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: 3, Interesting) by istartedi on Monday February 24 2014, @01:23PM
Some of your rebuttals to the radical Libertarian ideology
are good; but your last paragraph takes it a bit too far. Some
wealthy people actually benefit quite nicely from hyperinflation,
especially if they help orchestrate it. Those who see it coming
are well positioned to do things such as buy a motel for a few
gold coins, while most ordinary people suffer. Bill Gate's fortune
wouldn't be worth a loaf of bread under hyperinflation. The last
time I looked into this whole bloody issue, IIRC holders of equity
during the Weimar period lost only half their wealth. One is tempted
to think that stocks would retain their full value just as gold does.
The 50% haircut is due to the fact that businesses must manage the
monetary stress. It cuts into the bottom line, and may even cause
some of them to fail. Larger firms like Microsoft wouldn't fail
outright; but would have several bad quarters as they struggled to
manage the hyperinflation and engaged in unproductive activities such
as making sure that Excel accommodated humongous dollar values.