"Most banks would instantly be out of business". "would result in disastrous inflation". Boohoo. We should stop thinking of finance as an end in and of itsel

"Most banks would instantly be out of business". "would result in disastrous inflation". Boohoo. We should stop thinking of finance as an end in and of itself, and more for the purposes of achieving other goals, whether individual or social. In that case, it's both acceptable, and probably in some cases desirable, to lose money in the venture. If the private banking industry is vapourized, the state can step in, and gains an incredible new leverage to achieve policy goals. It would be the turbocharged version of things like green pledges. Rather than saying "we convinced some big banks to not back new coal projects, so you'll have to pay a few percent more interest/deal with second tier lenders to build the plant" it's simply "there's only one lender, and they said no to coal effective 2021, so you'd better start a bake sale to raise $400 million." or "The state will give you a 1% rate loan to build your new job factory in a downtrodden rust-belt city, or a 15% loan to build it in San Jose." Even inflation, I think we maybe need to think about it less as an abstract badness indicator. As they say, "money can be exchanged for goods and services", so let's figure out how to ensure access to goods and services even in economic turmoil, rather than worry about the numbers on the notes. On the short term, if you're not Zimbabwe or Venezuela, inflation is noise. If I'm saving for a few months to buy a RTX3080 or the down payment on a car, even if it's 20% per year inflation, that's not going to be a huge damper on my plans, so long as wages trend with it. There's plenty of things we buy with that degree of price volatilty already. Subsidized staple goods can help further damp the social consequences. On the medium term, inflation is basically a hedge strategy for everyone who took out non-jubileed debt. In some ways, this could kickstart some consumer demand to exploit it. Every year, your fixed-rate mortgage or car payment gets cheaper, again, so long as we index wages. I suspect we already see this-- how many people don't move because they don't want to leave their 15-year-old $120k mortgage on a house now worth $400k? On the longest terms, we have things like home deposits, college funds, and retirement plans. A state intervention could provide risk-mitigation strategies-- for example, broad deployment of inflation-indexed investment programs for consumers. Something like the old "Series I" savings bonds, but with bigger subsidies and better marketing. Or development of "guaranteed benefit" prepaid programs. Sign up now, pay for 15 years, and you're guaranteed a condo in Boca Raton when you turn 60/tuition at Harvard for your kid when he turns 18, no matter what they would cost on the open market at that time.