What is the state of the banks? Is Bernanke just "extending and pretending"?

The perpetualisation of debt by Isabella Kaminska

In an equity financed model, banks would either turn into venture capitalists — lending high risk at the right price — or remain extremely cautious, opting not to lend at all if productive loans cannot be found.

Which leaves us with three important conclusions:

• The banking industry as it stands represents “government lending” in everything but name.
• Even in its implicitly state-supported form the industry is struggling to find productive loans.
• It’s unsurprising the industry is unattractive to equity investors.

Three other points to consider on the back of those:

• Any lending forced upon banks under government duress would likely be directed towards unproductive loans, thus the equivalent of uncollateralisedmoney-printing.
• If banking remains in the private sector it should be equity funded. But if there aren’t enough productive loans to be had, equity funding will simply encourage cashpiles to accumulate contracting money supply.
• In that scenario the government/monetary authority would have to compensate either with uncollateralised money-printing or debt-financed government spending and sterilisation through taxes, when needed.

Final thought:

Perhaps we’re all government employees already, we just don’t realise it?

Second final thought:

What is equity if not perpetual debt? And what is money if not national equity? Is there really any differentiation at this point?

 How are the banks in Japan?