Econintersect: Private banking is parasitic, according to the discussion with Michael Hudson interviewed by Paul Jay on The Real News Network. Hudson used the terminology of “cannibalism” referring to the effect of the modern private banking system on the “real” economy. Hudson’s solution is public banking for such endeavors as funding infrastructure, industrial production and other activities that are mainstays of the Main Street economy.
[Video can be viewed after the Read more >> jump.]
Hudson maintains that a big mistake was made in 2008 when the decision was made to bail out the banks and leave giants like Citigroup (NYSE:C) and Bank of America (NYSE:BAC) intact. The correct action, he says, would have been to seize these insolvent banks following the template of FDIC resolution for smaller banks. The resulting institutions would have been prohibited from pursuing Ponzi finance as they have since the Great Financial Crisis (GFC), but instead would have been funding real economic activity rather than speculating.
Note: Michael Hudson contributes to Global Economic Intersection.