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Technology to End Banking

posted by Dopefish on Monday February 24 2014, @11:00AM   Printer-friendly
from the money-in-the-mattress dept.

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?"

 
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  • (Score: 1) by G-forze on Monday February 24 2014, @12:41PM

    by G-forze (1276) on Monday February 24 2014, @12:41PM (#5942)

    Inflation could be controlled by the amount in circulation, roughly the same as it is now. It would give people a guaranteed income in an age where automation is reducing our need for labour.

    This is a problem that I seldom see discussed even though the newspapers nowadays seem to be filled with articles stating "Technology will eliminate our jobs!". The problem is not that automation is making goods cheaper to produce, but that the savings are not being distributed among those that formerly benefited from the revenue (i.e. the workers), but stays at the top which gets ever richer while the workers are laid off. I see no way in which the market forces will correct this shift in power, and am afraid that some kind of central planning will have to come into play. Perhaps as you suggested, through a central authority taking over the creation of money, or through heavy taxing of those making their fortunes using automation.

    Anyway, we will soon have to realize that the days when every respectable citizen had a 9-5 job are gone, simply because there will not be enough such jobs for everyone, and that some kind of citizens' salary will have to be instituted to compensate. This will have the added benefit of letting people do what they like and are motivated to do, instead of what job they happened to find, which will lead to much inventiveness and creativity. I also expect things like hand crafted goods will become much cheaper, as people see their hobbies as extra income and not something you have to live of.