Month: January 2010

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The Banking That Dare Not Speak Its Name… Speaks!

Here’s something we very rarely see; open mention in a mainstream national newspaper (albeit the online version) of the true nature of banking; http://www.independent.co.uk/news/business/news/king-calls-for-radical-banking-reform-in-uk-1879931.html

Bankof England governor Mervyn King offers his views on current banking practices; saying among other things,”Whatever the pros and cons of various alternatives, the system that has the least going for it is the present system”. I have to disagree with him there. The present system works great for the people in charge of it, the banks themselves. It works, if it can be said to be working at all, really badly for the rest of us, denied as we are whenever it suits the banks access to our own money (that generated by our own government for our benefit), and thus denied the chance to build our own wealth. King goes on to suggest that he favours the ideas of little-known Laurence Kotlikoff, an academic who favours scrapping fractional reserve banking. I think this is the wrong way to go myself, I favour authourity-controlled infinite funding for genuine wealth-generating schemes, but the real significance of what’s being discussed here in virtual print is that fractional reserve banking and what it means are themselves being discussed openly. It isn’t overt, it’s not glaring headlines in a red-top, but it isn’t covert either. We need to see more and in-depth examination, dissection if you will, of fractional reserve banking in the media and the sooner the better. There’s an election coming up; how are the public to know which way to vote if they have no grasp one of the major issues of the day even exists?

BB

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Obama Declares War On My Arse

President Obama Declares War On The Banks, bawls one headline, presumably missing the days when it could stand urchin-like on street corners exhorting passers by to “Readallaboutdit” inbetween sniffs. President Obama, it seems, proposes to reinstate key elements of the Glass Steagall Act to restrain the banks, causing many to think that – at last! – he’s turned against them. The effect of Glass-Steagal (and the new legislation too, to an extent) is drawing a clear line between what we in Britain refer to as casino banking and high street, deposit banking. The point of this is that when the casino bank bets too far and goes broke, it isn’t any longer able to count your and my money, safely deposited with a separate company, as assets it can lose. We don’t all lose our money when the casino banks lose theirs, so the economy as a whole survives, in a much-abreviated nutshell. Glass Steagall was introduced after the Great Depression as a way of ensuring that another Great Depression never happened. Lobbying by the banks saw it repealed in 2004. Lo and behold, as we’ve seen another series of bank crashes followed, again imperilling the broader economy. Good old Obama for bringing back Glass-Steagall, then, eh? Phew!
Not really. It doesn’t address the heart of the problem at all, that the banks simply shouldn’t have the place in society that they do. Banks don’t lend money, they create it. A banking license isn’t a license to lend money, it’s an extension of the sovereign power formerly of the monarch, eventually surrendered to parliament, to create money out of thin air. We pay the banks a fee for this we call interest. When we have a government elected by the electorate to further and safeguard the interests of that electorate that can create money itself for free, it’s an absurd situation to even suggest that when we need money for funding a sound business proposal we have to go cap in hand to a third-party privately-owned bank and ask them to create money for us, incurring fees in the process. It’s nonsense, and the banks simply shouldn’t be in this entirely parasitic position. They give the community nothing, and in charging recurring fees for effectively doing nothing they endlessly cream off money that should be being spent towards the betterment of the community as a whole. They grow fat for doing nothing while the community suffers for no good reason.
Obama’s proposed legislation won’t do anything to change this. What it will mean is that the banks will once again have brought the greater economy to its knees, profited handsomely from the experience, and survived essentially intact to repeat the process in the future. A repeat of the earlier Great Depression scenario, in fact, as they were bailed out back then too. Obama’s proposed legislation leaves them free to repeat the experience again next century, sooner if they wish, if the economy has revived enough to make it worth their while. It’s not a punishment for the banks, it’s a gift, a lifeline – through this they’ll survive in place as they are to cripple us all financially another day.
I’ve said before that Obama is the bank’s puppet, a reader of press-releases, nothing more. His recent proposals do nothing to change that view. When he campaigned on the basis of change, he seems to have neglected he meant the kind of change that usually has plus ca attached to it.

BB

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New Banks For Old! Oh Wait; They ARE The Old…

New banks are being created to buy the old ‘Good Bank’ formed form the ashes of Northern Rock. A good thing? Not in my view, simply more of the same. We don’t need more private banks operating for private profits, we need genuine competition to the existing cartel not additions to it. We need banks that work on favour of the public, effectively distribution outlets for government-created money to the little guy. I note no-one seems to be interested on making loans/creating money (using fractional reserve principles) for the smaller business. They’re onlyinterested in the big fish. Where are the big fish going to be coming from if the small fish areen’t ever allowed to develop? All the proposals seem to suggest is more business as usual and frankly, that’s no good for anybody.

I notice too that Mr. Chen’s bank formerly tried operating under the moniker of ‘The Bank of Britain’ until the Bank of England reportedly objected. Hey, at least we knew who was behind the Bank of Britain!

BB

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Competition For The Banks

Competition for the banks is not a new idea. Here it is illustrated by excerpts from It’s a Wonderful Life together with the suggestion that we too need an alternative to going crawling to Mr Potter.

http://tinyurl.com/ybojonk

The difference between America, well, some places in America like for instances North Dakota, and Britain is that they have community banks that locals can use as an alternative to the too-big-to-fail type of institution that gamble with the money and rely on taxpayer bailouts to keep them out of trouble when they get into it and use taxpayers’ money to give themselves huge bonuses either way. Here in the UK, we simply don’t have anything similar. We may have credit unions and so forth but they can only lend what they have (full reserve banking) they don’t have what the high street banks have which is a license to create money (fractional reserve banking). I’ve said for years that the only thing that will really scare the banking fraternity is genuine compeition, a real alternative, and so far such an idea isn’t even being discussed here in the UK. If the government exercised its authority against the banks then that would terrify the banksters but so long as the banks can offer more reward to politicians than the electorate can then that isn’t going to happen. Whatever the way forward might be, politics isn’t it.
Anyway, I’m glad to see that Mr Bailey and presumably Harvey the rabbit had these ideas before me, before I was even born in fact. Perhaps we should remind ourselves we’ve grown up in an era where we regard going to a private bank to get into debt whenever we need money for something beneficial to our community as normal only because we’ve been conditioned into it. Earlier generations hadn’t been schooled to think the way we do and still regarded it as clearly artificial at best, outrageous at worst. So should we.

BB