Tuesday, May 28, 2013

Neil Wilson — Making banks work

I think it is probably time to outline how I would reconfigure the banking sector in the UK.
To do that first you have to understand what a bank is and what the point of them are from the perspective of an economic system. For this I refer to Minsky's work on What Banks Should Do.
Making banks work
Neil Wilson


Clint Ballinger said...

Nice post Neil, a clear explanation of the issues at stake and good solutions. I think there is finally some much needed convergence on bank reform, and it all fits in nicely with MMT as well.

Basically, 1) make sure there is a safe narrow banking system for those who want it (which will be a large part of the medium to poor) 2) let lending partly be by completely risk free (to society) maturity-matched loans to the extent there is demand for this and 3) let operatives loan out state money for profit to meet additional demand for loans as long as they do so responsibly, which can be ensured by limiting the asset side and revoking licenses liberally.

Not far off from my conclusions here( Towards a Pure State Theory of Money )just arrived at differently.
My post needs to be developed further, but Neil’s post says some of the same things I would have anyway.

Roger Erickson said...

Isn't this just one aspect of "Making Democracy Work"?

The banking system works the way it presently does exactly BECAUSE there's a endowed sub-class running a bureaucracy whose life depends on finance as-is.

We saw that lobby at work during the 2 pitches it took to ram TARP through Congress. [Rt now, if it came down to a battle between London bankers and the Queen Mum's hat collection ... I'd bet on the bankers winning!]

Without a prior treatise on "Making Campaign Finance & Lobbying Work" I just don't see any methods available to make politicians make banks work.

There are multiple necessary-but-not-sufficient steps to making any complex system CAPTURE a more organized state.

It's never simple, or else it wouldn't be a complex system.

Clint Ballinger said...

"Look at some of the people who promote the ideas behind those proposals and the point above and you'll understand one of the reasons why support and funding is forthcoming."

Any sources or links on this?

Clint Ballinger said...

Neil likes to make unsupported allegations and then delete comments that point this out. The pat I could recover:
4 June 2013 07:35
Clint Ballinger said...
Please tell me you didn't delete the last comments? They were constructive and fair.
Where did they go?

4 June 2013 09:07
Clint Ballinger said...
And the sources or links I asked about?
You can't insinuate there is something more behind things like PM (""Look at some of the people who promote the ideas behind those proposals...") and not give some sources.
Kotlikoff, Dyson and others are genuinely trying to develop a fairer system. There seems to be zero corporate, bank, or mainstream political backing to them.

If you are going to suggest otherwise, you should make clear your sources.
Otherwise it is just hot air.

4 June 2013 10:33 Clint Ballinger said...
PS I am also referring to your statements elsewhere like this one on PM type proposals "There is a reason these ideas are being funded in a propaganda like fashion. Somebody is looking at a big payoff down the line."

Please, any source on who these people (banks?,bankers? financiers?) looking for a 'big payoff' are? As far as I am aware, Positive Money, Kotlikoff and others are barely funded at all, and either simply write academic papers on this subject or (like PM) run on a shoestring.
Besides from you, I have never, not once, heard or seen any statement by anyone that Kotlikoff or PM or similar groups are funded by any substantial outside source.
Yet you keep repeating this as if it is a fact.
Please - give us some sources, or links to sources, of any evidence of their funding (of the nature you allude to) if you have any.

4 June 2013 10:40

[Neil asked “Who put it in legislation?]
Well, first of all, it failed, right? No big backing from the special interests you allude to?

Anyway -I haven't followed British politics lately, but I think it was the idiosyncratic libertarian-ish Douglas Carswell?
Libertarian views often overlap with progressive views, especially on banking. Just look at Austrians on maturity matching, or the huge overlap between M Friedman and his progressive contemporaries.

No - there is nothing to the fact a libertarian supports progressive bank reform.

Again, give us something, ANYthing, to support such a strong assertion that "There is a reason these ideas are being funded in a propaganda like fashion. Somebody is looking at a big payoff down the line."

Give us sources or links on who this "somebody" is, and/or of the funding - or it is merely your quirky and very biased opinion.

Clint Ballinger said...

4 June 2013 16:39
Andrew Jackson said...
“Look at some of the people who promote the ideas behind those proposals and the point above and you'll understand one of the reasons why support and funding is forthcoming.”

Seriously? I almost fell off my chair laughing! Positive Money is the best funded out of any of the monetary reform groups and we operate on a shoestring. Last year our total income was £68,000, half of which came from small individual donations (£8 a month average). The other half came from charitable trusts.

Of course you could have found this in a couple of minute on the PM website (available here: (http://www.positivemoney.org/about/finances-funding/), it’s a shame that you choose to spread misinformation instead.

The most powerful people and institutions in the world today are the banks and the bankers - they are the ones most against the Positive Money proposals.

4 June 2013 16:49
Andrew Jackson said...
And to your point on concentration of wealth, in fact the complete opposite is true. As the new scientist recently pointed out:

“An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy. … When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.”


But then it’s hardly surprising – in fact it would be surprising if giving the power to create money to banks led to anything other than a concentration of wealth and money in the hands of banks and bankers.

4 June 2013 16:49