Nationalisation of all Bank's. Is this the future?

Banks have been nationalised across the globe. In the USA, UK and even in little old Ireland. This has been seen as a last desperate step by governments to preserve the financial system. For decades banks have looked for further deregulation and the removal of constraints so they could go about their profitable business. But when they manage to run their business into the ground they come to us the taxpayer looking for a bailout.

The main aim of a banking system according to the classical economist Adam Smith is to allow financial inter mediation. Banks allow people to deposit money when they have excess funds and lends money to people who require them. Its a simple concept but in the modern globalised society banking has become a different monster all together.

Banks cannot be trusted. I speak from experience as a lowly placed and under paid employee of one. An unregulated financial sector has lead to banks throwing prudent lending criteria out the window. It has been replaced by 100% mortgages and unacceptable lending practices. Banks answer only to their shareholders and generally only to the one or two with a controlling interest in that particular bank. This global recession is not the first we have had. But previous global downturns have not made us any wiser. The unregulated market that promotes consumption and encourages debt has certainly not provided us with a stable and sustainable economy. The financial elite of this world always seem to wriggle out of regulation and control. They send the whole western world into a mad dash for higher profit and margins,more consumption, more personal debt. This approach always leads to the inevitable economic crash. Why does this happen? Well the financial elite of the world don't feel a recession like we do so they just don't care. All it means to them is they have to cut back on fuel for their private jet. Its great being a free market capitalist especially when the state is there to bail you out.

So here's a crazy idea. Instead of nationalising the banks short term. Why don't we hold on to them. Lets go a step further why don't we nationalise them all. OK before you paint me red and burn me at the stake for being a commie hear me out. I am not suggesting that we all quit our jobs and head out to collective farms (not yet anyway), this is a sensible suggestion. If we really want a sustainable and stable economic system its the only option that makes sense. Why hand the reins back to the same greedy financial elite that got us into this mess. State controlled banks could lend at fixed and fair rates and also hold deposits at fair rates. State controlled banks would have a remit to promote prudent business and personal lending. With the financial system in state hands we could remove our economys from the boom and bust cycles that characterise them. Now is the time for the government to take back control of the financial system to protect the people of their respective countries. Banks should not be money making monsters that can destabilise the global economy. Adam Smith one of the shining lights of Capitalist economic theory would certainly not endorse what the financial system has become. As Marx & Engel’s put it, “Modern bourgeois society with its relation of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer, who is no longer able to control the nether world whom he has called up by his spells.” This was written over 100 years ago but I think the relevance should not be missed when we plot the course of the future of our financial system.