3 thoughts on “Should banks be a public utility?

  1. Ian F Clark

    The banks should be a public utility. They are currently the only organisation working under Socialism (being supported by the public purse) while we (the rest) labor under the usury imposed by these besuited punks who vote themselves huge bonuses and drive decent people to the wall. Let the punishment fit the crime — greedy fingers (metaphorically) deserve to be broken.

  2. brodix

    While the movement toward public banking is gaining support and understanding from those pushing for change, it might be further legitimized by developing the broad historical and ecological context. Government is equivalent to society’s central nervous system, but banking and finance are equivalent to its circulatory system. The situation is very similar to replacing monarchy with democracy, in the sense that monarchy was government as private enterprise and democracy is government as public trust. A market needs a medium of exchange in order to function and when this medium is a private player in the market and not part of the playing field, then everyone else are sharecroppers on its ground.

    There are two primary components to the circulatory system: The pathways, streambeds, vascular/arterial systems, are equivalent to the banks and financial processes guiding this process. The other component is what actually flows through these systems; The blood/money/water that is the actual carrier of energy exchange.

    While there is a strong focus on making banking a form of public utility, there is less attention on the nature of money itself. Recently Naked Capitalism did a post on how economists could never find emergent monetary systems among indigenous cultures, but still assumed these must have happened at some point, irrespective of the evidence. This is because there is a misunderstanding of the nature of money. The working assumption is that it is notational value, but the reality is that it is notational trust. It is a contract, not a commodity. That is why there is no need for it among primitive cultures, because they are fundamentally based on organic trust and when that trust breaks down, the effect is not bankers, currencies, lawyers and contracts, but schism and warfare. Only when societies grew larger and diverse enough that they could not rely on organic trust, but still had to coordinate and function as ever larger groups, did the need for contracts and common currencies come into being.

    The entire notion of banking and money, as we are currently experiencing it now, is simply due to a misconception of money as a form of commodity. One which can be manufactured by creating demand, ie. debt. Thus the tendency among bankers to do whatever possible to find those willing to accept debt. It is then the tendency of those with large amounts of these notational promises to do whatever necessary to enforce their writ on the larger economy and society.

    If we recognize money as a form of contract, then it becomes apparent that only as many promises can effectively be made, as can be kept. There are limits on the amount of effective investment that the economy can support and supplementing this with infinite amounts of zero sum gambling only creates bubbles. If people began to understand that money is only a system of drawing rights to communal productivity and is a form of public commons, similar to roads, they would be much more careful what value they draw from relationships and hard assets to convert into money. This would allow other forms of organic exchange and storage of value to develop and lead to stronger communities and healthier environments. If you really think that paper in your pocket is yours, just try printing some and see who holds the copyrights.

    The banking system took over government at the inception of its financial coming of age, around the time of the Civil War. There is no real budgeting process built into the system. It is designed to create debt, by congressional bills that bunch desires and need, to only be passed or vetoed by the president. Actual budgeting would require the congress to order these expenditures and allow the president to draw the line at affordability. A possible method for congress to prioritize would be to break the bills into their individual items and have every legislator assign a percentage value to each one, then re-assemble them in order of preference. Among other effects, this would serve to break the monopoly of power held by the congressional leadership.

    This would likely reduce local funding, which would be replaced by community banking systems that directed local wealth into local infrastructure.

    Since the economy does have natural limits on investment, retirement pools, such as social security, make sense as a form of investment. Since money coming in funds current retirees, there is no need to find ways to store it within the economy and those participating understand its returns are a function of future income and not current income to the system. Making it fairly local and part of the community structure would reduce overhead and increase trust.

    When that big old oak tree falls over, the future belongs to the acorns.

  3. scottindallas

    There are three markets, not free markets.

    There’s a Free market: the customer has alternatives, and many competitors to choose from, this makes a market where the customer is always right.

    There’s a Professional market: no alternatives, though many competitors. The customer can’t “be right” as they are buying expertise. This market is regulated by fiduciary law.

    There’s the Utility market: no alternatives, no competition. The customer is powerless, the market must be regulated, if not socialized.

    There’s a hybrid market Professional Utilities. Here we conflate the ubiquity of utilities and the complications of the professional market. The fiduciary role is perverted as the payer/customer are divorced. There are two examples retail Banking, and Major Healthcare. (even Hayek supported national health care)

    This paradigm is a good metric for where gov’t belongs, in the utility market, and where it should avoid, the professional and free market.

Comments are closed.