The system was supposed to channel our hard-earned savings into the best real investments ... And it was supposed to correctly price our assets. It did neither.
We need a financial sector but not one like this. Nor do we need Wall Street hitting us up for its gambling debts. What we need is Limited Purpose Banking (LPB)
Under LPB, people, not companies, bear risk as their mutual funds do well or poorly.
A new Federal Financial Authority (FFA)--would rate, verify, supervise custody, disclose and clear all securities purchased, held and sold by LPB mutual funds
cash mutual funds. These funds would strictly hold cash and be valued at $1 per share. Owners of these funds would write checks against their balances and never have to worry about a bank run. Fractional reserve banking and the FDIC would be history.
I wrote a comment a while ago about what it would be like if we got rid of the lending. I think it was on askme, but I can't seem to find it now. I thought it would be mostly the same. Rather then "banks" we'd have "cash collectives" that stored our money, and we all would have to pay fees to maintain them.
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