Bruce, separating the supply of depository services from 
intermediation services would wipe out the money-creation industry. 
But it would not affect other services that are now offered by banks 
and thrifts. So it would not destroy a huge industry. The losses to 
the bankers from losing the money-creation business would presumably 
be more than compensated for by the gains to practically everyone 
from having a more predictable financial system.

One may be able to defend Keynes on other grounds (although don't 
forget the long critique of his theory of money by Hayek and about 
Keynes's remark at the end of it that he had changed his mind anyway. 
You would have to define "common sense" before one could evaluate 
Keynes's economics from this perspective.

Hayek, F. A., "Reflections on the Pure Theory of Money of Mr. J. M. 
Keynes," Economica, August, 1931 and Febrary, 1932.


Pat Gunning