Yes banks should be better regulated to avoid letting them make risky moves. That aside, many regional banks rather than a centralized government controlled bank is critical to our freedom. Government controlled banks or CBDC will give government total surveillance and control over us since you cannot do much without money.

In the US, a government-controlled bank would have stronger privacy because privacy is enshrined in law. Specifically my government cannot snoop on certain things.

If the government kept all of my banking records, they wouldn't be able to legally access them. Currently, they can just use taxpayer money to purchase these records from the corporations who gather them.

Sorry, you must not be paying attention or this is sarcasm. Giving the government the keys to your banking data and expecting them to respect rights is naive. Government ownership of data means they don't have to respect privacy because they already own the data.

The US government is wholesale spying on the entirety of electronic communications and working with social media sites to make some voices less prominent. Private business should be able to tell the government to pound sand when banking data is requested without a warrant or subpoena. Banks are not able to do that. Banks exist as long as they are in the good graces of regulators.

Laws prohibiting the sale of personal information (location, purchases, banking) closes the loophole.

The solution is less government, not more.

>The US government is wholesale spying on the entirety of electronic communications and working with social media sites to make some voices less prominent. Private business should be able to tell the government to pound sand when banking data is requested without a warrant or subpoena.

Do they actually tell the government to pound sand, though? In the end, if I can only rely on the moral codes of for-profit companies who are weighing the value of a good relationship with me versus one with the US government, then I can't rely on much. But the government can and regularly does tell itself to go pound sand. Like the IRS, Census, or any agency with confidential medical records.

Also, your examples are of private companies selling data. The government is the buyer in those scenarios, not the guardian.

IMO, data is less likely to be shared between government agencies because rarely do both parties benefit. For a company, the database team wins when sales wins, as long as they get to present their success together. Government workers follow strict pay scales, get no bonuses, and have nearly guaranteed job security. They also have notoriously few ambitious ladder-climbers. It's hard enough to get them to share data with each other when it's legal and ethical. If there's any possibility sharing data would break rules, government will refuse to risk it.

You're dancing around a point.

> for-profit companies who are weighing the value of a good relationship with me versus one with the US government

For-profit companies shouldn't need or care about a relationship with the US government beyond selling the same product they do to everybody else. That is my ideal. How to get there is the contention. You would like to give the for-profit company to the US government and thus removing the relationship. I would like to see the power the US government has over for-profit businesses reduced and preferably eliminated. Giving banks to the US government results in less private sector and a larger government. A larger government makes more people dependent on the success and benevolence of the government. History has proven unequivocally that governments cannot be trusted to remain neither benevolent nor successful. Concentrating power makes the temptation for government malevolence too great. Power will be abused by someone eventually. That is human nature. Concentrating power is just creating a ticking bomb. The way for more people to succeed is to reduce dependence on government and distribute power among businesses that serve only their customers. Business that are reliant on the trust of their customers will think twice about betraying that trust. If their customers ever learn of their betrayal it means the death of their business in competitive markets.

Large banks, and, more broadly, any large company is also concentrated power, though.

True. But large companies don't have the power to jail you, or worse, for crossing them. History has shown how hellish living under a powerful malevolent government can be.

The only reason why they don't have that power is because the government jealously guards it. In places where that's not the case, what would stop them?

Nothing. That is why we gave government the power to make and enforce laws and limited power elsewhere.

And how stable did that configuration prove to be?

So these statements seem to contradict each other:

> Government ownership of data means they don't have to respect privacy because they already own the data.

> Banks exist as long as they are in the good graces of regulators.

So we have this problem that the government doesn't want to respect our privacy and the problem that the government doesn't need to respect our privacy and somehow removing the bank in the middle will mean that the government isn't respecting our privacy.

If the government is in control of the banks it will make it more obvious to the average citizen that the government has the ability to snoop on transaction information and it might be that such citizens decide to demand stricter privacy measures.

Back to this statement:

> Banks exist as long as they are in the good graces of regulators.

That's kinda my point. The governments run the banks in practice, just not in theory. Changing that "not in theory" part brings the understanding to the citizenry that they can demand certain things from their bank.

I do not agree that giving government more power over banks is the solution. It may make it obvious to everybody what reality is but you just handed the keys to the entity that is abusing their powers already. Giving the government more power only reduces ours.

Apply your logic about laws to private banks. Make it so private banks have to adhere to some new law. Same outcome.

> Apply your logic about laws to private banks.

I'm pretty sure that's actually a more ambitious endeavor than insisting on a government-run solution. I otherwise still see the same issue in OP's comment: there is no reason for the private bank to exist.

I’m sure all the spooks in the three letter agencies will totally keep their hands out of that cookie jar.

All the commenters here that think the federal government should directly provide their banking services are going to be in for a rude awakening if it ever actually happens.

At least it would give a private citizen recourse if snooping did happen; it would become private by law. It is currently not.

Maybe it all goes south and people are worse off with their privacy than now but I can't even imagine what "worse off" would be. The particular example you gave ("spooks in three letter agencies") currently happens and I can't exactly expect it to stop. How could it be worse?

I’m curious, what recourse do you or anyone else have against the CIA, FBI, or any other Department of Justice or Intelligence agency that you wouldn’t also have with a commercial bank?

The commercial bank has something called a "privacy policy" in which they explain that they will choose not to respect my privacy. A government entity isn't allowed to do that. There are actually stricter laws for government invasions of privacy than corporate.

To your concern that these three-letter spooks will spy on you: what would they do that they're not already doing? That isn't to excuse the spying; I'm just pointing out that these are separate issues. Tackle the fact that the NSA compiles all unencrypted HTTP traffic separately from the fact that JP Morgan Chase knows my financial history and doesn't have to care about keeping it private per my idea of private.

So are ypu saying the constitution and its privacy protections are totally useless?

I'm intending to say the opposite. My point is exactly that a government-run bank affords citizens this constitution-protected privacy because the bank would explicitly be a government entity.

(Unless you're asking whether the protections are useless against corporations. Then yes, they're useless.)

Technically, the CBDC could be a privacy coin, albeit very unlikely.

GNU Taler works fine. People have an anti CBDC bias that they project onto GNU Taler regardless of the privacy benefits of it.

It is already hard enough for the GNU Taler Team to get their technology adopted. When you see comments on HN you get the impression that it is very unpopular hence it won't be implemented and the expectation is that any CBDC won't be privacy friendly.

There's no "should" because there's no high authority in humanity which decides what should and shouldn't exist. Banks exist because some people want to found banks and then other people want to use their services. The only way to prevent this from happening is to threaten violence or threat of violence to either of these people.

The better question would be, why would anyone use violence to force his opinion on other people.

> Banks exist because some people want to found banks and then other people want to use their services.

That's not quite true. Take a look a the various narrow banks which have been founded and people want to use their services, but the government won't approve them to operate.

> The only way to prevent this from happening is to threaten violence or threat of violence to either of these people.

That's a weird view.

We could also just, you know, vote away banks. I'm not sure why a centralized bank would result in violence.

How are laws and the will of the people enforced? Typically via fines or jail time... both of which are backed by violence.

The enforcement of this vote (or law) would be violence against others. Majoritarian tyranny is still just tyranny.

OP is making a dumb libertarian argument basically saying "there's nothing stopping people from doing what they want except the threat of force/violence" (which is trivially true, and the mechanism by which any group of people - even democratic societies - imposes their will on insiders or outsiders), and "do you really want to use THE THREAT OF VIOLENCE to prevent me from STARTING A BANK???" as if it's different from the enforcement of any law. OP questions the use of "should" uncharitably, because the original comment's unstated assumption is clear - society "should" be set up to tradeoff freedom and minimizing collective harm. Violence is not the only form of harm; unregulated banking can obviously cause harm in the society (starvation was pretty harmful in the US during the Great Depression), and so it's valid to question whether or not society should consider how the benefits of private banking (with any amount of regulation) trade off with a public alternative.

The answer to that question, is the very same reason you gave for why banks exist.

Banks do more than hold deposits; they also loan money. This is not a business you want the government in; nor do you want to eliminate private sector loans.

State owned banks are usually a bad idea for one reason, corruption. Historically, having the government control money supply is usually a recipe for prolific corruption. A good modern example is Turkey.

The same kind of behavior happens in the private sector. Since it’s not government, we don’t call it corruption.

While corruption is never good, I’ll take private-sector corruption over government corruption every day of the week if I’m forced to choose. Governments are sovereign.

The government is corrupted by its relationships with the private sector. The only other way to pull money out of government is through salaries, and government workers don't get paid that much.

Most people are “the private-sector”, it’s called society and includes every voter not working directly for the government, which is most of them. If a government is necessarily corrupted by its relationships with the private-sector, then the word corruption is meaningless in the context of government. You should also mind that governments can also be corrupted—can be but not necessarily are-by their relationships with their own employees. I advise you to find and apply a limiting principle, one that would be useful for you in distinguishing government corruption from government business.

Would you rather have one bank of thousands fail due to corruption or have the one state owned bank fail and the entire economy grind to a halt?

Small banks constantly falling like dominoes won't do much to instill confidence in the US.

Besides people aren't stupid. If small banks are not too big to fail everyone will switch to a bank that is too big to fail.

Corruption comes in sorts of form, is unavoidable, and is a very grey subject. It’s a tough balance between growth and exploitation. But historically, government rooted corruption tends to be harder to remove than “buying” politicians” which the rich and banks do nowadays. Stanford has a really well explained thought process on this on their online philosophy library.

Governments are even worse than banks with money, if they were private companies every government would be bankrupt ages ago.

The house hold sector wants to save net. The corporate sector wants to save net. The government wants to save net. Tell me, where is the money supposed to come from? Will you drop it with a helicopter?

At some point some people have to spend off their money.

I am certain that the people who make comments like this have never lived in a country where they had to deal with something like a government-owned bank.

> Theyre just skimming middle man between the government and end consumer.

You're thinking of the "federal reserve" as "the government." This is a tempting but extremely flawed point of view.

> If youre in trouble with the irs or the law, the government will have all the insight they request.

These institutions make mistakes. They're also not immune to corruption or politics themselves. Government agents have qualified immunity. Do you really want to bank with someone you essentially cannot sue?

> I know the interest rate should be set by banks and not the politicians, but yeah, is that really it?

Rates should be set by the _market_. Which would be easier if currency were backed by anything other than _fiat_. You are in a tarpit, going further down is not the secret way out.

> neutral like the irs

What makes you think the IRS is "neutral?" Or presuming that's true, given this new responsibility, how are they capable of maintaining it?

Finally.. wouldn't something simpler, like just reimplementing Glass Steagall be the better idea? Let's make "consumer banks" and "investment banks" different and separately regulated again.

>And if they fail, the fdic needs to cover, also tax payer funded.

The FDIC is funded by the banks. It's backed by the US government in case it fails.

Who should set the rate on interest for loans?

Just one entity without any other consumer options?

What happens if the government makes a ton of bad loans that never get paid?

Why can't that be the central bank? We don't have private courts?

I ask again: What happens if the government makes a ton of bad loans that never get paid?

The government would seem to have every recourse to collect.

Hard to collect money on unemployed and dead.

Your thinking is too fine grained. Missing forest through the trees.

For a nation state with it's own currency, money is the sum of the production capacity / natural resources of that nation state.

You don't need Joe and Sue to pay you back.

This line of thinking is just flat out wrong, and uneducated.

Price discovery is critical to any system, and money is the shared store of value of those that hold it so long as it retains that store of value.

Producers set prices to make a profit, if they can't do that they stop producing. Factor markets, same things happen, as an employee you don't do $1000 of work in exchange for $1 in purchasing power by the time you get paid.

When government debases currency, unproductive efforts unwind into losses at the individual level, and inflation at the macro level. You can't print money out of air and use it to pay for things without issues that result in cascade collapses over time. The more you do it, the bigger the bubble, deflation, and crash/collapse from a combination of interest rates (that need to raise to fight inflation) and bubble pressure.

If it continues, eventually credibility is lost, and the currency is abandoned. This usually happens sometime after a 3:1 debt to GDP ratio, though it can be much higher, anything after 3:1 is where the smaller effects become noticeable.

I'd suggest you educate yourself a bit more on this. I'd recommend Debt, the first 5,000 years by David Graeber as a starting point, and then Big Debt Crises by Bridgewater/Ray Dalio for case studies of how these things actually play out.

If pricing becomes irrational, you run into economic calculation problem, breakdown, shortages ensue, then death (its been tried in non-market socialist systems).

There's a good reason central banks were not allowed during our countries early years. Quite simply, its well known in a historic context that money printing can end civilizations.

Okay Joe and Sue don't pay back their loan.

Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet.

Congratulations your civilization just discovered run away inflation.

The house is still there, it is repriced and sold.

The bank cannot lose money because money is a representation of all production and resources in the economy. (Edit: balance sheet is always zero)

There is no deflation because you are the bank and you can print money.

There isnt inflation because you can tax assets or reduce velocity of money (i.e. inflation) through transaction tax.

What marvelous central bank and government work together so perfectly as to have neither inflation nor deflation? Have you seen the central bank and government in the US? They’re both highly incompetent and ridiculed domestically and internationally.

Joe and Sue also don't pay back their loans to private banks, and those banks get bailed out.

Depends on the size of the bank. Obviously the government prints money when it needs to buy ideally it ain't just freely printing willy nilly every day.

In a manner of speaking.

Take a look at student loans, how have they been intending to collect on those lately?

> Why exactly should banks be private companies at all?

It's a government trust. The only use of banks is to realistically evaluate loans, but priced-in bailouts take away all of the risk, and with it all of the signal. People get loans because they're insiders who have relationships with bankers, or because they're objectively overpaying for them.

If banks will always be bailed out, the proper amount of interest that should be paid on a loan is 0%.

The thing that private banks are supposed to do is compete on accurately assessing and pricing risk (for lending). The better they do at this, the lower the rates they can offer on loans - more demand for loans - and higher returns they can offer to depositors - more supply for lending - with higher profits for themselves. They compete on this spread in a market.

I do not think the government would be good at doing this at all. Assessing risk is very hard, and the competition is necessary for it to benefit consumers. Politicians could pass extremely harmful or stupid policies for populist purposes.

That said, because banks have an oligopoly on “give me a place to digitally hold money” and in practice more money than they could ever really productively lend (why do you think interest rates have been trending down so low historically?), they’re not doing a great job at either side.

That’s why I think the government should implement only narrow banking where they don’t lend, just manage the table of accounts and amounts, and let banks compete against that for deposits. You would still move money to a bank for yield, provided it’s good enough, and banks would still be able to lend and stimulate the economy. Yes they’d have less capital and be able to lend less, which may require structurally higher rates (which may actually be a good thing in the long run- a lot of lending and low rates are just going towards bidding up fixed assets like land or leveraged stocks, and not actual economic activity) but that would balance out with higher yields on deposits.