The days of ever bigger intermediaries aka single points of failure - are over.
Period.
The logic of the Internet is for cutting out the middleman. The Internet interprets banks as "damage" and routes around them.
We are very close IMHO to a "bottom up" networked "clearing union". The current position is almost like a supercooled solution waiting for the first ice crystal.
The organic solution necessary requires the right DNA ie an "Apache Money Messaging Server"; the right "boundary" framework agreement aka the legal XML; and the right nervous system aka decentralised network architecture.
The result: an organic "Clearing Union" within a Clearing "Domain", let's call it "Dot Clear".
In order for the viral spread of the resulting "Clearing Union" (cf Keynes at Bretton Woods) there would need to be a compelling "free" proposition in Napster, Hotmail etc tradition..
I see this as:
(a) Risk Sharing Peer to Peer Credit - (aka time to pay - the lifeblood of our economy) which is "Interest-free" - but not "cost-free" credit, system costs and defaults would be supported by a mutual guarantee and provisions into a default fund.
(b) Revenue Sharing Peer to Peer interest free investment - replacing the secured debt proposition that gave us the Credit Crunch. So, we simply "Pay it Forward" by buying unitised production (eg redeemable energy units, land rental units) at a current market price.
There is a service provider role for Institutions formerly known as Banks in both of these propositions, but they no longer need to put their capital - and our civilisation - at risk by creating an unsustainable pyramid of credit based upon it. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
It's not because banks have forgotten to actually do their job that the job is not necessary - quite the opposite, as current events show.
There will always be a need for an intermediary able to analyse risk, process it and provide options to other with respect to its allocation.
That's what banks do. The boring kind. In the long run, we're all dead. John Maynard Keynes
Risk analysis is a service that banks can provide for a fee. You can't be me, I'm taken
That is exactly what I am saying.
I prefer "service provider" to "intermediary".
To me a "risk intermediary" is someone like a clearing house, not an advisor.
I see the banking role in the future as:
(a) managing the creation of bilateral trade credit, by setting "guarantee limits", operating the system, and managing defaults.
ie pretty much what they do now, but the pool of capital supporting the credit creation will no longer be the Bank's, but the Community's.
(b) appraising potential projects for viability - eg in terms of energy units invested against energy units returned; advising investors, and bringing them together with appropriate investments; putting their capital at risk by "making markets" in the new classes of "Units".
Neither role requires credit creation/intermediation.
Both require the sort of skills Jerome and his colleagues have.
The outcome is shared value creation not value extraction. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Historially, banks have always been providers of political ballast - their job has been to create momentum and credibility for governments and ruling cliques, and also to ration credibility so that only some individuals and projects are allowed to possess it.
Banking is really one of the branches of government, and it's not a coincidence that Wall St wags Main St rather than vice versa, and that in every country in the world there's a Treasury department which makes decisions based as much on political inclination as economic foresight.
The problem is that it's not a very good form of government. It's twitchy, neurotic, prone to convulsions and fevers, and often rather stupid and self-destructive. While individual bankers have been very good a politics, they've been very bad at social strategy - possibly because there's rarely any personal benefit to be had from social investment.
It wouldn't be easy to create a participatory open equivalent system, but there is no democracy as long as bankers define policy, so any alternative has to be worth exploring.
Oddly enough, it's harder to maintain fraudulent power if all transactions are public.
There's also a difference beween neutral accounting and enforcement of policy. There's no reason why a database needs to have a lobbying wing.
So you claim.
And cheating means what, exactly? Theft? Fraud? Political leverage?
Plausible denyability? The bribe to your CEO buddy is really a pilot program to try out some new idea.
Incompetence? You confess, but claim to have learned a valuable lesson.
-- $E(X_t|F_s) = X_s,\quad t > s$
2. What receipts? The pilot program paid for your buddy's time and some resources and expertise that his company has available. It's a black hole unless you also expect every company to exactly account for every minute of computer time, every hour of employee time, every meeting etc. As I understand it, you're only postulating complete transparency at the banking level?
3. You're not in jail yet, you've only just been found out. And you go on TV and apologize, and your flock the people forgive you and refuse to prosecute ;) -- $E(X_t|F_s) = X_s,\quad t > s$
And it would have succeeded too, if it hadn't been for you pesky ETers.
kidding aside, this fear, born of faux-xtian fundy revelatorising, is so last century. no need for the implant really, when everyone's fingerprint, dna, and eyesare unique and the tech is now up to discerning it.
who's running the database, and how ethically is my bigger concern than having a gps in my third eye, (might be handy) or a usb plug in my cranium, (enough tension in my sub-occipitals already)...
surveillance nudism
;)
it does bring up this privacy thing, which we've discussed (semi-anonymously!) here before.
when i trust the 'pars that be' more, and especially their competence and agendas, part of me wants to be unco-operative, invisible.
then i listen to sven's arguments, and find they reflect another part of me that believes that secrets breed evil, and the more open and honest things are, while it might sometimes be uncomfortable in the short run, in the end is the better road.
we just have to be vigilant about the 'more-equal-than-others' syndrome.
~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
