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The fourth narrative is that you can only really understand what's happening by removing all money and accounting from the discussion.
I don't think that's right. If you want to make sensible policy you have to understand your policy tools. Money and accounting are powerful policy tools, so you need to understand how the institutions in your economy react to them.
What does it mean that a business plan sucks?
That it is illegal, in violation of good business practise or not remunerative.
How does the bank know?
In a properly run economy, banks would have specialists on staff or retainer to evaluate business plans.
Is the bank correct?
Not always. If I were overly concerned with inflation, I might view that as a problem. But I'm not, so I don't.
To what extent do the banks themselves create the social conditions in which certain business plans can be guesstimated to suck, while others appear not to?
To a very large extent. Banking is fundamentally a political planning function. That's why parliaments periodically have to reassert democratic authority over banks that grow too big for their britches.
What is the true cost of the percentage cut taken by the banks? Is that cut a good use of social and natural resources?
Banks are essentially vehicles for providing private firms with state power (money). In a properly run economy, the advantage of having banks is that they can go tits-up, which should result in their management getting relieved of the jobs that they apparently found too onerous to do properly. A central bank, of necessity, cannot go bust in its own currency (that's why CB balance sheets are where crap assets go to die).
So having the private banks as a go-between between the central bank and the private firms who borrow is a vehicle for purging incompetent government bureaucrats by pretending that they are private bureaucrats.
How could "business" - let's pretend we know what that means - be organised in ways that don't require these costs?
You could abandon technically sophisticated, capital-intensive industrial mass production.
But if you're not going to do that, you need economic actors who do political planning, because technically sophisticated, capital-intensive industrial mass production requires planning, and planning is always political. You can have the state do that. You can have the firms themselves do it. You can have the banks do it. Or you can have someone else do it. But I've yet to see any evidence that properly run and supervised banks are sufficiently more corrupt, wasteful an incompetent than properly run and supervised politicians elsewhere in society.
Honesty and competence in your politicians: Accept no substitute.
Friends come and go. Enemies accumulate.
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