Add New York Senator Kirsten Gillibrand to the list of big name Democrats who want the U.S. Postal Service to double as a bank. The potential 2020 contender is rolling out legislation today that would require post offices to offer their customers basic financial services, such as checking and savings accounts and small, short-term loans, that many Americans currently can’t access affordably. While the idea of postal banking has been backed by progressives like Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont—both likely presidential candidates—Gillibrand’s bill gives an important policy objective a high-profile, useful boost.Compare Girobank (UK).
Slate
Kirsten Gillibrand Unveils Her Ambitious Plan to Turn the Post Office Into a Bank
Jordan Weissmann
Adding lending to the ideal of a Postal Bank is a poison pill as is paying positive interest.
ReplyDeleteWhat we need then is NOT a Postal Bank but a Postal Checking and Debit Service that does not make loans and does not pay interest.
And to encourage the population to use it, let's abolish all privileges for the banks including government provided deposit insurance and free (not to even mention IOR!) storage of "their" fiat at the cb.
Unprincipled solutions are doomed to failure eventually.
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ReplyDeleteThat such a widespread need for short-term loans exists is an indictment of our economic system and that need should be eliminated with GRANTS, such as a UBI, not loans, from the monetary sovereign.
ReplyDeletePostal banking does not preclude UBI. Screw the predatory banks and lenders, they are in the same class as health insurers.
ReplyDeleteThis has even less chance of happening than single-payer, UBI, JG, etc., but is a great concept nonetheless.
It's a doomed concept if unprincipled.
ReplyDeleteA true solution is one no can attack without revealing their hypocrisy or corruption, e.g. why are banks allowed free checking accounts at the cb, much less paid interest on reserves (IOR)?
The aim is to put an end to payday lenders and the outrageous interest (rent) they extract.
ReplyDeleteI know what the aim is but lending is NOT a proper function of a monetary sovereign since it is bound to violate equal protection under the law unless the loan terms are so forgiving as to constitute an outright grant ANYWAY.
ReplyDeleteAnd why further the misconception that a monetarily sovereign government needs to be repaid in the first place?
The reason it violates equal protection under the law is because lending by the monetary sovereign is new fiat creation. But fiat creation should be for the general welfare - not for those most likely to repay it.
ReplyDeleteRather, not only for those most likely to repay it.
ReplyDeleteWe can nail payday lending rates by high NEGATIVE interest rates at the Fed for banks and other large accounts but with a $250,000 or so negative-interest-free exemption for individual citizens. Bank reserves will then be a hot potato the banks will be desperate to lend out* or lose anyway to the high negative interest.
ReplyDelete*Yes, bank reserves CAN be lent out - to other accounts at the central bank.
Moreover, when all citizens have inherently risk-free checking accounts of their own at the Federal Reserve, some significant but entirely ethical wealth redistribution can be achieved by the progression abolition of government-provided deposit insurance and other privileges for the banks - without wrecking the economy.
ReplyDelete"It's a doomed concept if unprincipled."
ReplyDeleteIt's a doomed concept because government of the banks, by the banks, for the banks will never allow it.
Equal protection is irrelevant, there isn't any.
From the St. Louis Fed:
ReplyDeleteThe Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies
Abstract: We characterize various currencies according to their control structure, focusing on cryptocurrencies such as Bitcoin and government-issued fiat money. We then argue that there is a large unmet demand for a liquid asset that allows households and firms to save outside of the private financial sector. Central banks could offer such an asset by simply allowing households and firms to open accounts with them. Finally, we conclude that a central bank will not issue cryptocurrencies in the sense of a truly decentralized and permissionless asset that allows users to remain anonymous. from "The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies" [bold added]
ReplyDeleteWhat is likely to happen is that government address the issues that crypto does in a way that obviate anonymity, and then outlaw crypto. They are already taking a bead on cash for a similar reason. Governments don't like anonymity, which the other side calls "privacy."
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ReplyDeleteWhat is likely to happen is that government address the issues that crypto does in a way that obviate anonymity, and then outlaw crypto. Tom Hickey
ReplyDeleteIn addition to a single, negative-interest-free checking account for each citizen up to, say, $250,000; additional anonymous accounts, both on-demand (checking/debit) and term (savings), but subject to negative interest, could be made available to anyone.
As for the use of crypto (and cash) for tax evasion purposes, I'd argue that taxes that can be evaded are not proper taxes anyway since they violate equal protection under the law in favor of tax cheats. A land tax is an example of a tax that cannot be evaded.
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ReplyDeleteIt's a doomed concept because government of the banks, by the banks, for the banks will never allow it. Noah Way
ReplyDeleteDe-privileging the banks must be done with care, as in removing a cancer must be done with care, but it is certainly doable and a lot of injustice can be reversed in the process.
"All the forces in the world are not so powerful as an idea whose time has com." Victor Hugo from https://www.brainyquote.com/quotes/victor_hugo_136258