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Comment by randbox | Hacker News Reader

> There is a middle ground between banning and a free for all.

Providing basic banking as a public utility so most deposits by individuals, local governments, and small businesses are not stored with investment banks engaged in speculation. Public banks can be limited to originating loans on 100% security of material personal property such as crops, livestock, cheese, gold, lumber, steel and prohibited from originating loans on security of state property such as money (which might be obtained via leveraged loan from another lender) or on security of common property such as excess real estate values attributable to land scarcity.

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> banks can be limited to originating loans on 100% security of material personal property such as crops, livestock, cheese, gold, lumber, steel

The problem isn't getting loans on one's crops. It's transferring the price risk to someone better able to bear it.

Farmers want a guaranteed profit when they plant. Loans don't address that. Futures do. (It's why they were invented, in the 17th century, by the Dutch and Japanese.) The only real alternative is government guarantees. Those bring their own host of problems.

futures don't guarantee a profit, only a price. it's up to the farmer to decide whether the price is worth the planting (regardless of profit). and the pricing function only works well in an uncorrupt market.

the problem isn't the existence of the futures markets, but the same kind of over-consolidation that corrupts every laissez faire market, making them inefficient and brittle in the long-run. if regulation encouraged primarily mid-sized firms, rather than a few large ones, we'd have better informed and more efficient markets, albeit less lucrative since the firms wouldn't have undue (read: corrupting) influence.

note that insurance is another alternative to futures or gov guarantees, though i'd question the need to externalize risk, which manifests a critical market-shaping signal.

You mean growth dependence. When you are forced to grow every year and you can't grow by getting new customers you must steal existing customers from other companies by acquiring them.

'growth dependence' is just a symptom of greed, which is also the root driver of over-consolidation/corruption in markets. that's why a thoughtful regulatory stance is essential to high-functioning markets (e.g., anti-trust, not price controls), rather than the slapdash shit we have now, where parts of markets are highly over-regulated to ensure regulatory capture, while other parts are highly under-regulated to externalize risk.

> The problem isn't getting loans on one's crops. It's transferring the price risk to someone else. When a farmer plants, they want a guaranteed profit. Loans don't address that problem. Futures do. (It's why they were invented, in the 17th century, by the Dutch and Japanese.)

The problem is excess credit available to financial firms engaging in leveraged speculation and financial services investment, resulting in financial sector employment and compensation that is super-proportionate to any real savings generated for non-financial producers. This leverage is enhanced by the lack of free (zero-fee) public alternative for basic banking services. It is not necessary for public banks providing basic banking services to guarantee profits for farmers. Provide savings, transfers, and liquidity loans at present values at what an option to sell existing previously planted crops would be worth might be sufficient to reduce deposits held by banks engaging in leveraged speculation. Providing basic banking as a public utility is the middle way the parent commenter advocated because it does not require banning anything.

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