Fortunately, there is a way to fix the banking system for real and
for good. It's called Limited Purpose Banking (LPB). Under LPB, all
financial companies protected by limited liability are permitted to do
just one thing – market 100 percent equity financed mutual funds. Since
LPB mutual funds can't borrow, they can never fail and since the
incorporated financial system consists of such mutual funds, it too can
never fail. Cash mutual funds, which hold only cash, are used for the
payment system. Cash mutual funds are the only mutual funds backed to
the buck, since they hold a buck for each buck they take in. Insurance
mutual funds are used to allocate risk and provide an entirely safe
derivatives market. A single regulatory agency -- the Federal Financial
Authority (FFA) -- hires private companies working only for it to
verify, appraise, rate, custody, and disclose, in real time, all
securities held by mutual funds. Mutual funds buy and sell FFA-processed
and disclosed securities at auction. This ensures that issuers of
securities, be they households or firms, receive the highest price for
their paper. Thanks to the FFA, LPB should enhance the ability of small
and medium-sized enterprises to borrow as well as sell equity.
Unlike Glass-Stegall and the current course of banking "reform,"
which regulates based on name, not function, LPB treats all limited
liability financial intermediaries identically.
Read more: http://www.theprojecttorestoreamerica.com/
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