an indirect means of exchange increases the opportunities for exchange as a double coincidence of wants is no longer a requisite for making trading possible. The indirect means of exchange that becomes universally accepted becomes money. In Principles of Economics, Carl Manger theorizes that money emerges spontaneously out of the free market activities and that free market money emerges out of a commodity such as precious metals, gold, silver. Mises later showed with his regression theorem that this must indeed be so for praxeological reasons. Money must have emerged out of a free market and it must have emerged out of a commodity. Money is an economic good like any other. As such, it will be economized like any other good. This means that people will demand more convenient ways for holding and exchanging their money proper. What is more, an inequality of wants among moneyholders implies savers that are those who hold excess money balances and investors that are those who demand money in excess of the actual holdings. It is against this backdrop that two kinds of money businesses would emerge in a free market. Deposit banking or money warehousing and loan or credit banking. Deposit banking offers holders of money proper, custodian, safeguarding and settlement services. For instance, holders of money proper can deposit their commodity money with a deposit bank against a money certificate in the form of a bank nor oversight deposit. Credit banks would refinance themselves by obtaining genuine savings that is issuing interest-bearing bonds. Savers will exchange their savings in the form of money proper against such bonds that by earning a yield. The market interest rates will thus be determined by the supply of and demand for money proper. And so the market equilibrium interest rate will reflect the societal time preference rate. In other words, in a free market there will be quite naturally a profession which may be called banker. Some bankers will work in the money warehousing business or deposit banking, others in credit banking. To be sure, in a free market deposit banking and credit institutions will represent legally separate entities. And so we would have the deposit banker on the one hand and the credit banker on the other hand. At this juncture we should remind ourselves that in a free market there are only three ways of acquiring property. That is in a non-aggressive way. Homesteading, production and voluntary contracting. In reality, however, things may be somewhat different. Franz Oppenheimer pointed out that quote, there are two fundamentally opposed means whereby man requiring sustenance is impelled to obtain the necessary means for satisfying his desires. These are work and robbery. One's own labor and the forcible appropriation of the labor of others, quote ends. The logic of human action tells us that there is, in fact, there must be for the individual and economic incentive to aggress against other people's property. Two interrelated praxeological insights explain this. First, we know for sure that an earlier satisfaction of one's is preferred over a later satisfaction of one's. We also know for sure that a satisfaction of one's associated with low costs is preferred over a satisfaction of one's associated with high costs. In other words, individuals try to achieve their ends with as little input as possible and in the shortest period of time. Second, the process of civilization does not extirpate man's inclination to aggression. Individual A will aggress against B, that is, against B's property, if and when he gets away with it. That is, if the benefits or expected benefits for A aggressing against B will be lower than the costs or expected costs he has to bear by doing so. It is the individual's economic incentive to aggress against other people's property that is at the heart of the emergence of what is typically called government. A government can be understood as a territorial monopolist from compulsion an agency which engages in institutionalized property rights violations and exploitation of private property owners through taxation and regulation, for instance. To answer the question, what do bankers know about money and banking, it is necessary to take a closer look at the various forms of government as the latter will provide us with important insights for answering this question. One can make a distinction between government with a low time preference and government with a high time preference. At the one end of the spectrum is, and here I would like to borrow a term put forward by Mansa Olsen, is the roving bandit. The latter represents a form of government that has a narrow interest in the welfare of society and as a result his theft typically approaches 100% of society's income. The roving bandit. The roving bandit does not have to share in the damage his aggression causes to society. The time preference of the roving bandit is therefore relatively high. He takes as much from his victims as possible and there is next to no economic incentive to restrain his stealing. At the other end of the spectrum is the stationary bandit. Like the roving bandit, he also holds a monopoly of coercion by being government over his victims. However, the stationary bandit has an encompassing interest in society's welfare. He wishes to keep his victims producing. The more his victims produce, the more there is to take for the stationary bandit. Sharing in society's losses, the stationary bandit will make sure that his thievery is limited. The higher the losses in production from thievery are, the lower will be the level of aggression at which the stationary bandit's take is maximized. The stationary bandit's time preference will therefore be lower than the time preference of the roving bandit. Taking a closer look at the stationary bandit, one can make a distinction between private ownership of government, feudalism, monarchy and public ownership of government, democratic republicanism for instance. The caretaker of a privately held government maximizes the present value of total income which results from expropriating the property of the ruled. A monarch for instance holds a monopoly of expropriation over his victims and his time preference will be due to his encompassing interest relatively low. In contrast, the caretaker of publicly owned government will maximize his current income. His time preference will be therefore relatively high. Public ownership of government means majority voting. The majority of the people decides about who will serve as a temporary caretaker of public ownership of government. The average voter will support those politicians who are expected, rightly or wrongly, to improve the voter's economic situation. A voter has every incentive to act in this way, irrespective of the fact that the income he may obtain in this way results from expropriating fellow citizens. The caretaker of public ownership of government in turn has an incentive to secure the majority of the voters. He will favor policies of expropriating and increasingly so. The typically few high income producers contribute to the benefit of the typically large group of less productive or non-productive people. The important insight is public ownership of government will lead to an ongoing erosion of the encompassing interest of the majority of the people in the market income of society. Or in other words, society's time preference will increase. The rise in society's time preference will decide for explaining the emergence of fraudulent banking or the fraudulent banker for that matter, which is epitomized by a pure fiat money regime. We know that the caretakers of public ownership of government wish to expropriate resources from the public at large. This can be done most conveniently by first, obtaining control over money production, second, replacing commodity money through fiat money, producing money through credit expansion. The banking industry and the bankers are therefore a natural ally for government's savory. Government and bankers are in cahoots. Thanks Michael for the expression. For logical reasons, those in government and the bankers will collude for establishing a pure fiat money system. Bankers realize that they would earn additional revenue if and when they're allowed to issue new money balances through credit expansion, or ex nihilo, that is making loans beyond the amount of money proper they hold. They understand that fractional reserve banking is a fairly profitable undertaking, and so the deposit as well as the loan banker will be in favor of merging deposit and credit banking. The temporary caretakers of public ownership of government are very much in favor of fractional reserve banking. Being the first receiver of the new money, government can expropriate resources from the owners of things. And having monopolized law, government will declare fractional reserve bank illegal. Engaging in fractional reserve bank, however, is risky for the banker. He knows that if and when his counterfeiting is detected, a bank run ensue would be forced out of business or something even worse might happen to him. For government, bank failures are fairly undesirable. It would bring political and economic problems and defaulting banks, first and foremost, endanger access to credit and money on easy terms. Government will therefore greatly support us by the bankers, set up a center bank, thereby greatly encouraging all banks to inflate the quantity of money in a combined effort. Even with the center bank in place, however, the risk of a banker is not entirely limited. What is needed is that the center bank holds the money production monopoly. This is why sooner or later commodity money will be replaced by irredeemable paper or fiat money. To this end, government will make it legal for bankers to suspend the redeemability of outstanding money, substitute money proper. One may wonder, how do government and bankers get with this? That is, fraudulently extracting resources from producers and contractors by issuing inflationary money. Is it a lack of knowledge on the part of those who are on the losing end of the counterfeiting regime? Or are the costs of revolting against a pure fiat money regime prohibitively high from the viewpoint of the individual? An economically reasonable, that is praxeological, answer to the question can be found with what I call collective correction. Collective correction means that individuals, once government intervenes in society's monetary affairs, will increasingly develop a disposition for violating other people's property. By taking advantage of government coercion an individual can reap the benefits from aggression against the property of others. While he has to bear only a fraction of the damage his action does to society as a whole, he has every incentive to act in this way. He would have to bear the losses of whatever opportunity for violating others' private property he passes up. A pure fiat money system will lead to collective corruption on the grand scale. As is well known, government can secure its support simply by letting the public or parts of it share in the enjoyment of the receipts fraudulently extracted from natural owners of things. For instance, government will offer reasonably paid jobs, in particular for the intellectuals and the secondhand dealer of ideas. It will also provide firms with public contracts such as, for instance, for construction and building projects. And with growing government handouts a growing number of people and businesses will become economically and socially dependent on the continuation or even further expansion of government activity. Quite naturally resistance against a further expansion of government and the fiat money regime which necessarily means further violations of individual property rights will decline. Clearly, bankers play an important role in spreading collective corruption. It may suffice here to say that a growing number of people will start investing their lifetime savings into fiat money denominated deposits and bonds. Sooner or later, people will develop a great interest in supporting government policy and upholding the fiat money regime by whatever means are deemed necessary. Where do these insights lead us to? In the remainder of my talk, I will argue that collective corruption, once it has become sufficiently widespread will lead to hyperinflation. By which I mean an accelerating increase in the quantity of fiat money leading to an erosion or even a total destruction of the purchasing power of fiat money. Of course, those in government and bankers have a common interest in avoiding hyperinflation. They prefer a kind of inflation that goes on unnoticed, that is a form of inflation that wouldn't spin out of control. However, once collective corruption has become widespread and the banking and financial industry has become highly important in terms of financing government and serving as an important horde for people's lifetime savings, the pendulum has already been swung towards hyperinflation. From praxeology, we know for sure that a fiat money boom will ultimately end in depression. And we also know that efforts to escape this depression by increasing the quantity of fiat money will even further increase the damage it might at best postpone the day of reckoning. How will the majority of the people respond to an approaching depression? If and when people can expect to rank among the first receivers of the newly created money, which is the case once collective corruption has become sufficiently widespread, the answer appears to be obvious. The majority of the people would prefer the running of the electronic printing press over letting government and banks defaulting. And under such conditions, such an incentive structure, the fiat money system would end up in hyperinflation. Ladies and gentlemen, in view of what has been said above, we can therefore conclude. First, if and when public ownership of government takes hold, commodity money will be replaced by fiat money. Second, fiat money leads to collective corruption, possibly on the grander scale. And three, once collective corruption has become sufficiently widespread, a fiat money regime will be destroyed by hyperinflation. From what has been said above, it follows that we know that once a fiat money system has been put into place, banks and bankers have joined, some of them willingly and knowingly, some of them unknowingly, the vast criminal enterprise that is the state. And being a self-interest being, the bankers should be expected to know a lot about money and banking. And this interpretation also makes sense of the words we just heard from Giovanni di Bicchi di Medici at the beginning of my talk, who said to his sons, stay out of the public eye. Thank you very much for your attention.