Would you support the nationalisation of all banking?

[UndercoverElephant]

I propose the following:

All private banking should be criminalised. All banks should be taken under the ownership of government (with no compensation to shareholders). This would mean that all profits from banking -- including all of the benefits from being able to create money as loans -- would go to the exchequer instead of into private hands. It would also mean the government could exercise direct control over which sort of projects could be loaned money and which could not, so that priority or better terms could be given to ecologically sustainable or otherwise desirable projects, instead of everything being driven purely by the desire to make a profit. Furthermore, this would include central banks. The Bank of England would no longer be a private corporation but would be a branch of government (or civil service). There would be clear advantages in terms of simplifying the system and ensuring everybody has access to a local branch of "The National Bank", but the main goal would be to take all creation of money (both sovereign money created by central banks and credit/debt money created as private loans) out of private hands.

Would you support or oppose this?

[Catweazle]

You mean all the banks would become the new, mammoth Bank of England ?

The potential for corruption and bloating would be huge, and the country would lose a fortune from the money laundering market, but overall it couldn't be much worse than the present system which is going to need bailing out when the property market crashes to more realistic levels.

[UndercoverElephant]

You mean all the banks would become the new, mammoth Bank of England ?

All high street banks would become one new, mammoth commercial bank owned by the state. The BoE might need to be a separate organisation, though I have not thought through the details of this. Maybe we wouldn't need it to be different, since it would no longer be needed to lend money to commercial banks. May not even need a "base rate" anymore, though somebody would still need to control interest rates.

The potential for corruption and bloating would be huge,

Both are controllable though, I think.

and the country would lose a fortune from the money laundering market,

Yes, which would be a major problem for the UK in particular. But that cannot stand as a legitimate reason for opposing the policy. The UK needs to find a more honest way to make a living in the world.

but overall it couldn't be much worse than the present system which is going to need bailing out when the property market crashes to more realistic levels.

Exactly. In a way all I am suggesting is the socialisation of bank profits rather than just their losses when they go tits up.

[clv101]

What about mutually owned building societies? Profits are usually reinvested to help improve the service, rather than paid out to external shareholders as they would be in a public limited company (PLC). Members also have a say in the running of the mutual, as they part-own it.

[UndercoverElephant]

What about mutually owned building societies? Profits are usually reinvested to help improve the service, rather than paid out to external shareholders as they would be in a public limited company (PLC). Members also have a say in the running of the mutual, as they part-own it.

That is a lot better than privately owned banks, and represents a less radical move in the same direction, yes. Could be exempt from the ban.

[kenneal - lagger]

The charging and paying of interest is what drives the requirement for economic growth so something will have to be done about the banking system or it will be virtually impossible to combat climate change. UE's proposal in one way forward but whether it would be possible to implement it on our own I'm not sure. Unless the whole world nationalises their banks there would still be the requirement for growth and a problem with addressing climate change.

[UndercoverElephant]

The charging and paying of interest is what drives the requirement for economic growth

Is that the only reason? This is a crucial question and the answer is actually quite elusive. If it is true, then the problem can be fixed by making it illegal to issue interest-bearing loans, which is quite minor compared to what I am suggesting. Something is telling me the situation is more complicated than that. It can't be that simple...can it?

[dustiswhatweare]

Support.

[BritDownUnder]

I think the Soviet Union had state controlled banks and that did not end well but was probably not the reason why the Soviet Union collapsed.

Better banking regulation in the UK could be tried first rather than that drastic action of nationalising all the banks and their probably increasing dodgy debts/loans. Corporatising profits and socialising losses etc etc. There is already a partly national bank called national savings. Don't think they do credit cards though. There is a better example of state owned bank in New Zealand called Kiwibank that I myself was, for a while until i left the country, a very satisfied customer of.

Better in my opinion to introduce minimum deposit percentages for home loans to discourage rampant house price inflation. Also limit the amount of money banks can borrow from international markets. Finally, pay some decent interest rates to savers which will be helped greatly by the previous measure.

End to end nationalisation did not help a bankrupt UK after WW2 and will probably not help a bankrupt UK now but there are exceptions and things that did work, e.g. health, education. Steel making and electricity generation and distribution would probably benefit from re-nationalisation. Maybe railways too.

[emordnilap]

Credit unions are strong in Ireland and mostly owned locally, sometimes by groups of workers or particular communities. I haven't had a bank account for years: most ordinary people don't need one.

[UndercoverElephant]

I think the Soviet Union had state controlled banks and that did not end well but was probably not the reason why the Soviet Union collapsed.

That is absolutely not why the USSR collapsed. It collapsed because the whole system had failed -- the fundamental problem was a lack of motivation for anybody to do any work, because there was no reward for working hard or innovation. "We pretend to work, and they pretend to pay us". I am not advocating that the state takes control of the entire economy -- just the legal right to create money, or the right to charge interest on loans.

End to end nationalisation...

...was not what I proposed. Along with banks, I would nationalise utilities and transport services -- things where privatisation is clearly a failure. I am not advocating the nationalisation of the rest of the economy, although I would be open to suggestions of what else might be a likely candidate.

[BritDownUnder]

A good debate but I would have to oppose nationalisation of banks. Too much risk. For instance Foreign banks with branches in the UK could be loaded with debt from abroad which the government would take on. Also the UK is a net borrower from overseas banks, or at least was in 2019, and it would be unclear if this were to continue with banks being nationalised. Any alternative to borrowing from overseas by just printing money would be inflationary and lead to currency devaluation.

Also I am not sure how the government bank would adjust the amount of money able to lend and conditions and interest rates at it was lent. Reducing the money available to lend might have unforeseen consequences like a housing crash or consolidation of ownership of residential property in the hands of the few and rapid increase in the amount of tenants. Targeted lending to the 'poor' might lead to a rerun of the sub-prime loans crisis and mortgage delinquencies might skyrocket.

In short too much risk on an already overburdened taxpayer to nationalise the banking system. Better to use regulation and a very big stick to enforce it.

[kenneal - lagger]

Printing money for capital projects isn't inflationary as long as the printed money is paid back from the proceeds of the projects.

[BritDownUnder]

Printing money for capital projects isn't inflationary as long as the printed money is paid back from the proceeds of the projects.

No idea about that. But will HS2 be profitable or do you have other projects in mind?

[kenneal - lagger]

Printing money for capital projects isn't inflationary as long as the printed money is paid back from the proceeds of the projects.

No idea about that. But will HS2 be profitable or do you have other projects in mind?

Yes.

A National Insulation Scheme.