therefore legislation would be needed preventing banks being anything other than deposit takers or service providers.

This is a massive institutional change, and therefore will have massive unintended consequences.

Personally, I see no role for a Treasury as a middleman any more than I do a Bank either in public or private ownership.

The system I advocate, as I have long said, is in fact (a)"Peer to Peer"  "trade" credit - supported by a mutual guarantee etc etc on the one hand; and

(b) Peer to Peer direct investment through production/revenue sharing "Unitisation".

No legislation is needed for that model: people just have to agree to do it.

If its an incremental transition in activity, legislative and/or regulatory change will obviously be required to accommodate it, as it grows, but no, not necessarily as massive a change as outlawing banks from engaging in banking.

And of course, peer to peer trade credit and direct investment will not eliminate positive feedback loops that lead to credit cycles ... while it is certainly likely to lead to the breaking of some existing positive feedback loops, it will create new ones, and we will come across the adverse consequences as we experience our first peer to peer credit crises.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.