Indeed Mrs KF! But just a few questions from an economics ignoramus if you please (?):

a) if we have hard-earned money to deposit, why should we need to borrow?

b) if we do need to borrow (to buy a house) why should a bank lend it to us?

c) if banks are nationalised, who PAYS for the money we borrow?

d) when we have sorted that out, what do those who pay get in return?

If all banks were nationlised, would it not be the case that banks that borrow money from other banks would (in effect) be governments (in the name of their people) borrowing from other governments (in the name of theirs)? If so, where is the "accountability", and what is (or should be) the "return" on the investment?

Just an idle thought - nothing more!

Baziron

Trick questions? Not at all - they were very real ones. As I understood your first posting Mrs KF, you seemed to be taking the view that Banks - rather like a Health Service or an Education Service - should be there simply in order to provide "working people" with what one might then term a "National Money Service". According to this supposed scenario they should be state-provided repositories into which we could (at no cost whatsoever) simply deposit our money for safe-keeping at no risk to ourselves. Additionally they should make available "public funds" upon which we can draw at will in order to buy, say, a house without there being any risks whatsoever to us "consumers". I quite sympathise with your inability to view my questions (within your own suggested framework) as anything but "trick" ones, because (within that view) they defy the provision of a single credible answer. But the "trick" lies, I feel, within fool's-gold Utopia of your own proposal. Let us be logical!...

Banks (whoever owns them) can only be run as businesses subjected to the relevant legislative conditions and frameworks that apply to business enterprises in general. As businesses they have but a single commodity to offer their clients - MONEY. So within that reality I should urge you again to review the questions I posed, and find a sensible way of answering them.

Baziron

You make some good points, Baz.  As a socialist I have always been been baffled by the old Labour clause 4.4  and its reference to common ownership of exchange.  The very existence of money is surely antithetical to common ownership.  I personally don’t believe the nationalisation of the banks would do any good; but your questions  – and the prevailing financial chaos – remind us of some fundamental truths which both governments and banks have been doing their best to make us forget for the last few decades.  As I mentioned on another thread, forty years ago very few people had a current account (or a mortgage).  When I went to college, I got a fair idea of what traditional banking was about: you paid monthly admin charges, you paid a charge for every cheque you wrote, you paid to see the manager etc etc.  In the thirty-odd years between then and now things have changed enormously.  It’s now almost compulsory to have a bank account – and government agencies have been instrumental in bringing this about from the time that local and national government began paying all employees through bank accounts to the latest outrageous advice from Mr Brown that those who are having trouble paying inflated fuel bills should switch to direct debit. 

It is, I suggest, perverse to deny that the banks, with the collusion of government, have spent the last few decades positioning themselves at the centre of everybody’s finances.  And one of the tactics used in this campaign was the deliberate propagation of the myth of free banking.  It might be naïve to imagine there isn’t a price to be paid for the services provided by the banks; but the way banks made their money has undoubtedly been kept off the statements of many accounts for years.  Most banks have provided ‘free’ banking to all customers who stayed in the black for as long as most people can remember.  The fact that the employer who paid your wages or the trader who took your credit card payment had to make a payment to the bank – as opposed to, potentially, paying you more or charging you less was not widely publicised.  Credit card companies took all this one step further by banning the offering of cash discounts by traders who took their card – thus passing part of the cost on to cash customers.  Is it any wonder that a generation (or even two) has grown up never knowing transparency in banking practice and now intuitively sees the banks as a sort of public service and a credit card as something to which all citizens are entitled; rather like a passport or a provisional driving licence.   So, as you hint, the larger banks might as well be governments because they have a stranglehold on everyone’s resources.  The government can now no more let a bank go broke than it can let, say, a local council go broke – so many ordinary people’s interests are at stake that they are more or less obliged to bail them out or, in extreme cases, take them over.  There is now no realistic possibility of returning to the everyday cash economy of the 1960s so Mrs Kerfoops raises a very valid point - the services we have all been virtually forced to use now have to be provided by organisations with (supposedly) the public interest at heart and those whose talent lies in playing the markets with other people's money should be kept at several arms' length from everyday deposits and savings.

...in the meantime, do I get the answers from you, or from her?

Baziron

A very impressive post by HtoHe there, for which thanks.

Marx and Engels in the Neue Rheinische Zeitung in 1850 point out that the speculation we're talking about here is a necessary symptom of something much more fundamental to the workings of capitalism:


Therefore, as HtoHe says, nationalising banks does not really touch the root of the problem, though it might have the short-term benefit of keeping gamblers' hands off our cash.

But methinks the lady is not for turning - it was she, after all, who began this thread. But having already been quite rightly censured by another member for being disrespectful to her I do not feel that I should do more than acknowledge her view that insofar as my questions were "questions" what she has now provided are "answers".

While I do (of course) believe that money is a means of exchange, Mdm KF takes the view that it is not also a means of investment and even speculation. But we should be foolish in believing that placing such organisations into the hands of the politicians (via nationalisation) would in any way rectify the situation! Currently local authorities in the UK now stand to lose 100s of millions of pounds of taxpayers' money by having invested such sums in failed Icelandic banks - simply because at the time of investment they expected to receive a higher rate of interest than offered by local banks.

Baziron