Saturday, February 27, 2016

The Seven Hermetic Principles

"The Principles of Truth are Seven; he who knows these, understandingly, possesses the Magic Key before whose touch all the Doors of the Temple fly open." — The Kybalion.
The Seven Hermetic Principles, upon which the entire Hermetic Philosophy is based, are as follows:
  1. THE PRINCIPLE OF MENTALISM.
  2. THE PRINCIPLE OF CORRESPONDENCE.
  3. THE PRINCIPLE OF VIBRATION.
  4. THE PRINCIPLE OF POLARITY.
  5. THE PRINCIPLE OF RHYTHM.
  6. THE PRINCIPLE OF CAUSE AND EFFECT.
  7. THE PRINCIPLE OF GENDER.
These Seven Principles will be discussed and explained as we proceed with these lessons. A short explanation of each, however, may as well be given at this point.

I. THE PRINCIPLE OF MENTALISM.

"THE ALL is MIND; The Universe is Mental." — The Kybalion.
This Principle embodies the truth that "All is Mind." It explains that THE ALL (which is the Substantial Reality underlying all the outward manifestations and appearances which we know under the terms of "The Material Universe"; the "Phenomena of Life"; "Matter"; "Energy"; and, in short, all that is apparent to our material senses) is SPIRIT, which in itself is UNKNOWABLE and UNDEFINABLE, but which may be considered and thought of as AN UNIVERSAL, INFINITE, LIVING MIND. It also explains that all the phenomenal world or universe is simply a Mental Creation of THE ALL, subject to the Laws of Created Things, and that the universe, as a whole, and in its parts or units, has its existence in the Mind of THE ALL, in which Mind we "live and move and have our being." This Principle, by establishing the Mental Nature of the Universe, easily explains all of the varied mental and psychic phenomena that occupy such a large portion of the public attention, and which, without such explanation, are non-understandable and defy scientific treatment. An understanding of this great hermetic Principle of Mentalism enables the individual to readily grasp the laws of the Mental Universe, and to apply the same to his well-being and advancement. The Hermetic Student is enabled to apply intelligently the great Mental Laws, instead of using them in a haphazard manner. With tire Master-Key in his possession, the student may unlock the many doors of the mental and psychic temple of knowledge, and enter the same freely and intelligently. This Principle explains the true nature of "Energy," "Power," and "Matter," and why and how all these are subordinate to the Mastery of Mind. One of the old Hermetic Masters wrote, long ages ago: "He who grasps the truth of the Mental Nature of the Universe is well advanced on The Path to Mastery." And these words are as true to-day as at the time they were first written. Without this Master-Key, Mastery is impossible, and the student knocks in vain at the many doors of The Temple.

II. THE PRINCIPLE OF CORRESPONDENCE.

"As above, so below; as below so above." — The Kybalion.
This Principle embodies the truth that there is always a Correspondence between the laws and phenomena of the various planes of Being and Life. The old Hermetic axiom ran in these words: "As above, so below; as below, so above." And the grasping of this Principle gives one the means of solving many a dark paradox, and hidden secret of Nature. There are planes beyond our knowing, but when we apply the Principle of Correspondence to them we are able to understand much that would otherwise be unknowable to us. This Principle is of universal application and manifestation, on the various planes of the material, mental, and spiritual universe — it is an Universal Law. The ancient Hermetists considered this Principle as one of the most important mental instruments by which man was able to pry aside the obstacles which hid from view the Unknown. Its use even tore aside the Veil of Isis to the extent that a glimpse of the face of the goddess might be caught. Just as a knowledge of the Principles of Geometry enables man to measure distant suns and their movements, while seated in his observatory, so a knowledge of the Principle of Correspondence enables Man to reason intelligently from the Known to the Unknown. Studying the monad, he understands the archangel.

III. THE PRINCIPLE OF VIBRATION.

"Nothing rests; everything moves; everything vibrates."— The Kybalion.
This Principle embodies the truth that "everything is in motion"; "everything vibrates"; "nothing is at rest"; facts which Modern Science endorses, and which each new scientific discovery tends to verify. And yet this Hermetic Principle was enunciated thousands of years ago, by the Masters of Ancient Egypt. This Principle explains that the differences between different manifestations of Matter, Energy, Mind, and even Spirit, result largely from varying rates of Vibration. From THE ALL, which is Pure Spirit, down to the grossest form of Matter, all is in vibration — the higher the vibration, the higher the position in the scale. The vibration of Spirit is at such an infinite rate of intensity and rapidity that it is practically at rest — just as a rapidly moving wheel seems to be motionless. And at the other end of the scale, there are gross forms of matter whose vibrations are so low as to seem at rest. Between these poles, there are millions upon millions of varying degrees of vibration. From corpuscle and electron, atom and molecule, to worlds and universes, everything is in vibratory motion. This is also true on the planes of energy and force (which are but varying degrees of vibration); and also on the mental planes (whose states depend upon vibrations); and even on to the spiritual planes. An understanding of this Principle, with the appropriate formulas, enables Hermetic students to control their own mental vibrations as well as those of others. The Masters also apply this Principle to the conquering of Natural phenomena, in various ways. "He who understands the Principle of Vibration, has grasped the sceptre of Power," says one of the old writers.

IV. THE PRINCIPLE OF POLARITY.

"Everything is Dual; everything has poles; everything has its pair of opposites; like and unlike are the same; opposites are identical in nature, but different in degree; extremes meet; all truths are but half-truths; all paradoxes may be reconciled." — The Kybalion.
This Principle embodies the truth that "everything is dual"; "everything has two poles"; "everything has its pair of opposites," all of which were old Hermetic axioms. It explains the old paradoxes, that have perplexed so many, which have been stated as follows: "Thesis and anti-thesis are identical in nature, but different in degree"; "opposites are the same, differing only in degree"; "the pairs of opposites may be reconciled"; "extremes meet"; "everything is and isn't, at the same time"; "all truths are but half-truths"; "every truth is half-false"; "there are two sides to everything," etc., etc., etc. It explains that in everything there are two poles, or opposite aspects, and that "opposites" are really only the two extremes of the same thing, with many varying degrees between them. To illustrate: Heat and Cold, although "opposites," are really the same thing, the differences consisting merely of degrees of the same thing. Look at your thermometer and see if you can discover where "heat" terminates and "cold" begins! There is no such thing as "absolute heat" or "absolute cold" — the two terms "heat" and "cold" simply indicate varying degrees of the same thing, and that "same thing" which manifests as "heat" and "cold" is merely a form, variety, and rate of Vibration. So "heat" and "cold" are simply the "two poles" of that which we call "Heat" — and the phenomena attendant thereupon are manifestations of the Principle of Polarity. The same Principle manifests in the case of "Light and Darkness," which are the same thing, the difference consisting of varying degrees between the two poles of the phenomena. Where does "darkness" leave off, and "light" begin? What is the difference between "Large and Small"? Between "Hard and Soft"? Between "Black and White"? Between "Sharp and Dull"? Between "Noise and Quiet"? Between "High and Low"? Between "Positive and Negative"? The Principle of Polarity explains these paradoxes, and no other Principle can supersede it. The same Principle operates on the Mental Plane. Let us take a radical and extreme example — that of "Love and Hate," two mental states apparently totally different. And yet there are degrees of hate and degrees of Love, and a middle point in which we use the terms "Like or Dislike," which shade into each other so gradually that sometimes we are at a loss to know whether we "like" or "dislike" or "neither." And all are simply degrees of the same thing, as you will see if you will but think a moment. And, more than this (and considered of more importance by the Hermetists), it is possible to change the vibrations of hate to the vibrations of Love, in one's own mind, and in the minds of others. Many of you, who read these lines, have had personal experiences of the involuntary rapid transition from Love to Hate, and the reverse, in your own ease and that of others. And you will therefore realize the possibility of this being accomplished by the use of the Will, by means of the Hermetic formulas. "Good and Evil" are but the poles of the same thing, and the Hermetist understands the art of transmuting Evil into Good, by means of an application of the Principle of Polarity. In short, the "Art of Polarization" becomes a phase of "Mental Alchemy" known and practiced by the ancient and modern Hermetic Masters. An understanding of the Principle will enable one to change his own Polarity, as well as that of others, if he will devote the time and study necessary to master the art.

V. THE PRINCIPLE OF RHYTHM.

"Everything flows, out and in; everything has its tides; all things rise and fall; the pendulum-swing manifests in everything; the measure of the swing to the right is the measure of the swing to the left; rhythm compensates." — The Kybalion.
This Principle embodies the truth that in everything there is manifested a measured motion, to and fro; a flow and inflow; a swing backward and forward; a pendulum-like movement; a tide-like ebb and flow; a high-tide and low-tide; between the two poles which exist in accordance with the Principle of Polarity described a moment ago. There is always an action and a reaction; an advance and a retreat a rising and a sinking. This is in the affairs of the Universe, suns, worlds, men, animals, mind, energy, and matter. This law is manifest in the creation and destruction of worlds; in the rise and fall of nations; in the life of all things; and finally in the mental states of Man (and it is with this latter that the Hermetists find the understanding of the Principle most important). The Hermetists have grasped this Principle, finding its universal application, and have also discovered certain means to overcome its effects in themselves by the use of the appropriate formulas and methods. They apply the Mental Law of Neutralization. They cannot annul the Principle, or Cause it to cease its operation, but they have learned how to escape its effects upon themselves to a certain degree depending upon the Mastery of the Principle. They have learned how to USE it, instead of being USED BY it. In this and similar methods, consist the Art of the Hermetists. The Master of Hermetics polarizes himself at the point at which he desires to rest, and then neutralizes the Rhythmic swing of the pendulum which would tend to carry him to the other pole. All individuals who have attained any degree of Self-Mastery do this to a certain degree, more or less unconsciously, but the Master does this consciously, and by the use of his Will and attains a degree of Poise and Mental Firmness almost impossible of belief on the part of the masses who are swung backward and forward like a pendulum. This Principle and that of Polarity have been closely studied by the Hermetists, and the methods of counteracting, neutralizing and USING them form an important part of the Hermetic Mental Alchemy.

VI. THE PRINCIPLE OF CAUSE AND EFFECT.

"Every Cause has its Effect; every Effect has its Cause; everything happens according to Law; Chance is but a name for Law not recognized; there are many planes of causation, but nothing escapes the Law." — The Kybalion.
This Principle embodies the fact that there is a Cause for every Effect; an Effect from every Cause. It explains that: "Everything Happens according to Law"; that nothing ever "merely happens"; that there is no such thing as Chance; that while there are various planes of Cause and Effect, the higher dominating the lower planes, still nothing ever entirely escapes the Law. The Hermetists understand the art and methods of rising above the ordinary plane of Cause and Effect, to a certain degree, and by mentally rising to a higher plane they become Causers instead of Effects. The masses of people are carried along, obedient to environment; the wills and desires of others stronger than themselves; heredity; suggestion; and other outward causes moving them about like pawns on the Chessboard of Life. But the Masters, rising to the plane above, dominate their moods, characters, qualities, and powers, as well as the environment surrounding them, and become Movers instead of pawns. They help to PLAY THE GAME OF LIFE, instead of being played and moved about by other wills and environment. They USE the Principle instead of being its tools. The Masters obey the Causation of the higher planes, but they help to RULE on their own plane. In this statement there is condensed a wealth of Hermetic knowledge — let him read who can.

VII. THE PRINCIPLE OF GENDER.

"Gender is in everything; everything has its Masculine and Feminine Principles Gender; manifests on all planes." — The Kybalion.
This Principle embodies the truth that there is GENDER manifested in everything — the Masculine and Feminine Principles ever at work. This is true not only of the Physical Plane, but of the Mental and even the Spiritual Planes. On the Physical Plane, the Principle manifests as SEX, on the higher planes it takes higher forms, but the Principle is ever the same. No creation, physical, mental or spiritual, is possible without this Principle. An understanding of its laws will throw light on many a subject that has perplexed the minds of men. The Principle of Gender works ever in the direction of generation, regeneration, and creation. Everything, and every person, contains the two Elements or Principles, or this great Principle, within it, him or her. Every Male thing has the Female Element also; every Female contains also the Male Principle. If you would understand the philosophy of Mental and Spiritual Creation, Generation, and Re-generation, you must understand and study this Hermetic Principle. It contains the solution of many mysteries of Life. We caution you that this Principle has no reference to the many base, pernicious and degrading lustful theories, teachings and practices, which are taught under fanciful titles, and which are a prostitution of the great natural principle of Gender. Such base revivals of the ancient infamous forms of Phallicism tend to ruin mind, body and soul, and the Hermetic Philosophy has ever sounded the warning note against these degraded teachings which tend toward lust, licentiousness, and perversion of Nature's principles. If you seek such teachings, you must go elsewhere for them — Hermeticism contains nothing for you along these lines. To the pure, all things are pure; to the base, all things are base.

Friday, February 26, 2016

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I could sell my blog yet the purchaser would be strained to have the mind that created it.

Tis my own.

How to $100,000 in 6 months

Contact me.

The Top 5 Reasons to Be a Jack of All Trades

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Are the days of Da Vinci dead? Is it possible to, at once, be a world-class painter, engineer, scientist, and more?
“No way. Those times are long gone. Nothing was discovered then. Now the best you can do is pick your field and master it.”
The devout specialist is fond of labeling the impetuous learner–Da Vinci and Ben Franklin being just two forgotten examples–“jack of all trades, master of none.” The chorus unites: In the modern world, it is he who specializes who survives and thrives. There is no place for Renaissance men or women. Starry-eyed amateurs.
Is it true? I don’t think so. Here are the top five reasons why being a “jack of all trades,” what I prefer to call a “generalist,” is making a comeback:
5) “Jack of all trades, master of none” is an artificial pairing.
It is entirely possible to be a jack of all trades, master of many. How? Specialists overestimate the time needed to “master” a skill and confuse “master” with “perfect”…
Generalists recognize that the 80/20 principle applies to skills: 20% of a language’s vocabulary will enable you to communicate and understand at least 80%, 20% of a dance like tango (lead and footwork) separates the novice from the pro, 20% of the moves in a sport account for 80% of the scoring, etc. Is this settling for mediocre?
Not at all. Generalists take the condensed study up to, but not beyond, the point of rapidly diminishing returns. There is perhaps a 5% comprehension difference between the focused generalist who studies Japanese systematically for 2 years vs. the specialist who studies Japanese for 10 with the lack of urgency typical of those who claim that something “takes a lifetime to learn.” Hogwash. Based on my experience and research, it is possible to become world-class in almost any skill within one year.
4) In a world of dogmatic specialists, it’s the generalist who ends up running the show.
Is the CEO a better accountant than the CFO or CPA? Was Steve Jobs a better programmer than top coders at Apple? No, but he had a broad range of skills and saw the unseen interconnectedness. As technology becomes a commodity with the democratization of information, it’s the big-picture generalists who will predict, innovate, and rise to power fastest. There is a reason military “generals” are called such.
3) Boredom is failure.
In a first-world economy where we have the physical necessities covered with even low-class income, Mazlow’s hierarchy of needs drives us to need more for any measure of comparative “success.” Lack of intellectual stimulation, not superlative material wealth, is what drives us to depression and emotional bankruptcy. Generalizing and experimenting prevents this, while over-specialization guarantees it.
2) Diversity of intellectual playgrounds breeds confidence instead of fear of the unknown.
It also breeds empathy with the broadest range of human conditions and appreciation of the broadest range of human accomplishments. The alternative is the defensive xenophobia and smugness uniquely common to those whose identities are defined by their job title or single skill, which they pursue out of obligation and not enjoyment.
1) It’s more fun, in the most serious existential sense.
The jack of all trades maximizes his number of peak experiences in life and learns to enjoy the pursuit of excellence unrelated to material gain, all while finding the few things he is truly uniquely suited to dominate.
The specialist who imprisons himself in self-inflicted one-dimensionality — pursuing and impossible perfection — spends decades stagnant or making imperceptible incremental improvements while the curious generalist consistently measures improvement in quantum leaps. It is only the latter who enjoys the process of pursuing excellence.

Don’t put on experiential blinders in the name of specializing. It’s both unnecessary and crippling. Those who label you a “jack of all trades, master of none” are seldom satisfied with themselves.
Why take their advice?
Here is a description of the incredible Alfred Lee Loomis, a generalist of the highest order who changed the course of World War II with his private science experiments, here taken from the incredible portrait of his life, Tuxedo Park:
Loomis did not conform to the conventional measure of a great scientist. He was too complex to categorize — financier, philanthropist, society figure, physicist, inventor, amateur, dilettante — a contradiction in terms.
Be too complex to categorize.
Look far and wide.  There are worlds to conquer.

Diversity and Inclusion: Inspiring Learning for a Changing World

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What is an Expat?


The word expat is a contraction of expatriate, which derives from the Latin word expatriatus. In medieval times, an expatriatus was someone who had left his or her home country to live somewhere else. So in today’s culture an expatriate is exactly that; someone who lives in a different location than that which they were born and brought up. In general expatriates are considered to be people who are residing in their host country temporarily, with the ultimate intention of returning home at a later date. However, in recent times, more and more expatriates have left their home country and found that they can experience a higher standard of living and a better of quality of life abroad and, for this reason, many of them never return home.

Becoming an Expat

There are many reasons why people become expatriates. For some it is due to work reasons, others fall in love with a person or a place, and others still seek a different life from that which they have been accustomed by living overseas. It is important to note, however, that expatriates will differ enormously from one another and although they are often referred to as a homogenous group, the reality is that within that group people will differ enormously from one another and should therefore be treated as individuals. Whatever your reasons for becoming an expat, this expat guide contains everything you need to know when moving overseas.
Do you have a comment about this article, a further question or even a correction? If so please do let us know. We may edit your comments and cannot guarantee that all comments will be published, please be nice!


What Is The Future For The U.S. Dollar?

Currencies / US DollarSep 01, 2015 - 04:47 PM GMT
CurrenciesChina, the biggest foreign creditor of the United States, owns a truckload of our government bonds. Over the past several weeks, it’s been selling some of those bonds to prop up their currency, the yuan. This is supposed to signal the end of the dollar. As the Chinese put our bonds out for the bid, interest rates are going to shoot higher, driving down the value of the greenback and making imports unaffordable. At least, that’s what dollar haters have expected for years.


There’s only one problem. It’s not happening. And in our view, it won’t happen in the near future.

China’s actions have everything to do with their problems, and nothing to do with the valuation of the dollar or their assessment of U.S. policy moves. Besides, when it comes to U.S. Treasury bonds, we’ve got an ace in the hole, even if we don’t like it very much.

In the early 2000s, the Federal Reserve devalued the U.S. dollar by holding interest rates exceptionally low. Since the Chinese yuan is pegged to the dollar, Chinese goods became ever cheaper in currency terms on the world market.

They sold a lot of stuff, so their exporters were flush with foreign currency. They traded their dollars, euros, and yen for yuan, which the Chinese government had to print to satisfy demand. The process led to inflation in China from all the newly-printed currency, and a rapid buildup of foreign reserves in their central bank.

After cries of currency manipulation and a lot of inflation at home, the Chinese allowed their currency to strengthen a bit. The pegged rate moved down from just over 8 yuan per dollar to about 6 yuan per dollar over the course of a couple of years. On a daily basis, the government allows the yuan to trade 2% above or below the pegged rate. To keep the yuan within the band, the Chinese government uses some of its foreign currency to buy or sell yuan as needed.

This all works great until economic trends change.

The last two years have been particularly painful for China. Economic growth in the Middle Kingdom slowed and property prices turned lower. But instead of their currency easing as would be expected if it floated freely, it got stronger. The rising value had nothing to do with the economics of China of course, they were just along for the ride as the dollar powered higher.

The strengthening yuan made Chinese goods more expensive to the world, which is the exact opposite of what they needed to get their economy growing through higher exports. Meanwhile, the currency of competing countries like South Korea, Vietnam, and Japan fell against the U.S. dollar and, to some extent, the euro. This made Chinese goods even less competitive.

In response to all of this, the Chinese recently devalued their yuan. In a surprise move they increased the number of yuan per dollar by 2.5%, and then allowed the rate to edge up an additional 1.5% over the next few trading sessions. The moves sent shockwaves through the financial markets.

Was this the end, or would they devalue more? What exactly was their currency worth? Are their economic reports believable, or are things much worse than we know?

At the same time, carry trade investors got crushed. These folks borrow money in countries with low interest rates, like the euro zone and the U.S., and invest it in higher interest rate markets, like China. The trade depends on stable interest rates and exchange rates. Since the Chinese yuan is pegged, this was perfect. Right up until it wasn’t. When the Chinese devalued, these investors lost billions of dollars.

Both carry traders and those spooked by the general economic state of China are rushing for the financial exit from the country. To do this, they must exchange their yuan for foreign currency, which puts downward pressure on the yuan. To stop their currency from dropping more than they want, the Chinese must defend it by selling foreign reserves and buying their currency.

This is where the U.S. dollar comes in. The Chinese hold $1.27 trillion of U.S. Treasury bonds, which is the largest component of their $3.1 trillion in foreign reserves. Over the past two weeks they’ve reportedly sold $100 billion of U.S. Treasurys. This has dollar haters screaming about the coming crash of the greenback.

But as I said, nothing of the sort is happening. The market has easily absorbed the U.S. Treasuries China recently sold, as is evidenced by the fact that U.S. interest rates aren’t shooting to the moon. The world recognizes that China is the one with a currency problem, not the U.S.

Even if the Chinese sold another $100 billion, or even $200 billion, it’s hard to see the effects on U.S. interest rates, and therefore the dollar, being more than just a passing blip.

If a short-term pop in rates did occur, that would be an opportunity, not a risk. It would give investors a chance to grab some yield before rates fell again in what we see as a long-term deflationary environment.

As for the ace in the hole, the same group that’s failingly tinkered with the economy can always step in. If the Fed felt that the Chinese were going to sell a block of bonds that would destabilize the markets, the Fed could always buy the bonds directly, adding them to their already swollen inventory of U.S. Treasuries.

I imagine such a move has already been discussed.
Rodney
Follow me on Twitter ;@RJHSDent
By Rodney Johnson, Senior Editor of Economy & Markets

What Is Glass-Steagall? The 82-Year-Old Banking Law That Stirred the Debate


With the 2016 presidential primary season gathering steam, candidates on both sides continue to debate a banking law passed in the middle of the Great Depression.
The Glass-Steagall Act, whose partial repeal in 1999 has been blamed by some for the financial crisis of 2008-09, had imposed a regulatory separation between traditional banking and higher-risk investing activities.
Democratic presidential front-runner Hillary Clinton says she would not reinstate the banking law, but has instead laid out amultipronged plan to mitigate risk in the financial industry, including so-called shadow banking, which, she says, played a greater role in the crisis than the commercial banks covered by Glass-Steagall.
Clinton’s leading opponent for the Democratic nomination, Sen. Bernie Sanders of Vermont, would fully reinstate the law, and a 2015 bill to that end has the support of politicians from all corners of the political spectrum. Also among those in favor: two Republicans, former candidate and Arkansas Gov. Mike Huckabee and retired neurosurgeon Ben Carson.
Also on the Republican side, former Florida Gov. Jeb Bush says he’s “open to the idea” of reinstating Glass-Steagall, but, like Sen. Marco Rubio of Florida, Sen. Ted Cruz of Texas and businessman Donald Trump, he has called for the repeal of Dodd-Franklegislation, which includes a rule some have called “Glass-Steagall light.”
Read on for more about:
  • The original Glass-Steagall Act
  • Its repeal and the subsequent financial crisis
  • Its partial reinstatement as the Volcker Rule in 2010
  • The congressional proposal to fully reinstate it
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How we got here

Glass-Steagall and the Banking Act of 1933: The Glass-Steagall Act is actually a set of provisions included in the broader Banking Act of 1933, a response to the bank failures of the Great Depression. The Banking Act created the Federal Deposit Insurance Corp. to safeguard consumers’ deposits at commercial banks and included the Glass-Steagall provisions to reduce the risk of providing such insurance.
Most critically, Glass-Steagall made it illegal for a bank that held FDIC-insured deposits to invest in anything other than government bonds and similarly low-risk vehicles. Joseph Stiglitz, winner of a Nobel Prize in economics and a professor at Columbia University,wrote in a 2008 opinion piece:
“Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money — people who can take bigger risks in order to get bigger returns.”
Glass-Steagall attempted to keep commercial banks low-risk to make it safer for the government to back those banks with deposit insurance, which would, in turn, prevent another Great Depression.
The partial repeal of Glass-Steagall and the financial crisis: After decades of lobbying and proposed legislation, some of the Glass-Steagall provisions were repealed in 1999, when the Gramm-Leach-Bliley Act was signed. Glass-Steagall’s opponents had objected to what they perceived as over-regulation of the banking industry.
Some critics believe Glass-Steagall’s partial repeal contributed to the 2008-09 financial crisis, alongside earlier weakening of the act’s effects through various government actions. Even John S. Reed and Sandy Weill, the former co-chairmen of Citigroup — created in 1998 as the acquisition of an investment bank, Salomon Smith Barney, by a commercial bank, Citibank — have both said, in effect, that Glass-Steagall protected the U.S. economy.
Others, including economists Paul Krugman and Mike Konczal, have argued that Glass-Steagall would have done nothing to prevent the financial crisis, because it didn’t cover the shadow banks that had engaged in the riskiest behavior.
The Volcker Rule, or “Glass-Steagall light”: Pursuant to the view that the 2008-09 crisis resulted in part from a lack of sufficient separation, post-Glass-Steagall, between investment and commercial banking activities, Congress included the Volcker Rulein the Dodd-Frank reform legislation, signed into law by President Obama in 2010.
The part of Glass-Steagall known as Section 16, which was not repealed, limits the kinds of investments banks can make with customers’ deposit funds. Section 20, which was repealed, limited what banks could do even with their own money. The Volcker Rule reinstated some of the prohibitions of Section 20.

The future of Glass-Steagall

Potential issues with Volcker, including loopholes and gray areas that may impede enforcement, led to the introduction of the 21st Century Glass-Steagall Act. Four U.S. senators introduced the bill in July seeking to revive the broader banking law.
Sens. Elizabeth Warren, D-Mass., and John McCain, R-Ariz., among others, introduced the act. In McCain’s words, the act aims to “rebuild the wall between commercial and investment banking that was in place for over 60 years, restore confidence in the system, and reduce risk for the American taxpayer.”
The fate of the legislation, and of financial regulation in generally, will likely hinge on the results of the 2016 election.
Although Clinton’s plan to address the issues doesn’t include a full reinstatement of Glass-Steagall’s provisions, as Sanders’ does, Clinton would:
  • Close one of the Volcker rule’s biggest loopholes, involving hedge-fund investing
  • Instate risk fees on large financial institutions engaged in certain activities
  • Increase the government’s regulatory power over “shadow banks” such as Lehman Brothers, whose role in the financial crisis is widely accepted even by those who don’t believe Glass-Steagall’s partial repeal was a factor
On the other side of the aisle, apart from supporting the repeal of Dodd-Frank — including the Volcker rule — most candidates have said they would sign into law the REINS Act (for “Regulations From the Executive in Need of Scrutiny”). The act, sponsored by former GOP presidential candidate Sen. Rand Paul of Kentucky, would require major regulations issued by federal agencies in the executive branch to be subject to congressional approval.
Importantly, REINS would not be retroactive as a law, and the banking regulations opposed by the act’s supporters were not agency-issued, but congressional legislation. Still, the REINS Act would meaningfully inhibit the power of agencies to issue new regulations across economic sectors.
Apart from Paul, Cruz and Rubio are listed as co-sponsors, and all three, along with Bush and Trump, have said they would sign the bill.

The bottom line

Despite its complexity, regulation of the financial sector will likely remain one of the most hotly debated issues of the 2016 presidential race. Depending on the state of the economy heading into summer, the issue may play a strong role in deciding the election.
Devan Goldstein is a staff writer at NerdWallet, a personal finance website. Email: dgoldstein@nerdwallet.com. Twitter: @devan_.
This post was updated. It was originally published on June 11, 2012.


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