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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 beckett on Monday February 24 2014, @10:30PM

    by beckett (1115) on Monday February 24 2014, @10:30PM (#6339)

    Right, and that's why deflation is so bad. It works against the economy; in a healthy economy, you want people buying and selling a lot of stuff. You don't want them hanging onto money, because that's economic activity that isn't happening.

    this may or may not be true. certainly in the idea of free market economies this may be true, but also understand by keeping interest rates at 0% or lower, this already disincentivises a savings account, and encourages leveraged investments.

    most of us live beyond our means and owe our soul to the company store. this is what a "healthy economy" with lots of spending, rather than instilling the ethic to save up for a rainy day, does to people. if you owe money on a mortgage you will not want to go on strike, and perhaps this type of compliance is exactly what people need from a dissatisfied underclass.

    i'm not saying the economy is as simple as this relationship, but we should at least recognize there are benefits to saving, and people should be incentivised to save more than they currently do. with easy access to credit, someone can put themselves into financial ruin far quicker than their parents or grandparents could.