IS THE NATIONALIZATION OF THE BANKING SECTOR A SOLUTION TO THE PRESENT FINANCIAL CRISIS?

We argue in this paper that the institutional premises of the contemporary banking system are erroneously defined. In consequence, contemporary commercial banks cannot operate under normal circumstances as any other sector of the economy. The three core elements of the contemporary financial system - namely fiat money, fractional reserve commercial banking and central banking - imply a system which is fundamentally socialized. The most logical coherent consequence of such an institutional setting is the full control and operation of the entire credit industry by the state. The present crisis is a consequence of such an institutional setting and the nationalization of commercial banking - a logical step according to the premises of the institutional setting - will but speed up the process of a long depression.