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Guest Post: Do We Even Need a Banking Sector? Not Any More

Tyler Durden's picture





 

Submitted by Charles Hugh Smith from Of Two Minds

#404040;">D#404040;">o We Even Need a Banking Sector? Not Any More
 

An automated banking utility has no need for parasitic bankers or politicos or indeed, a central bank.

Do we need a banking sector dominated by politically untouchable "Too Big to Fail" (TBTF) banks? Thanks to fast-advancing technology, the answer is a resounding no. Not only do we not need a banking sector, we would be immensely better off were the banking sector to wither and vanish from the face of the Earth, along with its parasitic class of political enablers, toadies and Federal Reserve apparatchiks.

The key to understanding why big banks have outlived their purpose is to grasp the implications of computing power, self-organizing networks and crowdsourcing. Banks came into existence to manage the accumulation of capital (savings) and distribute the capital to borrowers in a prudent manner that minimized risk and still yielded a return for savers and the bank's investors/owners.

Back in the pre-computer era, the record-keeping and risk management processes of these two core functions required a complex bureaucracy and a concentration of accounting skills and lending experience. The costs of operating this record-keeping and risk management bureaucracy was high, and these costs justified the bank's fees and interest rate spread. In an idealized scenario, a bank might pay depositors 3% annual yield on their savings and charge borrowers 5%. The 2% spread was the bank's to keep for performing the accounting, collection and risk management functions.

Today, computers running scripts/programs can perform these functions with minimal human oversight and at very low cost. The tracking and recording of millions of transactions and accounts no longer requires thousands of clerks and a large institutional bureaucracy; a relative handful of software engineers are all that's needed to maintain these services, which are in effect a low-cost utility.

Risk management and lending are also computerized; the human interface of a banker is a bow to tradition, not necessity. Crowdsourced funding is entirely computerized: those with money/capital choose to join a pool of lenders who accept the risk of lending to an individual, household, project or enterprise for a specified return.

This process of aligning excess capital (savings) with borrowers is already automated. Is there a role for regulation? Absolutely: such a system requires transparency that can be trusted. Those who violate this trust with cooked-books, lies, misinformation, etc. must suffer negative, long-lasting consequences, starting with being banned from the system.

It is an abiding irony that the present banking system's secret portfolios and processes (shadow banking, derivatives designed to fail and trigger profitable defaults, etc.) are considered core competitive advantages: in other words, eliminating transparency generates the highest-return bank profits.

And let's not overlook the political consequences of these immense profits: a political and regulatory order that is easily captured to serve the interests of big banks. The number one agenda item is of course to arrange Central State protection of the most profitable (i.e. the least transparent) parts of the banking sector's operations.

This lack of transparency distorts the financial market, rendering it systemically vulnerable to malinvestments and risky speculations and the financial crashes that result from these systemic distortions.

The other top agenda item for bank lobbyists is to arrange Central State/Federal Reserve subsidies of bank profits. These subsidies are also known as financial repression, as the Central State/Bank rigs interest rates and regulations to favor bank profits at the expense of both savers and borrowers.

Thanks to the Federal Reserve's Zero Interest Rate Policy (ZIRP), savers have been robbed of hundreds of billions of dollars in income--money that has been effectively transferred to the banks by the State. This is why I call our system State-Cartel capitalism, as the State and cartels rule in a mutually beneficial marriage at the expense of the real economy, the citizenry and especially what's left of the dwindling middle class.

Since the core functions of banks can now be performed by cheap processors and software, we can get rid of the entire parasitic banking sector, once and for all. But what about investment banking? That too can be automated. What about wealth management? In a world where index funds beat 96% of money managers over a long time-frame, that too can be automated.

But what about the tens of millions of dollars in campaign contributions politicos skim from the bankers? Now we finally reach the real reason why the parasitic banking sector is allowed to exist, even though it has outlived its purpose and value: the political class of parasites benefits immensely from the banking sector's giant state-rigged skimming machine.

An automated banking utility has no need for parasitic bankers or politicos or indeed, a central bank. The only legitimate regulatory function of the state is to enforce transparency; beyond that, its actions are all subsidies of one sort or another of politically powerful constituencies at the expense of the real economy's productive people, communities and enterprises.

 


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Thu, 12/19/2013 - 19:06 | Link to Comment idea_hamster
idea_hamster's picture

But then how would douche nozzles get rich?!

Thu, 12/19/2013 - 19:07 | Link to Comment Winston Churchill
Winston Churchill's picture

They would have to take a more respectable career path.

Maybe burglary or shoplifting.

Thu, 12/19/2013 - 19:19 | Link to Comment idea_hamster
idea_hamster's picture

... or cannibalism ... or putting puppies into a blender.

Thu, 12/19/2013 - 20:43 | Link to Comment joego1
joego1's picture

Ultimate Banker Fighting- Only one banker comes out alive!

Thu, 12/19/2013 - 21:01 | Link to Comment negative rates
negative rates's picture

See what occurs when you try to financialize the economy. Bad things eventually happen.

Thu, 12/19/2013 - 21:50 | Link to Comment Raymond K Hessel
Raymond K Hessel's picture

So long as people continue to incorrectly call socialism by some version of hyphenated-capitalism, I know I'm reading drivel.  

Thu, 12/19/2013 - 23:59 | Link to Comment Anusocracy
Anusocracy's picture

This is basically panarchism applied to banking - you choose where you interact and how you interact.

Thu, 12/19/2013 - 20:25 | Link to Comment texas sandman
texas sandman's picture

RoboBanker.....bitchin!

Thu, 12/19/2013 - 20:58 | Link to Comment Wahooo
Wahooo's picture

Why, computers of course.

I was really into this article until it hinged its thesis on using computers. Just get rid of the fucking banks.

Thu, 12/19/2013 - 21:20 | Link to Comment doctor10
doctor10's picture

Bingo!!I know what investment bankers have done to America; have yet to see what they've done for anyone other than themselves and the local support staff in Darien.

Thu, 12/19/2013 - 19:06 | Link to Comment BellyBrain
BellyBrain's picture

No mention in the article of Bitcoin?

Thu, 12/19/2013 - 19:10 | Link to Comment GoldSilverWolf
GoldSilverWolf's picture

I think that was the premise of the entire article, but it was worded to avoid mention of the "nasty" B-word (or crypto-currencies in general).

Thu, 12/19/2013 - 19:19 | Link to Comment fonestar
fonestar's picture

So explain to me what your alternative is then?  Do you really think you are going to vote in a group of ethical good guys?  And also, why would you even want humans to do something that is far better run and efficiently done by an algorithm?

Thu, 12/19/2013 - 19:30 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

The question of whether a cryptocurrency is or isn't a suitable replacement currency, doesn't automatically mean BitCoin has any value.  Fact of the matter is that the market will decide when and which cryptocurrency will be suitable for use, if at all, not a two-Bit pumper.

Thu, 12/19/2013 - 19:39 | Link to Comment fonestar
fonestar's picture

Bitcoin, like gold is only worth what people are willing to pay for it.  The question was, why human beings who are susceptitble to greed, envy, apathy, indifference should be envolved in the money creation process?

Thu, 12/19/2013 - 19:45 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

"The question was, why human beings who are susceptitble to greed, envy, apathy, indifference should be envolved in the money creation process?"

The answer lies in your question.  Human beings are the most qualified to recognize corruption, greed, envy, apathy, indifference in the money creation process.

Thu, 12/19/2013 - 19:48 | Link to Comment fonestar
fonestar's picture

Perhaps there is no reason for them to be able to recognize it any longer in the money creation process?  It is time to give our trust to the machines and the algos.

Thu, 12/19/2013 - 19:53 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

Case in point:  40 million U.S. Target store shoppers trusted a machine since Thanksgiving in November.  That turned out not to be a wise choice.

Thu, 12/19/2013 - 19:57 | Link to Comment fonestar
fonestar's picture

But was it a decentralized open-source network?  Or was it a closed corporate network?

Thu, 12/19/2013 - 21:34 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

"Yes ma'am, we're terribly sorry but it looks like your bank account is wiped out.  Also, you owe $400,000 on your Visa card. On a happy note, you'll be pleased to know that you were duped by a security-flaw in our closed corporate network, and that decentralized open source networks are still working.  So, chin up and don't forget your Visa payment next month."

Thu, 12/19/2013 - 21:49 | Link to Comment fonestar
fonestar's picture

So you admit these are two very different things with little similarity between the two?

Thu, 12/19/2013 - 21:52 | Link to Comment Raymond K Hessel
Raymond K Hessel's picture

 

 

Closed or open.  

Government or corporation.  

Open sourced or centrally regulated.

 

It's obvious that without accountability there is no reason to trust any system.

Thu, 12/19/2013 - 22:05 | Link to Comment fonestar
fonestar's picture

Open and closed source systems make a world of difference.  There is no issue of trust and accountability where humans are not involved.

Thu, 12/19/2013 - 22:38 | Link to Comment i-dog
i-dog's picture

See, now you've jumped the shark!

I've upvoted all your other comments above because you asked valid questions ... but then you devolved into an opinion which, like your previous spamming, makes no sense. Humans are involved - especially in the BTC hierarchy.

BitCoin is only the beginning of the inevitable digital currency future. What we have to be vigilant to avoid is a centralised control/arbitration system and instead move towards truly local digital transmission of competing 'currencies' - where those involved in the arbitration of disputes/errors are accountable to those around them.

It's only the globalists that want a single world-wide currency.

Thu, 12/19/2013 - 22:51 | Link to Comment Yenbot
Yenbot's picture

 There is no issue of trust and accountability where humans are not involved.

Good God, it's Hal 9000 talking!

Thu, 12/19/2013 - 23:12 | Link to Comment Andy Lewis
Andy Lewis's picture

I'd like to uprate your comment, but I'm afraid I can't do that, Dave.

Thu, 12/19/2013 - 22:11 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

Exactly that.

Thu, 12/19/2013 - 20:15 | Link to Comment GoldSilverWolf
GoldSilverWolf's picture

Makes me concerned about the Target Red Card, which is a discount/payment card that debits purchases at Target Canada stores from your bank account.

Thu, 12/19/2013 - 19:57 | Link to Comment A. Magnus
A. Magnus's picture

"It is time to give our trust to the machines and the algos."

Oh, yeah, like trusting the same caliber of shithead whore programmers who made Diebold voting machines riggable, THAT will solve all our problems...*rolls fucking eyes*

Thu, 12/19/2013 - 20:08 | Link to Comment fonestar
fonestar's picture

Diebold is a corporation and does not make open source systems.

Thu, 12/19/2013 - 20:08 | Link to Comment Duke of Earl
Duke of Earl's picture

Nobody should trust the same calibre of programmer that created Diebold.  The only people that did were bureaucrats.  It's a far cry from peer reviewed, open source programs that have been battle tested over several years.

It's still a sad state of affairs that we can't have an electronic voting system now that Diebold poisoned the well.

Thu, 12/19/2013 - 19:46 | Link to Comment GoldSilverWolf
GoldSilverWolf's picture

Because no other species on the planet can create money, and computers didn't exist in 680 BC.

Thu, 12/19/2013 - 19:52 | Link to Comment nmewn
nmewn's picture

"Bitcoin, like gold is only worth what people are willing to pay for it."

lol...whats a virtual BitNecklace going for these days? ;-)

Thu, 12/19/2013 - 20:19 | Link to Comment TheHound73
TheHound73's picture

A virtual BitNecklace containing 1 bitcoin is currently selling for $725.

Thu, 12/19/2013 - 20:26 | Link to Comment nmewn
nmewn's picture

Yes, I can see its virtual light in the monitor reflecting in her eyes.

I guess she could wear anything with it or nothing at all ;-)

Thu, 12/19/2013 - 20:34 | Link to Comment TheHound73
TheHound73's picture

 *blushes!*

Thu, 12/19/2013 - 20:40 | Link to Comment nmewn
nmewn's picture

Hey, you guys do what you wanna do, my conscience is clear...I was tempted to drag out the ole "emperor has no clothes on" line but it seemed as ridiculous & cliche as hanging an i-phone around her neck so she could admire her new BitNecklace ;-)

Thu, 12/19/2013 - 19:40 | Link to Comment Hobbleknee
Hobbleknee's picture

Did you learn nothing from Terminator?

Thu, 12/19/2013 - 19:44 | Link to Comment fonestar
fonestar's picture

About hacking ATM machines?

Thu, 12/19/2013 - 19:47 | Link to Comment The_Prisoner
The_Prisoner's picture

Hacking ATM machines gets you 'suicided'

http://en.wikipedia.org/wiki/Barnaby_Jack 

Thu, 12/19/2013 - 21:03 | Link to Comment YC2
YC2's picture

lol my first thought as well

Thu, 12/19/2013 - 19:43 | Link to Comment GoldSilverWolf
GoldSilverWolf's picture

I didn't say that, I was only suggesting that the article was read-between-the-lines about bitcoin. Much of the 3-6-3-rule bankling has already been replaced by algorithms, we only have people to print documents and collect signatures.

Thu, 12/19/2013 - 21:27 | Link to Comment logicalman
logicalman's picture

The algo was written by a human, idiot!

Thu, 12/19/2013 - 19:22 | Link to Comment Fail2Deliver
Fail2Deliver's picture

ZH is not allowed to mention Bitcoin on days when its value is up over 50%. Only on down days are we warned how dangerous it is.

Thu, 12/19/2013 - 19:40 | Link to Comment CryptoCoinUser
CryptoCoinUser's picture

ZH is actually objective and sympathetic to Bitcoin and its early adoptors.

Thu, 12/19/2013 - 20:18 | Link to Comment Duke of Earl
Duke of Earl's picture

I thought that, too, and did a history check on headlines to complain.  It's not actually true, there are a lot of positive headlines.  I think the negatvie ones just make me cringe more.

Fri, 12/20/2013 - 02:40 | Link to Comment dark pools of soros
dark pools of soros's picture

ZH is still part of the whole Keys/Mises  Satan/God groupings which means something like bitcoin that doesn't fit into either camp gets shunned more than their mortal enemy

 

If you believe in Satan or God you believe in the other as well...

 

 

Thu, 12/19/2013 - 19:06 | Link to Comment Seasmoke
Seasmoke's picture

Must be an anti-Semite. 

Thu, 12/19/2013 - 19:06 | Link to Comment fonestar
fonestar's picture

Yet another reason to bank with Satoshi the cyberchrist.

Thu, 12/19/2013 - 19:12 | Link to Comment GoldSilverWolf
GoldSilverWolf's picture

Bitcoin, getto daze!

Thu, 12/19/2013 - 19:16 | Link to Comment CounterPartyVice
CounterPartyVice's picture

Will Satoshi be sold to the fed for 30 pieces of silver?

Thu, 12/19/2013 - 19:21 | Link to Comment fonestar
fonestar's picture

No, but currently one Bitcoin will cost you around 30 ASEs.

Thu, 12/19/2013 - 19:30 | Link to Comment falak pema
falak pema's picture

Are you predicting Satoshi's upcoming cyber-crucifiction in 2014?

The first martyr of cyberworld ! 

Thu, 12/19/2013 - 19:46 | Link to Comment fonestar
fonestar's picture

"I will not help to crucify mankind upon a cross of bits."

Thu, 12/19/2013 - 19:48 | Link to Comment falak pema
falak pema's picture

make that "tits" and I'll buy it.

Thu, 12/19/2013 - 19:10 | Link to Comment GoldSilverWolf
GoldSilverWolf's picture

Meanwhile the tapeworm (Jamie Dimon & friends) has grown so large that it has nearly consumed the host (the worldwide economy).  Once it does so, even the tapeworm will die.

Thu, 12/19/2013 - 19:18 | Link to Comment grid-b-gone
grid-b-gone's picture

Member banks should not be allowed to contribute to a presidential or congressional campaign.  

Thu, 12/19/2013 - 19:38 | Link to Comment WTFUD
WTFUD's picture

member bankers should be membered in the showers during their orange suit stint.

Thu, 12/19/2013 - 19:21 | Link to Comment fooshorter
fooshorter's picture

+10 Bravo. Best Ariticle today.

Thu, 12/19/2013 - 19:23 | Link to Comment falak pema
falak pema's picture

state cartel capitalism is Mussolini's economic mantra.

In fact it seems to me that cash heavy companies like Apple, Google and Microsoft, linked to social media, could very easily replace tommorow at much lower costs to clients and borrowers the TBTF bureaucracies, especially in consumer credit and individual loans. Deposit banking and small business loans.

It would be a counter cyclical investment than their traditional line of business that could create another source of revenu for them. All these companies have the resource and client base to sell them additional utlity financial services. Social media would benefit from such revenues. 

Would it be of interest to them and tech giants?

I guess Apple can make more money in Private Eguity funds and with Warren Buffet.

That's why it probably won't interest them. 

But it would help get rid of these parasites, scions of compound interest and fractional reserve, if their behemoths were abolished from banking along with the corruption of shadow banking, derivative soup and political lobbying via kickbacks.  

The world needs alternative financial structures and methods. Can the non financial corporates replace them?

But putting such additional power in the hands of a Google is not a good idea! Smaller high tech maybe.

Thu, 12/19/2013 - 19:22 | Link to Comment Kayman
Kayman's picture

The Feds apologists are deliberately silent about the lost interest income to savers, that otherwise would/could be spent (mostly by lower income people) in the real economy. 

Bernanke is nothing but a fucking thief, in a 3-piece suit, stealing from your grandmother.

Thu, 12/19/2013 - 19:27 | Link to Comment bozzy
bozzy's picture

In the UK it would have been a lot cheaper to let RBS go to the wall, fork and dangle the crooks who ran it, and rehire the retail banking employees in a new credit union, using a fraction of the funds so kindly donated by the UK taxpayer to bailing the bastards out. From what I hear, Fred trhe Shred and his evil gang were no fun to work for anyway, unless of course you were a "trader". Qualifications for said trading desks have always been about the lowest in all market spaces - the primary one being that you were able to tug on strings, or had crony links. Problem is that the UK public is as dumb as US mainstreet, and looks little further than the sixpack in the fridge, and the game at the weekend. In two generations all this will be forgotten, and the swaggering pieces of shit who picked up the multi million bonuses will be the respectable rich boys who made fortunes being "something in the city", and just conveniently found themselves at the top of the pile and respectable with it a decade or two down the line.

Fork and dangle the fuckers - it is the only answer. As long as there are no sanctions against banksters, there will be banksters. As soon as it becomes a life threatening issue to rig and maniipulate, the result will be magically as if there was automatic retribution and making whole of all injured parties from the PERSONAL fortunes of this scum. They add NO VALUE to society at all.

Thu, 12/19/2013 - 20:11 | Link to Comment reload
reload's picture

Nice rant ! Don't disagree with any of it.

Vented my spleen in a similar way to an RBS 'business account relationship manager' who rang to ask if we were happy with their service.

No we are fucking not

Ah, I see you seldom transact through your accounts now, has there been a problem?

Yes there fucking has

Sir could I ask youto calm down and tell me about it.

So I explained that when RBS had a 'glitch' last summer and LOST over  50k of our money for nearly 3 weeks  NOBODY in his department would take or return our phone calls. That unless we had funds elsewhere we would not have made payroll that month.

He proffessed extreme regret.

So I asked how extreme his regret was that RBS business relationship managers have sold some of their most vulnerable customers time bomb interest rate swaps which have now blown up - forcing those customers into fire sale asset disposals where the eventual buyer often turns out to be a subsidiary of RBS.

He was unable to comment!

Interestingly Cameron promised legislation to allow business  deposit accounts at credit unions prior to the last election. No sign of it.

 

Thu, 12/19/2013 - 21:35 | Link to Comment logicalman
logicalman's picture

Youchoose your leaders and place your trust

as their lies wash you down and their promises rust.

The Jam

Mon, 12/23/2013 - 09:55 | Link to Comment bozzy
bozzy's picture

I think you understand the issues, and the lack of sufficient spine or spunk in successive administrations of BOTH flavours to do anything about it, even if they have the inclination. The revolving door from GS has resulted in sufficient position and influence to take care of business for decades I think.

No, the answer lies in extreme personal threat to health and livelihood against these smug POS. If a regulator can enforce a "bail in" - the confiscation of depositors funds, then there should be little diffficulty with expropriating the lifetime wealth accumulation of these evil bastards. With our new found connectivity and cooperation, it is now much more difficult for them to hide. Cameron will be lobbied into impotence if that has not already happened.

Thu, 12/19/2013 - 19:30 | Link to Comment ejmoosa
ejmoosa's picture

I remember when banks were best qualified to know the risks in loaning locally to businesses and potential homeowners.  But we have eliminated that function altogether.  The experts think they have eliminated risk  Yet it is greater than ever.

You see what we get now. Some crack ass bank in California loaning millions to some street vendor in Singapore for a shack. But fear not, the risk of default has been rolled in to one of these many CMOs.  So you have nothing to worry about.

Which is bullshit.

I have read many books on debt.  And there is one recurring them that keeps smacking me in the head.  It's that if we did have localized finance, then dollars would not flow around the world to where they are "needed".

Which is total bullshit as well.

What they mean to say is that the dollars won't be able to flow around for all sorts of corrupt purposes.  

We are being fleeced left and right.  And they do not even have the courtesy to call us sheep.

Baa to those bastards.  Your day is coming sooner than you think.

 

 

Thu, 12/19/2013 - 19:39 | Link to Comment CryptoCoinUser
CryptoCoinUser's picture

Banking ought be a boaring, low-margin business, like running a gas station.

Thu, 12/19/2013 - 21:37 | Link to Comment TheHound73
TheHound73's picture

Aye, and they should be allowed to fail spectacularly when egged on by their shareholders to onboard more risk than is prudent.

Thu, 12/19/2013 - 19:49 | Link to Comment polak potrafi
polak potrafi's picture

wydac z siebie

a really amazed gasp

 

We need banks

to provide loans

to the folks that

PAY BACK

 

duh????

Thu, 12/19/2013 - 20:32 | Link to Comment mantrid
mantrid's picture

I absolutely agree. millenia ago, faraons and kings were needed because only they had knowlegde to manage populations. ordinary ppl were barely grasping ways to keep crops and they often turned to their overlords for advice. ppl couldn't write or read and knowgledle tranfer was limited. they needed centralised hubs of knowledge.

hundrets of years of progress in knowledge transfer and we do have means to let ordinary ppl learn to manage themselves. the third wave of Alvin Toffler's brings us to the point when individuals are able to make informed decisions based on accumulated human knowledge.. we can proceed to decentralised economy. it's not just a fantasy. only the likes of Krugman who think "internet woudn't chagne the world more than fax machines (sic)" still believe "most people have nothing to say". but they do and they can manage themselves. we do not need centralised hubs of managemnt: government, TBTF banks, 1%-ers any more.

one would say believing that computerized world can solve problems of scarcity is naive. it will indeed have its downturns. but the thing is that it will learn. focus on the process that spans decades. free market economy is a distributed economic computation system. it learns. it adapts. it improves itself. like the internet routing, like genetic algorithms, like neural systems. it is in fact in some sense darwinian-neural system that uses capital and price signals for self-organisation and improvement.

central planners think they can override this self-organisation with better "parameters" that leads to better "performance". but what they miss is that centrally planned market is absent self-repair mechanisms. and since no one can know the best allocation of resources they end up pumping bubbles. free market may create bubbles as well but it also has mechanisms to liquidate them early enough before they pose threats to the entire system.

 

one day future scholars will look at us and say we were so ignorant, so limited in our vision. that we could not see we were part of processes that span decades and centuries and that ultimately lead to progress thanks to self-organised, darwinian-neural processes. it sounds like sci-fi today, but it isn't any different from computer science discoveries applied to robotics, logics and optimisation. we just don't want to think of ourself as neurons or genotypes.. but the world out there works like that. it has been for thousands of years already. we're blinded by fatal conecit.

Thu, 12/19/2013 - 19:59 | Link to Comment RovingGrokster
RovingGrokster's picture

So, is the proposed model something like eTrade, where banking and portfolio management are largely automated and low cost, with "real people<tm>" only available for customer support, or is it more like KickStarter, where investments are made without any bank intermediary?

What is the liquid funding medium? Bitcoin, e-Gold, ????

Sounds like the banking version of anarchy - all mutual cooperation and capitalism, as long as transparency can be provided without the state taking over. Exactly the same problem we have with our government - instituted to "preserve these rights", it now thinks it can create and destroy rights on a whim.

Thu, 12/19/2013 - 20:11 | Link to Comment fxrxexexdxoxmx
fxrxexexdxoxmx's picture

+100 great post

Thu, 12/19/2013 - 20:20 | Link to Comment loveyajimbo
loveyajimbo's picture

Who needs a Federal Government?  Go to gold, regional banks, trade agreements, armed forces agreements.

Thu, 12/19/2013 - 20:47 | Link to Comment blindman
blindman's picture

i would argue that the last paragraph is wanting.
@.." The only legitimate regulatory function of the state is to enforce transparency; beyond that, its actions are all subsidies of one sort or another of politically powerful constituencies at the expense of the real economy's productive people, communities and enterprises."
.
the people and communities do require protection, their protection or conservation
of their resources, from those who would deplete or destroy said same for exploited
personal gains under the influence of the near infinite
capacity of some individual for shortsightedness and extreme stupidity.
.
perhaps i said it wrong but any intelligent student of history
might grasp the point and appreciate the concern and need going forward?
...yet it is true that that true function of the state has been entirely
perverted in law and language to service the few in the name of the many.
the point being that there is, "comes a time", when floods and total ruin
are the preferred, only conceivable, solution.
sheesh ..

Thu, 12/19/2013 - 21:40 | Link to Comment acetinker
acetinker's picture

What if, individuals actually took responsibility and did their own due diligenge before doing business with "xyz" entity?  Why do we need the protective bosom of government?  Is it because we (collectively) never developed into true adulthood?  I think so.  Is it because we're lazy and afraid?  Again, I think so.  Is it because we expect a higher power to someday intervene on our behalf?  Just sayin'.

If you run a small business as I do, it doesn't take long to realize that there are "players" you want nothing to do with.  Further, you will find that the "bosom of government" only exists to exploit and control you.  Not only do they not protect you from the "bad" players, they enable the bad players.

I need this for what, exactly?

Fri, 12/20/2013 - 00:12 | Link to Comment blindman
blindman's picture

law is rightly legislated in the cause of
elimination of tyranny and tyrants in all
forms, all the many forms!
then it becomes the tyrant itself by
perversion of all forms , all the many forms ...
.
it is so easily perverted because it
is so essential and fundamental.
.
but can you succeed by eliminating the
essential due to it's promiscuity?
.
curious

Mon, 12/23/2013 - 22:08 | Link to Comment acetinker
acetinker's picture

The short answer is I dunno.  You know what?  I am just pissed at the dumbassery in general.  Remember that thinker friend I mentioned?  He thinks he knows what's wrong with the world- It's the fuckin' humans.  I'm not a smart guy, but I have to admit that if I were an "elite", I'd gaze upon the peasants from my lofty perch and shake my head in disgust.  ZeroHedge is NOT a representative example of society, and that's a shame.  Our 'retards' are head and shoulders above average.  I should know.

Thu, 12/19/2013 - 20:51 | Link to Comment PieEconomics
PieEconomics's picture

Banks have been rendered obsolete by the internet.

Not only should there be no money in a banking sector, but also no money (or debt) in the government sector. Government should simply create money as it spends, and retire money as it taxes, but never actually own or borrow money. A net worth tax on commonly registered assets (stocks, bonds, real estate, motor vehicles, and electronic currency) would easily fund a mandated balanced budget without reallocating relative wealth.

I explain this in detail on my blog: http://pieeconomics.blogspot.com/

Thu, 12/19/2013 - 21:04 | Link to Comment acetinker
acetinker's picture

Charles, I'd love to share your optimism, but I can't.  A hundred years ago, oil was the magic bullet that literally transformed the world.  We're living at the end of that era.  Now, you want to say that cyber-banking is the next level?  I know, I know, but have you considered how fragile (and susceptible to fraud) this kind of system would be?  Matter of fact, it sounds exactly like what Nick Rockefeller proposed to Aaron Russo shortly before the latter "unexpectedly" perished.

No Charles, we cannot and should not allow ourselves to be duped into a world run by algos.  As far as wall st. goes, it already is run by algos.  You really wanna extend that to include the lives of everyday people?

Do we need TBTF?  No.

Do we need the Fed?  No.

Do we need a central money system run by algos that only the technocrats can control?  FUCK NO!

Thu, 12/19/2013 - 22:15 | Link to Comment Urban Redneck
Urban Redneck's picture

Little minds with narrow perspectives shouldn't write such trite tripe about the really big bad world we live in.

As bad as the current banking system is, it would be impossible to crowd source the multiple billion dollar increments of investment required on a daily basis to make the world go round with some magical capital distribution algorithm.

Any viable banking solution needs to scale to the level of the complex just-in-time leviathan than sustains 7 billion people.

Fri, 12/20/2013 - 02:49 | Link to Comment dark pools of soros
dark pools of soros's picture

this is why this site is garbage... surely not all 7 billion give a shit about banking

 

Fri, 12/20/2013 - 14:26 | Link to Comment chinaboy
chinaboy's picture

Lose the banks and keep the Fed.

Do NOT follow this link or you will be banned from the site!