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Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

greatdemocracyinitiative.org

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Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#31

Post by closeparen »

RobertoG wrote: post #4

This is an interesting proposal. Private banks have two very important functions in society: they provide the infrastructure for the payment system and they control credit. This proposal would disentangle those functions making, I think, a more robust financial infrastructure. The payment system is, by its characteristics, a natural monopoly, and it's so important that makes sense that it become public. If that was t…

Customers expect to have use the of the money they deposit with you, so once you take deposits you are the payment system.

“Robust banking system” is inherently tied to reserve ratios, or having the deposits on hand to cover the loans you’re writing.

A bank that only writes loans and doesn’t have deposits is the opposite of robust. If any bank gets to do this it would be the central bank. Payment facilitation is less of a superpower and can be more safely entrusted to the private sector.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#32

Post by jimbob45 »

yholio wrote: post #17

Banks as private middlemen providing society with a payment system is an outdated and baroque system. Today, the whole payment system of an average nation can work over a single cluster of computers in the basement of the central bank, there is absolutely no reason not to provide this service for free to all citizens and businesses since it's a critical part of living in a society. The whole superstructure of banks,…

>Some resources should be spent on preventing laundering and fraud with the system, but this needs to be done in the banking system as well, with the costs passed on to the consumers.

I feel that you glossed over the most important part of credit card companies. I would say 100% of the reason I have a credit card is their diligence in preventing and solving fraud on my account. I would imagine the same to be true for many financially responsible HN readers as well.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#33

Post by reaperducer »

TMWNN wrote: post #2

Is there a place in the US, outside maybe some really rural areas, where a credit union isn't available that doesn't offer accounts to the general population? In my experience credit unions' checking accounts are free. (I realize that this proposal is something slightly different, but I wanted to preempt the inevitable "poor are unbanked because of fees" claims.)

There are lots of people who cannot get a bank or credit union account for one simple reason: Lack of identification.

I know it's hard to believe in today's tech bubble, but there are hundreds of thousands of people in America who simply don't have any identification. They might have a Social Security number they remember, but that's about it.

I'm not talking about hobos or criminals, but just people who choose to live a different lifestyle.

I was first introduced to this society when me and a bunch of friends cycled across the continent. We ran into all kinds of interesting — and very nice — people who just weren't on any official radar. Drifters, in a sense. People who just enjoy the freedom of working in a coffee shop in one city for a few months, then a bar in another city for a few months, then camping for a few months.

I'd forgotten about this subculture until a couple of weeks ago when the New York Times did a photo piece about the people who still ride Amtrak during a pandemic. One couple that was interviewed had to take Amtrak because they didn't have any official documents that would let them get on a plane.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#35

Post by [deleted] »

yholio wrote: post #17

Banks as private middlemen providing society with a payment system is an outdated and baroque system. Today, the whole payment system of an average nation can work over a single cluster of computers in the basement of the central bank, there is absolutely no reason not to provide this service for free to all citizens and businesses since it's a critical part of living in a society. The whole superstructure of banks,…

[deleted]

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#36

Post by _gx90 »

Spooky23 wrote: post #29
_gx90 wrote: post #25

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 ba…

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.

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.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#37

Post by hogFeast »

hammock wrote: post #26
marcell wrote: post #16

Earlier quoted context omitted.

The direct quotes from this article can been found elsewhere on the internet. They collate them to provide a coherent narrative which is backed up by the OP article. This is an ad hominem argument and not compelling in this case.

It's really hard to convince ZH detractors. A naive perusal of the site is definitely packed with of, at its most charitable interpretation, a bunch of gobbledegook, and at its least charitable, pure propaganda. But between the lines there is a lot of truth, and importantly, many facts and analysis that you will never find in any mainstream sources, neither NYT nor Fox News nor the Atlantic nor whatever else. It take…

Yep: I worked in finance for years, have degrees in economics...and their coverage is useful.

To name one example of many, they were saying that JP Morgan was rigging commodities markets for years. I know people not in finance who heard that ZH story (years ago now, when ZH was in their pomp): lololol, tinfoil hat...that JPM were rigging commodities markets was known in finance for literally decades, it was common knowledge (I didn't work in commodities and heard about it, JPM were just fined $1bn for it).

I think people get confused because they have trouble signal from noise, particularly from people who are obviously biased (this is a key ability in finance, almost all the information you receive is conflicted, and you have to understand human nature at a deep level i.e. understand what people lie to each other about, what they lie to themselves about, etc.). I am totally fine with biased coverage (everyone is prone to biases, it is just some people deny that to themselves/others). I don't have to believe everything they say and, compared to every other finance publication, they really do cover stuff that no-one else is covering. Yes, it is sensational and their political coverage is usually insane (tbh, it is quite funny)...but, again, that doesn't mean they are wrong about everything or add no value (btw, almost every economist I have ever met has had bizarre political views...people who work in finance usually do because being an expert in one thing does not make you an expert in all things).

In my experience, people who talk about news not being reliable also believe all kinds of insane shit that appears in the mainstream media. Believing that you are hyper rational is, in itself, not rational.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#38

Post by RobertoG »

closeparen wrote: post #31
RobertoG wrote: post #4

This is an interesting proposal. Private banks have two very important functions in society: they provide the infrastructure for the payment system and they control credit. This proposal would disentangle those functions making, I think, a more robust financial infrastructure. The payment system is, by its characteristics, a natural monopoly, and it's so important that makes sense that it become public. If that was t…

Customers expect to have use the of the money they deposit with you, so once you take deposits you are the payment system. “Robust banking system” is inherently tied to reserve ratios, or having the deposits on hand to cover the loans you’re writing. A bank that only writes loans and doesn’t have deposits is the opposite of robust. If any bank gets to do this it would be the central bank. Payment facilitation is less…

>>"A bank that only writes loans and doesn’t have deposits is the opposite of robust."

Maybe they are, but modern private banks already do that.

Before a bank concede a credit it's just checking if it's a good business, not if it has enough deposits or enough reserves.

When giving a credit, banks, are, basically, creating money that it's destroyed when the debt is payed.

A posteriori of giving the credit, the bank will search (assuming it have not already enough) the legal reserves requirement for the new created money.

Note, that this is the opposite of what we normal hear. In reality, first come the credit, then the reserves.

The bank that gave the credit, trying to meet its legal obligations of reserves, will try to get reserves loaned from other banks, creating demand for reserves in the inter-bank system. If the Central Bank does nothing, the added demand would increase the interest rate.

Modern Central banks don't try to control the quantity of money in the system, but the interest rate. If the are not enough reserves for the existing demand, in order to keep the interest rate in their target, the central bank will increase the reserves in the system.

So, deposits are not necessary, otherwise, the quantitative easing programs of the last years, would be impossible.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#39

Post by _gx90 »

MrsHippy wrote: post #34

The next step would be allowing citizens to vote directly on the laws that govern central bank policy.

Hah, now that is something I'd like to see. I don't have my hopes up though because elitist central bankers don't like to be transparent or be subject to public scrutiny - all documents from the Swedish Riksbank in my country are classified with absolute secrecy (same level as military secrets) and cannot be inspected even by members of parliament as that may threaten "monetary stability". This is in a country where everyone's tax returns are public by default.

Re: Central Banking for All: A Public Option for Bank Accounts (2018) [pdf]

#40

Post by pm90 »

hammock wrote: post #24

So "Great Democracy" is how they are going to wrap this, huh. "This" being helicopter money AKA digital dollars AKA direct fiscal injection into private Americans' bank accounts. Been a long time coming. Who is The Great Democracy Initiative, and where does their funding come from?

Can we debate the idea on its merits rather than immediately trying to guess at ulterior motives?
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