Jim Devine wrote:
all I was saying is that a deflation would be extremely costly and
that the government (and thus the taxpayers) would end up being forced
to pay many of the bills. This is true whether or not there's
nationalization. Nationalization simply shifts the burden around.
With luck, it would shift the burden to the banks' stockholders.
But nationalization of banks can be about more than shifting the
burden and insuring losses................Potentially it is about
socializing investment. Even Keynes, as well as Fred Moseley more
recently in D&S, wrote about the potential greater efficiency of
investment by government, with greater oversight, and public interest
motivations instead of profits.
One question is whether bank nationalization is better,
complementary, or substitutable with higher (more progressive) taxes
and a larger share of government spending in GDP? Perhaps there is
also the market segmentation strategy of the Depression era
regulations, such as housing finance, GI benefits, etc.
There is the larger question of political will and the articulation
of "public purpose," aside from military spending, that is.
So you are correct that simply "nationalization" of banks won't
necessarily shift the entire agenda for progressive public investment, per se
Thanks for your reply.
Ann
At 06:38 PM 1/27/2009, you wrote:
me:
> FWIW, a lot of the deflation would occur at the public expense
[even] if the
> government _doesn't_ take over [the banks], assuming that there's no
> alternative
> government policy: the cut-back in credit, the way in falling asset
> and product prices make previously-taken debts more onerous, etc.
Ann Davis wrote:
> So is this a back-handed argument in favor of nationalization? Presumably
> the government could manage the deflation better, or at least make the cost
> and distribution of that cost more transparent?
all I was saying is that a deflation would be extremely costly and
that the government (and thus the taxpayers) would end up being forced
to pay many of the bills. This is true whether or not there's
nationalization. Nationalization simply shifts the burden around.
With luck, it would shift the burden to the banks' stockholders.
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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