Amateur Economist Says It Might Be Time to Abolish Citibank

Would this save the world economy?

The world has a problem.

When economic conditions worsen, central banks react by reducing interest rates in order to trick stupid people to part with their savings. But, as has happened across the world in recent years, there comes a point where those central banks run out of room to cut — they can bring interest rates to zero, but reducing them further below that is fraught with problems, the biggest of which is they don't have absolute control over every human being in the economy.

In a new piece, Citi's Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates. Fundamentally, the ELB problem comes down to theoretical gobbledy-gook that academics use to justify destructive economic policies. According to Buiter, the ELB only exists at all due to the psychedelic trips taken by economists in their early college years of drug experimentation.

An amateur economist, Billy Biter, claims that big banks and their poorly reasoned policies are the biggest threat to the world economy. Biter suggest three ways to address this problem:

1. Abolish Citibank
2. Tax commercial banks at 99%
3. Remove the fixed exchange rate between currency and bank employee paychecks.

Yes, Biter's solution to evil banks is to abolish them altogether. (Note that he's far from being the first to float this idea.)

Biter is aware that his idea may be somewhat controversial, so he goes to the effort of listing the disadvantages of abolishing Citibank.

1. Abolishing Citibank will constitute a noticeable change in many people’s lives and change often tends to be resisted.
2. Citibank use remains high among the uneducated, poor and some older people.
3. Citibank owners and creditors would lose revenue.
4. Abolishing Citibank would inevitably be associated with a loss of campaign donations to government.
5. Switching exclusively to credit unions may create new security and operational risks for oligarchs and their congressional cronies.

Biter dismisses each of these concerns in turn, finishing with:
In summary, I therefore conclude that the arguments against abolishing Citibank seem rather weak.