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by lotsofpulp 897 days ago
I specified an (FDIC insured) bank's role "in transmitting and keeping an account of money". There would be nothing stopping a lender from lending if the US government gets rid of FDIC insurance and just provides the people of the US electronic money accounts directly.
1 comments
robertlagrant 897 days ago
Sure, but then what happens to the thing I said? How do businesses get loans? How much interest should be paid on that money, if any?
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lotsofpulp 897 days ago
Supply and demand determine the price (or interest rate). Businesses get loans the same say any other business transaction happens. A buyer and seller hash out an agreement. This already happens all the time, even in the US (see investment banking).

If the lender, such as a bank, is any good at their job of underwriting, then they won’t need the federal government’s assurance to bail them out and they will still be able to attract funds from people seeking returns (and risk).

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robertlagrant 896 days ago
> Businesses get loans the same say any other business transaction happens. A buyer and seller hash out an agreement. This already happens all the time, even in the US (see investment banking).

Yes, but a big way small business loans happen is with people's deposited money. You're naming alternatives, but not replacements. If my money is deposited with the government, then I have to go and find someone to lend to myself, and actually have the money removed from my bank account?

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lotsofpulp 896 days ago
Yes, is this a problem? There are businesses that assist you with this already. Called investment banks. Or the government if you are looking for small business loans via SBA (and the government hires banks to do the underwriting, which the banks can still do).

> If my money is deposited with the government, then I have to go and find someone to lend to myself, and actually have the money removed from my bank account?

Also, you know the savings rate you earn at a bank is not because of the loans a bank makes, but because the government pays the bank. Why do you want your government to pay a middleman before paying you?

There was a time and purpose for this system, before instant communications and electronic databases. Now, those purposes have been automated away.

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