Alternatively, what the banks call an overdraft is in fact the consumer agreeing to take some money from them on short-term deposit. That's only fair because for much of the time we agree the deal the other way round.

Truly 'Free' banking should mean the 'overdraft' (planned or otherwise) and even charges for returned items should be free, upto the point where the fees are in balance with those we could have charged the banks for having (and using) our money when in credit.

Now that's what I call Free Banking!

And that's the approach the business and private customers should start to take. We should stop talking the bankers' language, stop seeing the world through the pair of spectacles they provide for us. We should define what constitutes free banking, not the bankers.

Interest on current accounts (paltry and insulting levels, by the way) in no way makes up for the benefit the banks get by having our money available to them in vast bank-breaking amounts. The interest rates and fees banks charge on loans at the moment should be reflected in realistic interest payable on current account credit balances. That might impact on what they charge on straight loans.

The concept of interest on current accounts, such as it is, only really arose recently in any event, and could be seen as a response to the consumer revolt over bank charges in the first place. We shouldn't have to 'earn' the right to interest on the money we lend the banks every week and month. We shouldn't be grateful for the insignificant amounts on offer. If banks are (like RBS/NatWest) now charging 11% on their loans (even higher to businesses) - with the bank base rate at 1% - then current accounts should bear a similar figure.

Even if you spend everything in your account every month (and the vast majority of people do exactly that) the parts of the month when you are still fairly healthily in credit is crucial to the retail banks.

Queues outside banks are more powerful even than queues at petrol stations. The banks know this. The queues at Northern Rock by customers have become a defining and iconic image of the 21st century so far. It shows how important retail customer deposits are.

If we all decided not to lend the banks money every month or week through our salaries and wages they would be in a mess and they know it.

We could, of course, insist that any credit in our account was converted by the banks into gold (at $1000 per ounce, today!) and held in a safe so it was clear that asset was ours, not the banks, and could not be used by the bank in any way. The banks, of course would not be able to cope with that.

If I thought like the banks, I could propose that businesses and consumers charge the banks a monthly basic operational fee of £50 and £2 per day per £1000 deposit. The figures plucked from the air by the banks to set their penalty charges and fees are as random and as unrelated to reality. Any transaction or other fees involved in the short-term borrowing by us would initially be deducted from those figures. You would move your money to whichever bank agreed to pay the highest bank charges to you.

The Chief Executive of Barclays, when interviewed on the Radio 4 Today programme at the beginning of August to justify their exorbitant half-year profits, asserted that essentially his bank provided a service to allow the passage of money through the economy, just like any other essential service in the country. Presumably he didn't mean he was just like, say, a navvy laying tarmac on the nation's roads, but that's effectively what he meant.

So his comments provide us with a more radical and serious solution. The daily routine of banking transactions, business and private, are clearly central components of the economic pathways of the country. These pathways have come to be too important to be left in the hands of these failed and lazy private bankers. Like the roads, retail and business banking should now be owned and operated by a not-for-profit government agency bank. The daily deposits of the nation's businesses and consumers can be a benefit for all of us, rather than providing an opportunity for fat cat bankers to fleece us every time we cough.

The government should then provide the free banking to assist in the efficient movement of money around the economy.

We own most of the retail banks anyway. It's time to bring back the National Giro Bank. Move all customers where the government owns more than 50% (most of them, as shortly Lloyds/HBOS will be joining them) to it straight away. Most of the inflows of capital to Northern Rock last year were on the basis that consumers believed they were banking with the government anyway and felt it was a safe harbour.

Now, if the other banks came up with a better deal than the government for handling our money, then that would be up to them, and up to us to make a judgement. Sometimes direct government competition is a better way of protecting the consumer than the process of external regulation.

The banks, of course, could then merrily get on with what they do that isn't retail banking (whatever that is). They, and we, would not have to fear a run on them by silly, scared and fickle consumers. Disconnecting retail banking from the complex daily intercontinental ballistic banking nonsense is a good end in itself anyway.

We could also much more easily and readily allow their collapse if they returned to the casino banking that has wrecked things so much this last 10 years.

We could then allow moral hazard to ride again...and the devil take the hindmost!