Why nationalise the banks? Some see this as purely a defencive move before clearing them of toxic assets and refloating them.
I don't. I see it as strategic option. now deliverable at very low cost to:
1) Bring seigniorage back into state control for the benefit of all - which I believe will be a source of considerable future wealth for the common good;
2) Regulation credit in the future
3) Regain control of the money supply
4) Ensure that the basic transaction recording processes that are fundamental to the operation of a modern state are under common control and that the risk of their failure that existed last October is eliminated
5) Ensure regulation is enforced
6) Put finance firmly back in its place as a support service - not a means of wealth creation in its own right
7) Ensure society obtains the return from the banking sector that is due to it, and which has been denied to it by that sector's abuse of all forms of regulation to date, including taxation.
These aren't opportunistic - these are long term statements of aim for the benefit of society as a whole, but which now have added pertinence now that it is apparent that the existing banking model has failed.
Let's not apologise for nationalisation: let's be clear that nothing else will do - and nothing else can deliver what we want.
But that does not of course mean private banks are dead: I'll be entirely happy to see private operators licenced to provide services in a new banking infrastructure. But let's be clear: they will secure their funds from a central bank, will pay for them, and earn a margin on them within strictly regulated limits. That's an appropriate role for the private sector. Letting them run riot as they have over the last thirty years is not.
Look around you. The evidence is clear. Now what's the problem with adopting this alternative?
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The problem is that no one nominally in power is prepared to countenance such action. The current strategy seems to be a grotesque caricature of the trickle down theory, pouring (borrowed) money into the financial sector in the vain hope it will somehow leak into what is quaintly termed the real economy.
The so called institutions should have been treated like any other business and placed in administration until their proper role, that of facilitating payments, was able to be restored. The staff and infrastructure were all there, and presumably wanted to continue to be there. The prime minister said it was vital to save ‘the’ financial system when what is required is to develop ‘a’ financial system which is servant rather than master to its host.
Strangely enough, what you suggest could well be termed a casino economy (that stale metaphor beloved of the current rash of stable door journalism), casinos are highly regulated, work on strict margins (‘the edge’) and (despite this governments enthusiasm to deregulate them)are off limits to vulnerable sections of the economy.
[…] Oh dear. […]
“…if we ever again are going to have a decent money, it will not come from government…because providing the public with good money which it can trust and use cannot only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject.”
I used to believe that Seignorage reform was a universal solution to the modern debt-mony system, then I actually began learning about it.
What you propose is extremely dangerous in my opinion now and we now need a completely different approach.
It should have been done months ago.
But it must not be done in such a way that any nationalised institution has to disadvantage itself, for the sake of EU ‘competition’ policy or EU commitments to trade liberalisations, or whatever limiting, corporate-welfare tricks a corporate-welfare EU has installed.
Well since Hayek and the mont perelin mob have been the intellectual vanguard of the mess we now find ourselves in, I doubt very much they have anything useful left to offer.
They’ve had their shot, hopefully.
I’m sorry Paul – I see no relation. For all their attempts and marginal successes at persuading politicos of their ideas, it is the fiat money/central bank system against which so many of them railed that has devalued money 98% since 1913, impoverishing millions in the process.
Where complementary currencies, which I guess are about the closest thing to private money systems, have been tried, they seem to me for the most part to have been quite successful in their aims.
Whenever the state printing presses have been turned on (and creating vast quantities of new state debt is just as bad – worse in fact as it will have to be bought back with interest by future generations of tax payer) it has resulted in disaster.
This latest inflation – created with the very debt money Friedman and Hayek so opposed – is just the latest example. The problem with Hayek’s idas – certainly on private money systems – is that they have been paid only lip service (not even that for the most part) by politicians of both right and left who realized that to adopt them properly would mean a significant diminution of their power to manipulate things to their advantage.
I think you under estimate their ‘successes’, hayekian /friedmanite free trade anti state neoliberalism has been a valuable tool in the class war of the last thirty odd years. I seem to remember a prime minister of our’s stating there was no alternative to it. A very big fan of these ideas.
They were quite happy to use Chile (at the point of a gun)as a laboratory for their crackpot, inhuman policies, wrecking the pension system, eliminating free public education, cratering gdp, pushing unemployment from 4 to 22%, creating a highly polarised society (116th most unequal out the world’s 128 countries in 2007)and callously ignoring the bodies piling up around them.
And of course that old devil called inflation rose to 375% in ’74.
Hayeck said at the time:
“My personal preference,leans toward a liberal dictatorship rather than toward a democratic government devoid of liberalism.”
So much for the free trade= freedom claptrap.
Friedmanite (perhaps now reformed but unrepentant) wunderkind Jeffrey Sachs did the same number on Bolivia before overseeing the Russian ‘shock therapy’.
Their rampage was hardly something to celebrate- life expectancy dropping, population shrinking,
4 million to 74 million moved into poverty and the construction of a tiny, grotesquely rich criminal elite.
Friedman was quite happy to advise Den Xiaoping in creating the considerably less than free Chinese hybrid of totalitarian capitalism.
Despite their pious rhetoric concerning fiscal rectitude and freedom, they have consistently made common cause with the most egregious of over powerful, brutal governments.
I don’t hate their worthless, dysfunctional ideas, they are welcome to them. I hate the fact that everywhere they have had their policies enforced has brought death, immiseration and inequality.
And all that free trade cobblers has increased the power and perniciousness of the debt money system they apparently deplore.