Thanks for the thoughtful reply — I really appreciate you engaging! Just to clarify though, I do aim a substantial amount of critique at central banks throughout the piece. I explicitly point out that they control the issuance of base money, trigger bailouts through QE, and ultimately enable the entire debt-based model to persist. In fact, the whole article builds toward a system where central banks can’t step in to socialise losses — because that’s the root of the moral hazard. /P
Discussion
Ok but isn't then a logical conclusion that one should eliminate central banks, and not banks or the mechanisms by witch credit money is created. There is obviously useful purpose in such scheme, to allow people to start a bussiness when there is no one to give them money for it. E.g. there is one bakery in the city i want to open another one, obviously there is a need for more bakaries, I take credit, once i return it i do not have to share profits with investors. And everybody is happy because the price of bread goes down.
I think the issue today though is that so often that is not what happens. That small bakery or small business owner can’t get a loan, even though that’s how it’s “supposed to work”, because the big banks much rather lend to corporate giants that can pledge big chunks of collateral. Again, I have nothing against lending as long as losses aren’t socialised. If a given bank wants to lend at a fixed rate, they (along w depositors) should also take the fall if it doesn’t work out—not the public. But as a depositor, ask yourself if you’d be willing to put your money in a fallible bank for a mere 3% interest and risk losing everything (no FDIC insurance, no bailouts). The only reason I think the answer is yes today is because it’s a rule of thumb that banks are bailed by government. If the answer is no, the current banking model would have to change under BTC. I believe it will be a bottoms-up change.