The squirrel does not store food as a dietary device. The patience “gene” The source of human self-command, or patience, appears to be neurological. Recently, this has become detectable using brain imaging technology. That suggests the pre-frontal cortex of the brain is key to self-control and patience in humans. 2 The pre-frontal cortex develops with age, being least developed in small children. In other words, neurology has confirmed the suspicions, and frustrations, of generations of parents with impatient toddlers. The pre-frontal cortex is also the part of the brain which has developed most recently. Human skulls developed from prominent brow ridges of Neanderthal man to the high straight foreheads of today’s homo sapiens to accommodate the growth of the pre-frontal cortex. That tells us the patient part of the brain was close to being fully developed perhaps around 30–50,000 years ago. Today, although the pre-frontal cortex in humans is no larger than in a gorilla, its evolution has resulted in patience having become a distinctive, perhaps unique, human attribute. As such, it is not too big a leap to imagine patience having had important implications for the evolution of human systems, economic and social. Take economic growth. The NeoClassical growth model in economics provides a simple link between patience and development. Patience generates savings by households which in turn finances investment by companies. And capital accumulation by firms, growth theory suggests, is then the prime driver of future output. Countless empirical studies, across time and countries, have confirmed that theory.

In the case of a floating rate NAV, fund managers faced with large redemption requests typically sell their most liquid assets first, leaving the remaining investors with a riskier, less-liquid portfolio and a greater risk of loss. Similarly, with a stable NAV and a capital buffer, unless the capital buffer were very large, there would still be an incentive to run because the buffer might not prove large enough to shield the investor from loss. Because the second option is the only one that actually creates a disincentive to run, as I stated before the FSOC proposal, I view it as the best one for financial stability purposes. The requirement that investors who withdraw funds must maintain a small balance for a short period to absorb near-term losses would deter investors from pulling out at the first glimpse of trouble and make the system safer. The modest withdrawal restrictions, which create a “minimum balance at risk”, might be set at 5 cents on the dollar, based on the high-water mark of recent holdings, with more favorable treatment for small retail investors.15 A minimum balance at risk of loss would also increase market discipline. Corporations and other sophisticated investors would have an incentive to monitor risk-taking more carefully,  13  Financial Stability Oversight Council. 2012. “Proposed Recommendations Regarding Money Market Mutual Fund Reform”. (November). http://www.treasury.gov/initiatives/fsoc/Documents/Proposed% 20Recommendations%20Regarding%20Money%20Market%20Mutual%20Fund%20Reform%20%20November%2013,%202012.pdf  14  See William C. Dudley. 2012. “For Stability’s Sake, Reform Money Funds”. www.bloomberg.com, August 14. http://www.bloomberg.com/news/2012-08-14/for-stability-s-sake-reform-money-funds.html.