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rentingtechie

We Should Auction Banking Licenses

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Ok, this might be a completely silly idea, but upon reading the thread about Barclays paying 7% interest on deferred bonuses I just thought of a way we could get out of this absurd situation with the banks.

We should auction banking licenses like we do RF spectrum or NY does with taxi medallions. Get the banks to pay massive amounts of money for the privilege of being allowed to setup a lucrative banking business.

Imagine if we said that starting in say 2015 there would be say 5 banking licenses available in the UK. Auction them over a 90 day period - whoever pays the most gets the license. The ones who don't would have to wind their businesses down or merge with a winner etc. They'd all try to outbid each other and probably pay far more than we get out of them in taxes. Straight into the treasury with no funny business (hmmm, well they'd find some way...)

We'd still have competition. We could have some rules like 1 or 2 licenses would be reserved for a bank with holdings below some value, so that it wasn't just the obvious top banks who got to continue. We could make them 3 year or 5 year licenses or something like that and get a nice recurring revenue stream.

Then all the other banks who keep threatening to leave us could just - well... umm - go ahead and LEAVE. Yippee!!

Anyway, food for thought... I'm sure there are a million reasons it wouldn't work but it's nice to think about a world with a very different banking landscape.

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I bid 100000000000000000000000000000000000000000000000000000000000000000000000000000000 pounds.

Do I have 100000000000000000000000000000000000000000000000000000000000000000000000000000000 pounds, no but then neither do the banks.

So bidding with money (that is a fiction) achieves absolutely nothing,once the government gets the money it gives it back to the bank that it owes the most too.

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Erm there is only one bank.... all others are merely pretend franchisees of the main bank.

Also when you do this you introduce the problem of recouping costs. The bank which wins will seek to recoup the costs PDQ!

Remember 3G in its infancy? I still remember the first semi capable internet phones. Companies would absolutely gouge you for each KB you used. I remember a short email I sent via hotmail on my K800I. It ended up costing me £2 in datacharges.

Or when rail franchises get auctioned out they set about sweating the contract soon as possible. Anglo American companies are NOT like Eastern companies! There was an article about HK porno band 1GB per home everywhere in HK. They would not make a profit till 2016 at the earliest. HK MTR will not make a profit on the Ma On Shan lines and the New Western line till 2018-2020.

Such situations are completely unacceptable for British companies. They want to make profit NOW as much as possible (to hell with tomorrow) as fast as possible.

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We cannot return to the Gold Standard, without entering a deflationary death spiral.

The Banks should never have been allowed to create money, [debt] out of thin air. I mean seriously, why were they ever allowed to do that in the first place?

We cannot create a new currency without global co-operation between creditors and debtors. Never happen. I think we'd see entire countries collapse, or even War before we saw that.

A good book is the 'Collapse of Complex Societies', Tainter 1988.

According to Tainter's Collapse of Complex Societies, societies become more complex as they try to solve problems.

When a society confronts a "problem," such as a shortage of energy, or difficulty in gaining access to it, it tends to create new layers of bureaucracy, infrastructure, or social class to address the challenge.

Tainter, who first identifies seventeen examples of rapid collapse of societies, applies his model to three case studies: The Western Roman Empire, the Maya civilization, and the Chaco culture.

As the Roman Empire grew, the cost of maintaining communications, garrisons, civil government, etc. grew with it.

Eventually, this cost grew so great that any new challenges such as invasions and crop failures could not be solved by the acquisition of more territory.

Intense, authoritarian efforts to maintain cohesion by Domitian and Constantine the Great only led to an ever greater strain on the population.

We often assume that the collapse of the western Roman Empire was a catastrophe for everyone involved.

Tainter points out that it can be seen as a very rational preference of ordinary individuals at the time, many of whom were actually better off.

Average individuals may have benefited because they no longer had to invest in the burdensome complexity of empire.

In Tainter's view, while invasions, crop failures, disease or environmental degradation may be the apparent causes of societal collapse, the ultimate cause is an economic one, inherent in the structure of society rather than in external shocks which may batter them:

Finally, Tainter musters modern statistics to show that marginal returns on investments in energy, education and technological innovation are diminishing today.

The globalised modern world is subject to many of the same stresses that brought older societies to ruin.

Ring Any Bells? Sound Familiar?

History is doomed to repeat itself because Human Nature does not Change.

Edited by Dan1

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Let's tailor this a bit.

Any bank with a loanbook of greater than £x bn (including all subsidiaries and beneficial or legal ownership) must have a banking license, of which only 5 are on offer. All banks in this scheme must also pay a too big to fail tax of y% of their balance sheets.

Banks below £1bn can trade without a license.

Edited by Mikhail Liebenstein

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Its one possible way to claw back some of this wealth that belongs to the public from the private bankers. The expansion of the money supply goes along with the expansion of the production potential of the nation. Which is the result of the combined efforts of the people of the nation(and technological progress globally). However this gain which rationally should be given to all citizens equally, is going to a handful of private bankers. Which is why we see them with mind boggling pay and bonus packages.

There is a very easy solution. It is simply to take away the ability for these banks to create new money. The major banks would become just like credit unions are now. They would raise money by offering attractive deposit rates, and give out loans as they acquired more deposits. Credit union employees today earn a salary that is in line with other industries based on their experience and abilities.

For new money, Britain requires about £350 billion a year expansion of the money supply to hit the 2% inflation target. The central government would simply print that and spend it into the economy each year. That woud also erase our £175 billion deficit and give enough extra room we could simply cancel the income tax and still run a balanced budget.

It seems absurd, but that is how large an annual subsidy our society is giving to the bankers.

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Its one possible way to claw back some of this wealth that belongs to the public from the private bankers. The expansion of the money supply goes along with the expansion of the production potential of the nation. Which is the result of the combined efforts of the people of the nation(and technological progress globally). However this gain which rationally should be given to all citizens equally, is going to a handful of private bankers. Which is why we see them with mind boggling pay and bonus packages.

I've always thought of it more like the result of a system where nearly all transactions pass through the banks and there's nothing to prevent them helping themselves to as much of it as possible (as long as the parasite doesn't kill the host, which it's just about done - but for a while is happy to feed on the corpse), but what you say could well be the bigger part of it.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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