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If you have a Treasury with a drawer full of shovel-ready, useful infrastructure projects, then the Treasury can shoot the private banking sector in the back of the head, dump the corpse in a shallow grave and nothing excessively bad will happen (except maybe a coup d'etat), irrespective of where you are in the business cycle.
Because with sufficiently activist fiscal policy, you get to abolish the business cycle.
- Jake Friends come and go. Enemies accumulate.
We need a banking system so that the fiscal authority can concentrate their attention on those tasks that a banking system cannot or should not be doing. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
Not that you would want to do it unless your banks needed a lead pill delivered intercranially for other reasons.
Obviously we could shoot all the TBTF banks in the back of the head, and so long as we did it by taking them into receivership long enough for people to shift their accounts to small community banks and credit unions, there wouldn't be any massive calamity in the short term, and in the long term we'd be better off.
But shooting the entire private banking sector in the back of the head and having to recreate the entire sector from scratch ~ that seems likely to deepen the current depression. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
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