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You don’t have to use a bank. Cash is one option, and perhaps someday soon a self managed/federal CBDC. You can also put your cash into money market funds that

You don’t have to use a bank. Cash is one option, and perhaps someday soon a self managed/federal CBDC. You can also put your cash into money market funds that invest in T-Bills, which is what anybody with some common sense and a large amount of money should do. But in this world entities that offer you a return on your money will still exist, e.g. banks. If I can register my cash and you pay me x% per year, that’s better than getting 0. So banks would form regardless. Banks make loans and create credit which allows the broader economy to grow. Better to have properly regulated private sector entities with skin in the game making lending decisions than having the federal government do it. If you take a big chunk of credit creation and issuance out of service, the economy is likely to regress fairly significantly. Clearly the existing bank regulations aren’t sufficient though.

water-your-self 4y ago
>If you take a big chunk of credit creation and issuance out of service, the economy is likely to regress fairly significantly. Similarly, ceasing steroid use will reduce muscle mass.
- adam_arthur 4y ago
  Imagine trying to buy a house without a loan. Or start a business without cash up front. We can move to a world without credit, but standard of living for people will drop significantly. Look at what happened when they tightened lending standards into a recession in the 1930s. The key is to find the right balance in regulations to make the system robust
  - deleted 4y ago
    [deleted]
  - TheOtherHobbes 4y ago
    Imagine a world where people had enough cash to do those things without needing a loan. No doubt it would be "inflationary" or some other nonsense, but the reality is that banking is a form of deliberate rationing and enforced political hierarchy. The financial industry exists solely for its own benefit, at spectacular cost to everyone else - not just by making significant capital almost cripplingly expensive for most of the population, but also by acting in irresponsible self-serving ways which everyone else has to pay for.
    - mablopoule 4y ago
      How is giving financial leverage to people with not enough cash in the bank, but a solid forseeable revenue stream "a form of deliberate rationing and enforced political hierarchy"? It's like wishing that healthcare system wouldn't exist because you imagine a world where people were just healthy instead.
      - spopejoy 4y ago
        Because the current overinflated housing market is a direct consequence (in the US) of loosening credit requirements for mortgages, the product of a herculean lobbying effort by investment banks in the late 70s to get the government to allow them to securitize mortgages (that is, immediately sell the off after origination), with the mortgage interest deduction (a subsidy to banks) the cherry on top. Mortgages used to be boring and conservative, house prices were rational, but financial middlemen didn't make any money on it so it had to stop. It took the Reagan administration installing the Merrill Lynch CEO as head of Treasury to get it done. The 2008 financial crisis and today's overinflated shitshow of a housing market are the direct result, along with tons of wealth creation for the rentier class.
        hgdfhgfdhgdf 4y ago
        The $175,000 brand new 3 bedroom homes in Houston are overinflated? There must be something else that's causing the inflation.

water-your-self 4y ago

>If you take a big chunk of credit creation and issuance out of service, the economy is likely to regress fairly significantly. Similarly, ceasing steroid use will reduce muscle mass.

adam_arthur 4y ago
Imagine trying to buy a house without a loan. Or start a business without cash up front. We can move to a world without credit, but standard of living for people will drop significantly. Look at what happened when they tightened lending standards into a recession in the 1930s. The key is to find the right balance in regulations to make the system robust
- deleted 4y ago
  [deleted]
- TheOtherHobbes 4y ago
  Imagine a world where people had enough cash to do those things without needing a loan. No doubt it would be "inflationary" or some other nonsense, but the reality is that banking is a form of deliberate rationing and enforced political hierarchy. The financial industry exists solely for its own benefit, at spectacular cost to everyone else - not just by making significant capital almost cripplingly expensive for most of the population, but also by acting in irresponsible self-serving ways which everyone else has to pay for.
  - mablopoule 4y ago
    How is giving financial leverage to people with not enough cash in the bank, but a solid forseeable revenue stream "a form of deliberate rationing and enforced political hierarchy"? It's like wishing that healthcare system wouldn't exist because you imagine a world where people were just healthy instead.
    - spopejoy 4y ago
      Because the current overinflated housing market is a direct consequence (in the US) of loosening credit requirements for mortgages, the product of a herculean lobbying effort by investment banks in the late 70s to get the government to allow them to securitize mortgages (that is, immediately sell the off after origination), with the mortgage interest deduction (a subsidy to banks) the cherry on top. Mortgages used to be boring and conservative, house prices were rational, but financial middlemen didn't make any money on it so it had to stop. It took the Reagan administration installing the Merrill Lynch CEO as head of Treasury to get it done. The 2008 financial crisis and today's overinflated shitshow of a housing market are the direct result, along with tons of wealth creation for the rentier class.
      - hgdfhgfdhgdf 4y ago
        The $175,000 brand new 3 bedroom homes in Houston are overinflated? There must be something else that's causing the inflation.