This is simple, straightforward, and disintermediatory, so I imagine everyone involved will fight to the death to prevent it happening.
With that said, as closely tied our government and the major banks are there might not be much functional difference from power they have today.
Non American here.
They already know and/or could trivially find out. There's no more barrier to them finding out now then there would be if there was some new, nominally independent government entity involved. That is to say a very thin wall preventing what you describe.
I sometimes get the feeling we oftentimes allow for market absurdities to supposedly prevent the government from doing something that it regularly already does today, just as long as there's a 'business' somewhere in the chain.
Americans seem willing to pay more to private business and thus actually part with more of their money than they otherwise would, as long as on paper they're not giving the money to 'the government' see i.e. healthcare.
100% agree here. Today the US goverment, I won't attempt to speak towards any other government, has way too much power and ability to collect inflammation in it's citizens. We've allowed the government to assume that powers but we could also take that power away. If the government owns the bank there's literally no way to do that.
Healthcare here is a whole other massively broken system. In general yes I think it's a fair generalization that we would prefer to pay extra to avoid large governments, historically at least since we've done a really poor job keeping our federal government small for the last 80 years. It makes sense given our country's history though, and personally I'd rather pay a little more to a corporation than save a few bucks at the expense of living under a much more powerful centralized authority.
Oh wait: that is what Canadian government did to tractor-trailer protesters a few years ago.
If the industries are moved into the government officially we really have given up that fight and have to accept whatever they give us. I assume it will be cake.
It's hardly "a little more" though. We're spending almost twice as much and get almost half as little back. Objectively speaking the capitalist market has failed in this area. We have to first accept this fact before we can find any solutions. If we keep thinking "government is bad" and "private industry is good" we're only allowing further exploitation and pain; and for what? We need to be data/solution driven.
Objectively speaking the non-capitalist systems have failed in this area too. The UK’s NHS is not capitalist and it is surely isn’t succeeding better than the US healthcare system.
You can find countries where “socialist” healthcare works, but you can also find capitalist healthcare that works.
The NHS has been effectively privatized as much as the Conservatives could get away with. It is constantly underfunded. It is not an example of a system the government wants to make work. In fact making it not work is the goal.
Yet when a family member of mine needed a life saving operation, they got it promptly and it didn't send them into any debt, whereas in contrast there's something like 50k preventable deaths a year in the U.S. due to lack of healthcare and people of poor means actively avoid visiting the hospital, so the NHS still works better for the vast majority.
Yes, for us in the tech industry and for elective procedures it's not so great, but that also perhaps isn't what regular people need.
I love that term. If you prevent death one day, only for them to die the next, is that one preventable death? What if you do that five days in a row? Death is not preventable.
Extra years of quality life, I can get on board with. Especially because it sounds more manipulable, so you are more wary about it’s meaning.
To put 50k/annum in perspective, 3.5 million people died in the USA in 2021.
It’s a difficult area to come up with numbers for: https://news.ycombinator.com/item?id=34045778
> people of poor means
Don’t poor people get some free healthcare in the US - although relatively how good that care is compared with other countries I don’t know. I thought it was the middle class that lose everything.
Privatize the gains, socialize the losses.
It's rare to find a way to "no true Scotsman" as hard as communists, but you've managed it.
But to address your point: contrary to what you're implying, Medicare spending is actually lower on average relative to spending on 65+'s in other countries; in e.g. the NHS, they're 18% of the population and 40% of the spending[1]. i.e. per-person spending is much higher in retirees. Contrast this with the US where per-medicare-enrollee spending (13k) is almost the same as the average spending (12.5k), because the non-socialized (capitalist) part of the market pays so much more than in other developed countries, that it doesn't bring down the average despite the younger cohorts having many fewer health problems.
[1] https://www.theguardian.com/society/2016/feb/01/ageing-brita...
Yes.
That said, developing countries are most likely to have one. If the government caps the number of doctors and hospitals in the country, like the US does with residencies and certificate of need laws, it's not very market-driven.
> There's no law that you can only have X doctors.
We have tons of these laws. All occupational licensing requirements are this law; that's the whole point of them.
It is a subsidy program:
https://hospitalmedicaldirector.com/how-residents-are-paid/
> We have tons of these laws.
Point me to one law that says you are not allowed to have more than X doctors.
Why can't we have doctors that other countries have agreed are qualified to be doctors?
Also, do you know how certificate of need laws work? It literally says you can't have a hospital unless the other nearby hospitals agree you can have it.
Taxi medallions are truly a "there can only be X many people doing this" system, but even if they're not written that way, these other laws are still intended to restrict the supply of healthcare.
nb my issue isn't whether the healthcare system is "socialist" or not, it's that it's bad. I don't think "just make the government pay for everything" is a solution to things costing too much though; if an ambulance ride costs $9000 the solution is to make it not cost that, not to share paying for it.
If an individual is willing/able to pay for the cost of residency that the gov covers there's nothing to prevent one to do so. Of course, this is not a practical solution for most, but that's another story.
> nb my issue isn't whether the healthcare system is "socialist" or not, it's that it's bad.
Agree, no argument there
> I don't think "just make the government pay for everything" is a solution to things costing too much though
Of course not, but if the capitalistic / private market has failed, I'd rather try a more gov-focused approach (or something else) than let it fester and cause more and more pain.
> if an ambulance ride costs $9000 the solution is to make it not cost that, not to share paying for it.
Agree, but how do you do that when the "ambulance lobby" owns the politicians and media who then try to convince the population that this is "the best system in the world"? You can't find a better system when you already think you have the best one (not saying you do) or that the "other" system is worse because it starts with an "s".
Pretend for a moment that Merrick receives a piece of memo from a subordinate that incriminates you in some form of bank fraud. Of course Merrick personally doesn't know anything about your bank account. Nobody has both the information and a brain big enough to store it. Hell, I have to check my own bank account regularly because I keep forgetting exactly how much is in there and it's my own money!
If something came across Merrick's desk and it convinced _him_ that it was worthwhile to investigate, do you really expect other than delays waiting for signed papers before he got the information he wanted? Do you really think there's a difference to Merrick whether he gets that information in 60 seconds by logging into your bank "as you" and looking at it, or whether he waits a few days and gets hand delivered a piece of paper by a bank's legal team?
[1] U.S. Attorney General and current chief law enforcement officer for the nation
There's some decentralization within the government also, if one branch wants something from another it (ideally) has to go the courts route too, it's not that every federal employee can just access any government records on a person, (at least in theory). If there's someone powerful enough taking interest in you to override that, I doubt a private bank is going to be a major obstacle.
I mean courts themselves are technically part of that system too. I am as cynical as the next person regarding government overreach, but I see little protection from a multi-national banking entity entangled with the government for decades in all sorts of ways.
If it was as 'easy' to start a bank as an ISP in the 90s, I could see it.
I don't think the Fed is "government" in the 4th amendment sense that it can just get information about you without a warrant, is it?
In an unrelated law, this is the reason child abuse reports from ISPs go to a private company called NCMEC. It's so law enforcement won't have automatically have access to private data in the reports without legal process.
There’s a massive difference between the data being theoretically available somewhere in your organization and “trivially” accessible vs actually being able to run a query (let alone the work to actually run the query).
With that said the unbanked crisis is severe and there are big societal benefits to insuring everyone has a checking and savings account. There’s no reason robust safeguards can’t be built into the law establishing the Bank of the United States (Third time is the charm!).
If you don't do this, the money supply gets a lot smaller.
Americans reject public healthcare because your average American has incredibly narrow view of the world, and many people buy lies about public health care in other places.
They simply buy the lie that propagandist are paid to spread that public health care includes 'death panels' or insanely long ER waits, or that you can't pick your doctor (can you now?).
The larger problem is that the government deals with things that are sufficiently complicated that they require dedicated time to understanding them and Americans aren't willing to do that on a scale that impacts government policy.
Americans spent $12,914 American dollars per capita in 2021 for health care costs. We pay over double per capita what Canadians pay.
Canada could increase the quality of the health care system by buying more services and paying more for services to increase quality.
https://www.cihi.ca/en/national-health-expenditure-trends-20... https://www.cms.gov/research-statistics-data-and-systems/sta...
I’ve had friends travel here just to get treated.
And a million+ Americans in border states travel to Mexico for routine procedures and prescriptions [0].
I imagine the numbers would be even higher if more Americans lived within travel distance of the southern border.
[0] https://www.npr.org/2023/03/08/1161888974/medical-tourism-me...
Most medical services are routine treatments that are the same wherever you go.People travel for special services, but special services don't represent most of that cost difference.
You're on the waiting list BECAUSE SOMEBODY ELSE NEEDED IT MORE. But I'm a Google developer I'm worth more to society! Who decides that? A death panel.
This level of indirection requires regulators who are always behind because of the extra layer.
Most of this information is for sale anyway.
That boat has sailed. Private enterprises collect spending information[0], associate it with your identity and sell the aggregated data to anyone willing to pay. The FBI is on the record as willing to be pay for this data. This dystopia has the "free market/small government" seal of approval.
0. Which is why every retailer badgers you into joining their rewards program based or your phone number and/or email.
With credit cards, the government shouldn't know as they shouldn't be involved, but they almost certainly do because overreach. Congress could always pass a law to block that or an individual could sue and claim something similar to illegal search. As soon as the government is the bank there's no way to bifricate the two, the deal is done.
https://www.cnbc.com/amp/select/irs-600-reporting-rule-delay... (From Feb 2023)
Nah, we'd see any lawsuits over violations of such a law get blocked due to standing issues or state secrets privilege, much like the lawsuits over the illegal and unconstitutional surveillance performed by the NSA.
States don't have the power to control the currency itself, don't control the collection of three-letter agencies, and in general are meant to have more leeway to try new things than the federal government.
Narrow banking and central bank accounts for individuals aren’t the same thing.
In fact, most CDBC projects see a role for commercial banks as KYC, fraud prevention, user interface etc. providers. – just not money creation.
It was mostly killed by the FDIC, which allowed private banks access to what was its competative advantage.
There's a proposal to revive the postal banking service in Congress every year or so; but thus far none have gone anywhere.
Oh yeah, the bipartisan bribes.
https://www.opensecrets.org/orgs/visa-inc/summary?id=D000029...
https://www.opensecrets.org/orgs/mastercard-inc/summary?id=D...
https://www.opensecrets.org/orgs/jpmorgan-chase-co/summary?i...
https://www.opensecrets.org/orgs/bank-of-america/summary?id=...
https://www.opensecrets.org/orgs/citigroup-inc/summary?id=d0...
https://www.opensecrets.org/orgs/wells-fargo/summary?id=D000...
It requires re-working the financial system from the ground up, and commitment to that new vision, because there isn't a graceful way to ease from fractional reserve to narrow banking or public accounts at the Fed, and there isn't a simple way back to our status quo from it.
Edit: I think technically the deposits where with the federal finance agency, i.e., lending to the federal republic. Don't think that matters for the discussion here.
In a crisis, it would make the narrow/public bank the natural place to drain deposits. (Similar to our SIFIs today.) As such, narrow banking would mean the end of commercial checking. That means we need to find non-bank providers of all the asset-side services, from lending to trade finance, banks currently provide. That's the re-tooling.
Do you have a source on the scope of what they did?
> some alternatives exist already, same for trade finance. I think the delta to the current state would be surprisingly small
The delta is tens of trillions of dollars. By no means insurmountable. But you don't want that changeover happening unexpectedly in a crisis.
German Bundesbank has a timeseries database you can drill into for banks' balance sheet and other data (easy to find).
Was actually the German finance agency (same thing for our purposes really, as only daily risk is sovereign Germany). There were claims that lobbying by banks killed it, but it was also not very attractive in a low yield environment. Ostensibly, it was created to broaden the funding base of the Federal Republic, I think.
This was the thing: https://www.deutsche-finanzagentur.de/bundeswertpapiere/bund...
> money storage with the respective sovereign (and daily liquidity)
You can buy overnight bills in most countries.
[1] https://www.investopedia.com/what-is-postal-banking-5217341
Wouldn't the graceful way be to... simply allow narrow banks to have fed accounts?
https://johnhcochrane.blogspot.com/2019/03/fed-vs-narrow-ban...
No. As the Fed details, in a crisis, deposits would drain into the narrow bank. Permitting a narrow bank by itself is de-stabilising. (There are a myriad of solutions to the issues introduced. From paying a lower return on non-risk taking reserves to limiting accounts to natural persons. But the point is the systemic effects have to be thought out in advance.)
Problem is, this takes a lot of money out of the economy if it catches on. That likely will reduce investment, and damage the economy. So regulators dislike narrow banking.
I suppose the Fed could try to make the circle slightly rounder here, but they may look at the hundreds of billions of dollars in such funds, which are by nature extremely "narrow" quasi-banking devices (because they only support a tiny form of maturity transformation, in asset type and term length), and decide "good enough, economic needs of this kind met"
There is no profit motive and it’s a very technically simple offering that the Fed already supports or will soon support with FedNow: I have a table of people and balances, and I only support transactions between the two.
If a bank can’t figure out how to compete with 0% interest with no value add to attract deposits, IMO they shouldn’t exist.
Regional and local banks are far more likely to originate loans to local residents, especially for unique purposes. If somebody in flyover country wants a loan to start a business, it basically has to be a cookie cutter franchise or a large existing customer for a big coastal syndicate bank to even look at it. This is one reason, although not the only one, why outfits like Dollar General are eating the downscale retail market when it used to be local general stores.
The advent of online banking and digital payments added enough value that there was really no reason to continue to be unbanked or underbanked for most people. But IMO banks have begun to take depositors for granted by offering poor interest rates and exposing us to more risk than necessary (certainly more than justifies checking or savings rates). With the recent spat of bank failures roughly coinciding with crypto, which also provides online banking and digital payment functionality, the Fed/banks need to recognize that there is a real risk that depositors will opt back out of traditional banking.
I think a shift off the dollar and onto crypto would be much worse (personally, but also for banking) than the Fed offering a path to digital mattress stuffing of the USD, because at least with that they can still influence monetary policy and keep people on the dollar. I also suspect, but have no data, that our shift towards structurally low rates and high asset prices over the last half century was partially influenced by banks’ relative share of the monetary supply increasing so much that too many deposits are stuck chasing yield/credit is too accessible for activities perceived as low risk: so if some deposits shift onto a Fed narrow bank, banks will at least find it easier to loan and offer interest at higher rates. But even beside that, I as an individual should not be obligated to deposit my money into a banking system that gives me poor risk:reward - and when better options exist, I might not. So the banks and Fed better figure out something better than crypto or a fireproof safe.