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.
