Saturday, 27 September 2014
Musgrave’s law of banking.
It goes like this.
1. Neither of the two main activities of banks, accepting deposits or making loans should be subsidised.
2. Therefor all subsidies should be removed.
3. Removing subsidies by definition means that all bank creditors become shareholders, even where they are CALLED “depositors” or “bondholders”.
4. However, there is a legitimate demand for a totally safe way of lodging money, thus government should provide that service and on a non-subsidised basis: something that governments already do in various countries, e.g. National Savings and Investments in the UK.
5. And that all amounts to full reserve banking.