Bob Matter’s thoughtful comments need a response, and I can’t figure out how to properly format one without doing a new post, so here it is.
1. Not enough to time to implement a plan of such scope.
There’s enough time to price and purchase opaque derivative securities but not to open 700 straightforward banks? There are so many out-of-work bank staff– and more to come. I agree that this is a considerable task, but there are lots of people who know how to do it, and would have started their own banks already if they could raise the capital.
2. Too much added expense. 700 more buildings to rent, heat, light, and maintain, 700 sets of phone lines to pay for, computers, personnel, etc. etc.
We have a banking infrastructure in place now. There is plenty of vacant commercial space pretty much throughout the country. Of course there will be a cost, but each bank is a billion-dollar institution before they even take a deposit; they could spend 1/10th of 1% for physical facilities and startup staff.
3. Even this plan would ultimately lead to failure. The core problem of allowing private ownership of real property needs to be addressed. Until that time we will just keep repeating the boom-bust cycle. Interested parties can read the solution to today’s financial “crisis” in _Progress and Poverty_ by Henry George.
Henry George explains the root cause of economic meltdowns, and they will not be avoided until something like his proposal is put into effect. If he were here today, what would he propose as a way out of this depression?
I claim only that my proposal is far better than what the authorities propose. I don’t claim that it is better than doing nothing, which would result in considerable inconvenience but probably a quicker recovery than what we’ll get.
What’s really encouraging now is how much opposition is appearing to the whole idea of any bailout. I wish that meant it was unlikely to happen.
One thought on “700-bank solution isn't better than nothing”
Yes, this would be the same basic idea (as I understand it) behind the mutual bank proposed by Mutualists. Imagine if an idea that was supposed to happen as gradual revolution could happen all at once because of the capitalists screwing up. What a boon!