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November 10, 2010


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Chris, I bet you didn't realize where this was going to go when you decided to support Venessa's actions. Nor did I. But this rocks, in a way. That aside, a few concepts that held my attention here.

Better fossil fuel vehicles are good, but remain a transition technology, with electric vehicles up and running in a few years. I would appreciate if the same industry built them, because of their experience with road holding and other safety features. Yet, the industry is plagued by lobbying and less newsworthy maneuvering for favorable regulation, and other skulduggery. "Car Wars" by Jonathan Mantle is an entertaining read about what's molding in the closets of the brands we all know. What makes us think regulated ____ are any different? (Name a cartel of your choice.)

"why I keep saying that these are separate areas: commercial and community, as gifting does not assist in increasing wealth." Yes, if your yardstick is goods, services, or their latent form, currency. No if you teach a man to fish, or share other investments of time, attention, and other immaterial currency.

Agreeing with the innovate approach - the banks are best left regulated to stay focused on what they understand pretty well and can (usually) be trusted with, material wealth. They offer a commodity service that a majority of people do not wish to build relations with. Banking is not sexy, and that is good. If it was, it would set off a lot of red lights in the trust department.
All clear, I take my attention elsewhere.

Jacqui Taylor

Not sure what happened but my last post disappeared! I'll try again.

Chris great post, you are definitely ensuring the door remains open.

I largely agree with your comments apart from the following:-

“So, even with reform, it is unlikely to result in reform of the oil of financial refining and drilling as any radical changes to that system creates systemic instability”

The engines of the financial systems are largely legacy back office systems which have been neglected for years, and tinkered with only when necessary. Whilst I doubt that the lethargy to refresh these ‘webs of tangled spaghetti’ will disappear overnight, disappear I believe they will. The technology to achieve this already exists, however a reduction in the Total Operating Costs has not initiated this change.

However the day approaches when this will be done. Will it be a result of the success of new banks, such as Bank Simple attracting enough deposits to produce a tipping point and the resultant mad scramble from the incumbents to sort out the back office? Or will it be as a result of one of the incumbents, or even a group of them deciding enough is enough? Only time will tell, I know where my money is!


funny that CoCreatr honed in on the same phrase that i did -

"gifting does not assist in increasing wealth"

i argue that it most certainly does, depending on how wide one would choose to expand their definition of wealth.

but this is where i have very much enjoyed your clarifications of what the banking industry is and is for. it is rather cut and dry, dealing with infrastructure, trade, material things.

we need those things. we need buildings and roads and marketplaces. but i believe there is a peak to materiality before it starts devolving into something damaging for mind/species/planet. our current models reward growth for growth's sake, mindless hyperconsumption, planned obsolescence.

i don't know that these things are necessarily healthy or sane.

(it's what IS, but that doesn't make it favorable or optimal.)

i'm interested in seeing what would happen if we redefine wealth to be inclusive of the strengthening and preservation of systems, not based on waste and scarcity. then create currencies that facilitate the building of that kind of wealth. that would be disruptive.


"First, a key question: if banks are oil, how can you build better vehicles?

I think we’ve been arguing the wrong point when we attack the banking system per se, as the core of banking – the bit that it really exists for – is to oil global trade, as opined by Stephen Hester, CEO of RBS."

There is a theme in the last few of your posts, to remove the banks from the argument, that banking (as defined) exists a priori and we are just talking about what we will bank. While I understand this position based on your client base, it is still a position and not a fact or even a good assumption. Banking is a fiat system, someone declared it into being, then called it Good.

Value exchange and stores of value existed long before the invention of banking. They will exist long after banking is no longer required.

Bastiat (sp?) declared that private property continually destroys itself, becoming transformed into communal wealth, that we focus on solving our own ages problems with private enterprise but inherit the labors of our predecessors as public good. I think this is the route 'banking' will take.

While Venessa is laudably positive and bridge building in her message; I would like to be less so. If banks are oil and someone invents DIY cold fusion, do we need banks anymore (sorry to abuse the metaphor)? Only if we decide that by definition we need banks, then redefine the bank to continue their privileged position (this is actually the future I expect). I think your previous comment about banks moving from money to data (or whatever needs to be exchanged securely), speaks of this future.

From a business model perspective, you are quite right to work with your client to redefine their business more broadly, so that they can survive the transition. This is similar to many successful transitions in the past where businesses say, we aren't a car company, we're in the transportation business, or we aren't a paper company, we're in the document business then proceed to imagine their future without clinging to their past. This is most definitely the way forward for banks that will survive. The real question is, do we still call them banks. Being change averse and traditional, we may well do so, but only if the banks successfully navigate the transition. If they cling too long to old modes, the new 'bank' will be called something else.

So what has changed that we no longer need banks (or phrased differently, prove to the audience you are not some granola eating, pot smoking, peacenik, hemp wearing, communist, tax and spend liberal socialist). The ability to mediate every interaction with a ubiquitous, persistent, computable layer of information. We "can" now track every generation and exchange of value and do not need a trusted anonymous fiat currency to store or exchange value.

Of course declaring the old system broken does not will it out of existence. I think Shirkey made the point in his book 'Here Comes Everybody' that just because the old system is broken and people know it, doesn't mean that we have any idea what the new system looks like (speaking of newspapers). Here follows a long period of experimentation and I think the future will be something none of us thought of at all. That doesn't excuse us from thinking about it.

Thanks to all who Participate and Contribute for the value they are donating, may it come back to them.


To paraphrase Keynes: the banking system can survive longer than the anti-bank activist can remain solvent.

Thanks Chris for keeping the discussion going.


Better vehicles, certainly. And better production methods.

Just as we expect oil companies to behave when drilling for oil (in the Gulf of Mexico, in Nigeria), we expect banks to behave when trading risk and duration (sub-prime investments, Icelandic deposit interest rates).

We expect oil companies to help build more efficient engines through closer integration of their product development with the r&d dept of motor engineers, not to just promote the lowest MPG V12s. We expect banks to develop better use of risk differences, not to just look for maximisation of risk at the expense of regulating governments.

Maybe it is not the banking system we want to get rid off, maybe it is the execution that is one step behind the strategic execution and transparency of the oil companies (which, by the way, is behind many other industries simply because of its protected nature).

Maybe we expect the banks to improve their oligopoly-protected management. Ever seen a picture of excessive risk? Theirs being a non-physical product, banks' mismanagement of their processes is less visible on a daily basis; it doesn't make the headlines at an early stage, as it does in the oil industry.

If I understood it right, Venessa's rant the other day was not so much anti-banking system as it was anti-banks' execution. A new currency in my view is still a currency. Wider-defined wealth is still wealth. There will always be the need for institutions that assume variations in risk and duration, whether expressed in the one currency or the other. New currencies may change the payment infrastructure, they will not change the nature of the core balance sheet of commercial banks.

Demanding transparency of production methods (Triodos!) could be a great consumer angle.

Cheryl Darrup-Boychuck

From a purely practical perspective, I'd like to connect with a few bankers who can actually impact the future Venessa and others envision. Specifically, I'm looking for a bank's Global Relations Manager for SWIFT, as well as someone from their government / institutional relations staff. We're working to improve the efficiency and integrity of the current process for verifying funding sources of prospective students and scholars around the world, in compliance with the host country's visa regulations.

This discussion is valuable, certainly, but I'd like to get to work on the transition, one particular niche at a time.

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