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This is an obvious trojan horse for totalitarian central planning. Easier to enact negative interest rate policy when everyone is holding an account at the Fed

by Qasaur 6y ago

This is an obvious trojan horse for totalitarian central planning. Easier to enact negative interest rate policy when everyone is holding an account at the Fed and no one can take out their money since cash is either banned or made severely inaccessible (like in some EU countries). In my opinion private banks are perfectly fine, the problem isn't the idea of independent banks, the problem is government and central banks subsidising losers by bail-outs and the "lender of last resort" mandate while also enacting enormous regulatory barriers that make it impossible for new banks/financial institutions to compete with incumbents.

Spooky23 6y ago
The horse is out of the barn there. Many forms of credit are basically government lons anyway. The current model of thousands of retail and commercial banks isn’t sustainable. Most bank business could be done at a post office or gas station counter. They exist as a sales funnel.
- Qasaur 6y ago
  It is not sustainable when we have an unsustainable and quite frankly insane monetary policy which is being pushed by central bankers. In a sane world credit provision would be decentralised and provided by local banks who are close to the borrower rather than people sitting 1,000 kilometres away. Remember: the most important role of banking is not the provision of payment services (although that is important too), it is to intermediate between savers and borrowers (which is almost always done better in a decentralised system). Indeed the current centralised banking model is quite recent and only started to creep in after the enactment of the Federal Reserve (and the consequent central planning of money and credit) and dramatically accelerated after the end of the gold standard in 1971 and the decoupling of money from sane fundamentals. It's not a coincidence that what followed was extreme consolidation of banks and the quasi-neofeudalism that we see today with large corporates who are able to get credit from large multinational banks which they are close to and then with that money price out small businesses and drive them to bankruptcy. What has been happening for the past 40 years is not natural, and what banks are doing now is almost entirely driven by central banks and not some natural order resulting from the free market (which throughout history has always selected a decentralised banking system with thousands of small local banks). In my opinion we need to protect what little we have left instead of just yielding to the central planners at the Fed, the ECB etc.
  - pm90 6y ago
    > What has been happening for the past 40 years is not natural, and what banks are doing now is almost entirely driven by central banks and not some natural order resulting from the free market (which throughout history has always selected a decentralised banking system with thousands of small local banks). In my opinion we need to protect what little we have left instead of just yielding to the central planners at the Fed, the ECB etc. Yes, we've had sustained economic growth and wealth generation to a magnitude never seen before in the history of the world (although not equitable, but that's a different policy problem). What does it mean that its not "natural"? There is nothing "natural" about the "free market"; its a way we decide to organize resource allocation. There are other ways to do so. Central banks have prevented catastrophic economic failures in the past few decades. I think I like this system better than one which results in "natural" destruction of economy and livelihoods like what happened in the Great Depression.
    - Qasaur 6y ago
      >Yes, we've had sustained economic growth and wealth generation to a magnitude never seen before in the history of the world (although not equitable, but that's a different policy problem). There are many ways I'd like to rebut this, but instead I'll just ask for who and how? Technology has improved that is for sure as it is a incredibly deflationary, but what else has improved in your eyes? The vast majority in the U.S. and some parts of Europe while nominally earning more than what they did in the 1960's are in my opinion worse off than before. Minimum wage used to be 40-50 dollars inflation adjusted, and one lower middle-class salary could support an entire family and provide material comforts. I don't see much of that happening now as I and many others believe inflation has completely ravaged the middle-class in the West and is making it increasingly difficult to get ahead. >What does it mean that its not "natural"? There is nothing "natural" about the "free market"; its a way we decide to organize resource allocation. There are other ways to do so. Central banks have prevented catastrophic economic failures in the past few decades. I think I like this system better than one which results in "natural" destruction of economy and livelihoods like what happened in the Great Depression. We didn't "choose" to have a free market. A free market is simply the voluntary and spontaneous interaction between free individuals, nothing more, and is entirely natural. Central planning and using coercion to force market outcomes, on the other hand, is definitely not natural. It is often taught that we have avoided a scenario like the Great Depression almost exclusively due to the enactment of a central bank, but this is outright false and is borderline malicious historical revisionism (in fact many economists, including some at the Fed, believe that the Fed was actually the cause of the credit bubble during the 1920's which eventually burst in 1929). We had periodic recessions before the Fed, but they almost always resolved themselves quite quickly and wasn't near the impact that recessions have today. Ask yourself this, why is it that recessions seem to get worse and worse and more importantly affect everyone and not just localised sectors in an economy? 2008 was definitely worse than 2001, and the current covid recession is arguably worse than 2008 due to how overleveraged everyone is (a direct consequence of Fed monetary policy).
mempko 6y ago
You honestly think there isn't already central planning? If you believe private banks are perfectly fine, what exactly happened in 2008?
- Qasaur 6y ago
  I should qualify that I think the idea of private banks is perfectly fine. I agree that what we have right now is a quasi-governmental centrally planned banking system and that should definitely be dealt with as it was government (through guaranteed mortgages) that largely encouraged the conditions that lead to 2008.

by Qasaur 6y ago

Spooky23 6y ago

The horse is out of the barn there. Many forms of credit are basically government lons anyway. The current model of thousands of retail and commercial banks isn’t sustainable. Most bank business could be done at a post office or gas station counter. They exist as a sales funnel.

Qasaur 6y ago
It is not sustainable when we have an unsustainable and quite frankly insane monetary policy which is being pushed by central bankers. In a sane world credit provision would be decentralised and provided by local banks who are close to the borrower rather than people sitting 1,000 kilometres away. Remember: the most important role of banking is not the provision of payment services (although that is important too), it is to intermediate between savers and borrowers (which is almost always done better in a decentralised system). Indeed the current centralised banking model is quite recent and only started to creep in after the enactment of the Federal Reserve (and the consequent central planning of money and credit) and dramatically accelerated after the end of the gold standard in 1971 and the decoupling of money from sane fundamentals. It's not a coincidence that what followed was extreme consolidation of banks and the quasi-neofeudalism that we see today with large corporates who are able to get credit from large multinational banks which they are close to and then with that money price out small businesses and drive them to bankruptcy. What has been happening for the past 40 years is not natural, and what banks are doing now is almost entirely driven by central banks and not some natural order resulting from the free market (which throughout history has always selected a decentralised banking system with thousands of small local banks). In my opinion we need to protect what little we have left instead of just yielding to the central planners at the Fed, the ECB etc.
- pm90 6y ago
  > What has been happening for the past 40 years is not natural, and what banks are doing now is almost entirely driven by central banks and not some natural order resulting from the free market (which throughout history has always selected a decentralised banking system with thousands of small local banks). In my opinion we need to protect what little we have left instead of just yielding to the central planners at the Fed, the ECB etc. Yes, we've had sustained economic growth and wealth generation to a magnitude never seen before in the history of the world (although not equitable, but that's a different policy problem). What does it mean that its not "natural"? There is nothing "natural" about the "free market"; its a way we decide to organize resource allocation. There are other ways to do so. Central banks have prevented catastrophic economic failures in the past few decades. I think I like this system better than one which results in "natural" destruction of economy and livelihoods like what happened in the Great Depression.
  - Qasaur 6y ago
    >Yes, we've had sustained economic growth and wealth generation to a magnitude never seen before in the history of the world (although not equitable, but that's a different policy problem). There are many ways I'd like to rebut this, but instead I'll just ask for who and how? Technology has improved that is for sure as it is a incredibly deflationary, but what else has improved in your eyes? The vast majority in the U.S. and some parts of Europe while nominally earning more than what they did in the 1960's are in my opinion worse off than before. Minimum wage used to be 40-50 dollars inflation adjusted, and one lower middle-class salary could support an entire family and provide material comforts. I don't see much of that happening now as I and many others believe inflation has completely ravaged the middle-class in the West and is making it increasingly difficult to get ahead. >What does it mean that its not "natural"? There is nothing "natural" about the "free market"; its a way we decide to organize resource allocation. There are other ways to do so. Central banks have prevented catastrophic economic failures in the past few decades. I think I like this system better than one which results in "natural" destruction of economy and livelihoods like what happened in the Great Depression. We didn't "choose" to have a free market. A free market is simply the voluntary and spontaneous interaction between free individuals, nothing more, and is entirely natural. Central planning and using coercion to force market outcomes, on the other hand, is definitely not natural. It is often taught that we have avoided a scenario like the Great Depression almost exclusively due to the enactment of a central bank, but this is outright false and is borderline malicious historical revisionism (in fact many economists, including some at the Fed, believe that the Fed was actually the cause of the credit bubble during the 1920's which eventually burst in 1929). We had periodic recessions before the Fed, but they almost always resolved themselves quite quickly and wasn't near the impact that recessions have today. Ask yourself this, why is it that recessions seem to get worse and worse and more importantly affect everyone and not just localised sectors in an economy? 2008 was definitely worse than 2001, and the current covid recession is arguably worse than 2008 due to how overleveraged everyone is (a direct consequence of Fed monetary policy).

mempko 6y ago

You honestly think there isn't already central planning? If you believe private banks are perfectly fine, what exactly happened in 2008?

Qasaur 6y ago
I should qualify that I think the idea of private banks is perfectly fine. I agree that what we have right now is a quasi-governmental centrally planned banking system and that should definitely be dealt with as it was government (through guaranteed mortgages) that largely encouraged the conditions that lead to 2008.