Harry Bosch
Contributor
No, people could deposit as much money in commercial banks as they want to, but the economy would be less dependent on commercial lending.
That would be a political decision. A functional finance model just puts the option on the table without it being ruled out by bogus budget constraints.
Yea, I'm just 100% opposed to this. Bankers should be neutral. I want my company to be judged on our performances and our credit worthiness. I don't want to be judged on my loyalty to the local government czar.
Now that is a fair point. There's obvious scope for corruption and cronyism.
I think there are at least partial ways to mitigate it : performance-related rewards/promotion for the "czars"; startups go it alone once up and running; non-public funding still no less available. But... yeah.
Again : private sector lenders overwhelmingly fund competition for existing real estate and asset bubbles which actually damage the real economy. I'd rather the private sector took care of itself but it ain't doing so.
Again : funding startups would be a small - and not necessary - part of it (on which you have fixated). A functional finance model just puts the option on the table. I'm mainly talking about funding public goods i.e. the sort of things Bernie Sanders or Jeremy Corbyn propose, which get slapped down with deficit-hysteria.
Actually, banks do no like lending for speculative purposes. In fact, many banks are totally out of that market. I'm a strong borrower, but my bank would not finance my purchase of bare land unless I had a plan to build a new commercial building on it within 6 months. Below is a link that shows the portfolio of the largest five US banks:
https://www.forbes.com/sites/greats...folios-of-the-largest-u-s-banks/#32727d06759a
According to the link, CRE loans (commercial non-owned occupied loans) make up only about 10.5% of all bank loans. Commercial banks mostly lend for lines of credit, mortgages, equipment purchases, owner occupied buildings and etc.