Cash is just easier to manage and probably less costly.
In terms of the government's becoming a bank, the largest pool of deposits I know about is in Japan's postal banks and that's pretty safe. Moreover, the quasi-governmental mortgage guarantee institutions are the backbone of the securities market that sells more bonds that US treasuries - the US mortgage-backed securities market.
The entire credit system of the U.S. (and the world) relies on the full faith and credit of nations which are in perpetual debt. Government debt has been the backbone of modern banking since before the Bank of England came into being. The government already is the lender of last resort and the debtor of first resort. What's wrong with that?
boddi
On 10/18/06, Jordan Hayes <jmhayes at j-o-r-d-a-n.com> wrote:
> > about the poor's need for financial services, and the state's role in
> > providing them.
>
> I think there's probably no worse idea than having the government become
> the bank-of-last-resort.
>
> With places like Washington Mutual who have "free checking" programs,
> there's no excuse for poor people to be without banking services. Sure,
> Citibank doesn't do it, but if you're poor, Citibank isn't the right
> provider for you anyway.
>
> I've known lots of people with "poor"-level incomes who won't use a bank
> because they don't trust them. Why that is, I can't tell you. But
> they'll use a check-cashing service instead. Makes no sense to me, but
> there you have it.
>
> /jordan
>
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>