Re: Do We Need Commercial Banks?

["John Gelles" <jjgelles@xxxxxxxx>]

	Although it appears there are many ways to
	provide liquidity (to lenders and borrowers
	selling and buying) in a free market, by banks
	and non-bank lenders, there remains the scary
	situation of

		(1) inadequate capital for major
	producers who do not have deep enough
	pockets to WAIT for the next boom in markets
	where their customers buy the things such
	producers make and sell,  and

		(2) inadequate purchasing power
	and income among "the poor and unemployed"
	and among public civilian authorities and
	political sub-divisions everywhere.

	"Do we need commercial banks?"  is hardly
	a pressing question.  We HAVE such banks and
	we HAVE the non-bank lenders; and we HAVE a
	central bank  !!!  We need more not less !!!

	What we need is money that tracks BOTH major
	public and private need AND  production (both
	output and capacity to raise output).

	Current "money" from all three sources we already
	have does NOT do the job. "Money" grows scarce
	whenever we produce more output than these sources
	funnel to the demand side. THEY are all constrained
	by PRICE.

	Only an institution like the central bank or treasury,
	using a scheme like the IEA (Gelles' plan) or military
	or civilian Keynesian/Lerner functional financing, can
	match money to output and provide (1) deep pockets
	to key producers and (2) adequate income to people
	in need.

	     John Gelles       jjgelles@xxxxxxxx
		http://www.rain.org/~jjgelles/1944.htm

----------
From: Greg Nowell <GN842@xxxxxxxxxxxxxxxxx>
To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
Subject: Re: Do We Need Commercial Banks?
Date: Monday, December 14, 1998 11:24 AM

Basil since you "wrote the book" on endogenous money in the banking
system I hesitate to engage you on this terrain,
..... [see original message for interesting thoughts]

Prof BJ Moore, Ekonomie, tel 2416 wrote:

> William
> This is a problem that has often worried me. If banks were to loose
> their market share to nonbanks, who could not create money, how
> would aggregate demand grow?  --   Basil Moore

--------------------

> Date:          Thu, 26 Nov 1998 18:26:04 GMT
> Reply-to:      pkt@xxxxxxxxxxxxxxxx
> From:          wfhummel@xxxxxxxxxxxx (William F. Hummel)
> To:            POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
> Subject:       Do We Need Commercial Banks?
>
> Banks have long since lost their near monopoly in financial
> intermediation.  Non-bank financial institutions have become the
> dominant source of financial capital supporting economic growth.
> This raises the question:  Can the central bank, working with
> non-bank intermediaries, perform all of the necessary functions,
> or is there some fundamental reason that it must license private
> financial institutions to create deposits (credit money) which it
> guarantees to be interchangeable with definitive money?
>
> William F. Hummel