As for business loans: you can get small-business loans on
PayPal right now. It's called Working
Capital, and the borrower is given the total amount due right up front.
As for the commercial paper market: there is no technical reason why a transparent exchange
couldn't enable borrowers and owners of capital to set short-term loan rates
via transparent bidding with automated software.
The obsolescence of banking includes the Federal Reserve--the ultimate middleman skimming operation. But what about providing liquidity in credit panics? Well, to start with, once the banking sector is gone then the concentrations of risk and the obscuring of risk that go hand in hand with banking also disappear-- the forces that generate panics will have been dispersed. Those forces will have vanished along with the middleman financial sector that created all the risks, speculative excesses and panics. If there were a liquidity crisis, the Treasury could create and lend whatever funds were needed. <="" b="">
But what about
manipulating interest rates and other forms of financial repression? Interest
rates would be set by millions of borrowers and owners of capital in
transparent transactions.
What about all those great investing services offered by big banks and Wall Street? As many have observed, automated index funds outperform 99% of fund managers over 10 year time frames. So Wall Street is also obsolete.
Once we get rid of these obsolete middleman parasites--Wall Street, the banking sector and the Federal Reserve--we have a delightful question to answer: what else can we do with the $1.25 trillion we'll save every year by eliminating these obsolete financial middleman parasites? A lot.
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