Here's where I'm coming from:

I was talking with a buddy of mine recently about Hitler (he brought it up, and he's a person of color, so no, this wasn't a Klan meeting). Anyway, he was saying that, if Hitler had not been genocidal and inflicted the Holocaust on the planet, his legacy would be pretty positive. He talked about how Germany, under Hitler, went from hyper-inflation to being a model country (except for the rabid anti-Semitism) with lots of technological advances and darn near full employment. He speculated that the main reason for this was that Hitler nationalized banking.

So, if we were to nationalize banking without being racist or anti-Semitic, would this be positive or negative?

I'll hang up and listen.

The first: do we need a Fed? The necessary part of this question is: to do what? To regulate the money supply? Yes. To provide temporary liquidity in a crisis? Yes. To influence the economy? No. To influence unemployment? No. To keep equity markets high? Absolutely not.

The Fed has completely lost its way. It was chartered to buy up corporate, not government, securities during crises. It is companies that need liquidity during times of crisis. Largely beginning with the Depression and FDR, though, the siren call to "just do something" was answered by the Fed. This has gone into overdrive over the last three decades. At first it was just the hint of recession. Then it was significant stock market corrections. Now it's small stock market corrections. Feds around the world are seen as all-powerful. Somehow, printing money to buy government bonds magically turns into economic growth, higher employment, and joy for all. Unfortunately, it's a total sham. All that's happened is that this country (and others) has run up debt. The national debt under Bush doubled from $5T to $10T. Not to be outdone, Obama doubled it again to $20T. (Gee, why has there been no growth in real wages over this time????) Thank you, enabler Fed.

With regard to German hyperinflation, it's one of those things that's frequently mentioned and yet completely misunderstood. Following WWI, Germany's means of production was decimated. France was understandably p.o.'ed at Germany and, in its infinite wisdom, insisted on war reparations--i.e. Germany owed a debt to France. Only that debt could not be paid in Germany's currency, the mark. It had to be made in France's currency, the franc. This prevented Germany from merely printing a bunch of money to pay off the loan. They had to earn it--after their means of production had been decimated. While it may seem fair on the surface for Germany to pay something back, it's akin to breaking a laborer's arm and then demanding that he go work and pay you a percentage of what he makes, when what he makes with his broken arm isn't even enough to feed him. So Germany nevertheless tried to print currency to repay its debts, and everyone who owned that debt responded by shorting the mark. This sent the mark lower, which meant it could be exchanged for fewer francs, which necessitated more printing, which resulted in more shorting, and the eventual death spiral. That is how hyperinflation unfolds. It's never just spending. That's a myth. It's total loss of confidence in a government. It's when nobody wants the currency (hence the shorting, i.e. selling).

Hitler, like all such dictators, rose to power in the ashes. (And yet we still wonder how the Taliban, Al Qaeda, and ISIS come into being.) He didn't create an economy. He cranked up the war machine, and that renewed the German people's confidence--at least, temporarily. Meanwhile, he was stealing from his own citizenry in order to finance it! And he kept stealing from every country he conquered. That's a helluva business model. Doomed to failure, of course, because eventually the loot runs out to finance such a military, but in the short run it sure looks great. Meanwhile, the U.S. borrowed a bunch of money from its own people (via war bonds) to finance our participation. The American people had tremendous confidence in its government and its currency. So did other countries. Who are you going to willingly led money to? A free country or a totalitarian regime?

The second question you ask is: would nationalizing banking be positive or negative? To answer that, one would first need to define banking. Would it include investment banking (e.g. M&A, capital raising, etc.) or more along the lines of checking accounts, mortgages, and small business lending?   

I don't see how the government taking control of either would be a positive, though I do not think investment banking should be allowed to be undertaken by actual banks due to the massive conflict of interest. Moreover, I also think allowing investment banks to issue stock to the public was a giant mistake, as it allowed the principals to take risk with no direct financial consequences. (And that risk was backstopped by the Fed, to boot.)

The initial purpose of a central bank was to backstop regional banks during crises. That's still, and will always be, a valid reason. Allowing or, worse, expecting and then demanding that it do more leads to insane policy and out of control asset bubbles (which are always debt-fueled and thus always end in big crashes). The world responded to the Global Financial Crisis, which was caused by debt, with--a lot more debt. When it ends, and such periods always end, you can bet that the powers that be will say no one saw it coming. Then they'll try to borrow more money.