BankNotes – August 2018

It is time to re-examine the origin of the word — ruminate. To do so we will have to understand “Cow Biology”: A cow has four stomachs. The rumen is the first — and by far — the largest compartment of the stomach of a ruminant from which food is regurgitated for rumination. She eats grass and chews on it in the first stage of digestion. She swallows it and it passes into the second stage of digestion in the rumen where it remains for a certain period.

LMR – August 2018

One thing that Mises stressed when considering economic theory in the banking business was to always keep these two activities separate because it was the only way to understand how each function works. This was also important because modern banking now includes other profitable activities, such as the purchase and sale of securities (which has morphed into what we know as “investment banking”), lockbox banking (sometimes known as “factoring”), and the renting out of safety deposit boxes.