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mrbluze writes:
"An interesting blog post by Charles Hugh Smith on Why Banks Are Doomed: Technology and Risk.:
The funny thing about technology is that those threatened by fundamental improvements in technology attempt to harness it to save their industry from extinction. For example, overpriced colleges now charge thousands of dollars for nearly costless massively open online courses (MOOCs) because they retain a monopoly on accreditation (diplomas). Once students are accredited directly--an advancement enabled by technology--colleges' monopoly disappears and so does their raison d'etre.
The same is true of banks. Now that accounting and risk assessment are automated, and borrowers and owners of capital can exchange funds in transparent digital marketplaces, there is no need for banks. But according to banks, only they have the expertise to create riskless debt.
...
One last happy thought: technology cannot be put back in the bottle. The financial/banking sector wants to use technology to increase its middleman skim, but the technology that is already out of the bottle will dismantle the sector as a function of what technology enables: faster, better, cheaper, with greater transparency, fairness and the proper distribution of risk.
There may well be a place for credit unions and community banks in the spectrum of exchanges, but these localized, decentralized enterprises would be unable to amass dangerous concentrations of risk and political influence in a truly transparent and decentralized system of exchanges.
It's still early days, but can new electronic currencies such as Bitcoin become mainstream without the assent of governments?"
(Score: 5, Insightful) by Sir Garlon on Monday February 24 2014, @11:40AM
Well, probably Americans think it's a good thing because they've had ~200 years of success with it. Issuing and regulating currency has been a function of government since ancient times. It's "How It's Done." Any alternative that's proposed will have to demonstrate it's better than government-issued currency. Suggesting people are daft because they don't see the same urgency for upheaval in the financial system is probably not the best way to set about persuading them.
[Sir Garlon] is the marvellest knight who is now living, for he destroyeth many good knights, for he goeth invisible.
(Score: 2, Insightful) by migz on Monday February 24 2014, @12:16PM
Well Gold has outlasted governments as a medium of exchange. Indeed for most of those 200 years of supposed success of American government money, it was redeemable for Gold. But governments once they have convinced people that paper is just-as-good, they forget about the backing. Then government starts printing money / debasing the coinage. Then the currency becomes no good. Then the government falls.
Not my wish, its the lesson of history.
See Zimbabwe Dollar (Government is still going, but they using other peoples paper money!)
See Weimar Republic
See Fall of the Roman Empire.
(Score: 2, Interesting) by monster on Monday February 24 2014, @01:16PM
I thougth it was redeemable in gold or silver, not just gold.
The problem with these economic discussions is that it's too easy to focus in some extreme cases and forget about the rest. Yes, Zimbabwe was nasty. It would have also been if they were using the gold standard, since the backing is efective only when redeeming, but printing is "free". Weimar was also a case of not having anything to back your coin, but since they were required to pay big war reparations to France, they would have been screwed anyway. And the Roman Empire had many economic problems, although they were using the gold standard: You can say dabasing their coins was the cause of their fall as much as price-fixing (easy way to get support from the lower classes of Rome) or infighting (more civil wars than against foreign powers). And even after the western empire fell, the eastern empire managed to go on for another thousand years using similar coinage. But paper-money worked well in ancient China, for example.
(Score: 2) by mhajicek on Monday February 24 2014, @02:35PM
Zimbabwe is only one of many examples, and printing more money than you have backing for breaks the backing almost immediately, because people WILL call the bluff.
(Score: 4, Informative) by Vanderhoth on Monday February 24 2014, @12:29PM
Just a quick correction for you.
The US government doesn't print, issue or control money, the Federal Reserve [wikipedia.org] does. The Federal Reserve is a separate private entity, which the US government has a token say in, but no control over. A board of governors controls the Federal Reserve with the Government providing "advice".
"Now we know", "And knowing is half the battle". -G.I. Joooooe