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During the week that followed September 16 2008 billions of monies disappeared from the stock markets of the world triggered by the collapse of Lehman Brothers, the wayward investment bankers. It was the beginning of the biggest recession since the 1930’s, almost a century before.

In the panic that ensued, politicians ran around like headless chickens unsure of what to do to avoid the onset of financial collapse and the onset of a full blown recession, even depression.

It was the banker’s friend, the incumbent British Prime Minister Gordon Brown, pompously proud of his classical economics background that came up with the misguided solution that pouring more borrowed money into the coffers of the perpetrators of the crimes would solve the problem. Unfortunately London’s misguided solution [and self interested solution since the banks own London] was taken up quickly by other governments as being their panacea.

But consider this, on that fateful week in 2008 when the stock markets lost their billions, what happened to the wealth of the world? Was a car still worth a car? Was a plane still worth a plane? Was a house still worth a house? The answer is simple, the wealth of the world was unchanged, all the roads, bridges, buildings in fact every physical thing that represents the worlds wealth was worth exactly the same. No loss, well at least not yet.

The tragedy of the ‘bail out the Banks’ policy is that it just bolstered up an already seriously faulty system. The money governments used to bail out the banks was borrowed from the banks [where else would they get it from?], using the future as collateral. Which is just another example of how most the money in the financial services sector is fictional; it can have any value you want to give it, it’s just a giant money-go-round. The fact that it can be worth this much one day and less the next is a measure of its volatility, its unreality. Who in the real world cares if the total amount of money swilling around in the financial services sector is worth a dollar to the dollar or a cent to the dollar? Who in the real world cares if one financial services company makes 5 billion profit in the first quarter? It just means that someone somewhere else made an equivalent loss.

But the biggest tragedy in all this is the knock on effect of all ‘bank misdemeanor’ induced recessions, unemployment. The unemployment of just one potential wealth creator is the single most devastating factor in social economics.

But before I go any further with this, let me just say that unemployment is too broad a description for the non-employment of a person. First we have to identify in which sector of the economy the individual is employed, for it is only the loss of a ‘wealth creator’ that will affect the health of the economy, anyone employed in the financial services sector that loses their job will have little or no effect on the economy, [other than possibly the negative effect if they claim unemployment benefit]. In this respect I prefer to think of the ‘employed’ as two distinct groups:

  • Wealth creationists and,
  • Those in parasitic employment.

So, it is my contention that if the billions poured into the banks had instead been poured into wealth creation industries the world’s economy would not only have recovered very quickly but it would have been built upon a solid foundation of boosted wealth creation. Salt of the earth wealth creation companies like Chrysler Motors would not have teetered on the edge of extinction through no fault of their own. Unemployment, instead of increasing would have been dramatically reduced, almost overnight and the creation of wealth would have continued unabated. The inevitable migration of those formerly in parasitic employment towards the wealth creation sector would have further boosted the economy.

At the time of the 2008 meltdown a senior executive at of one of the large investment banks admitted during a TV interview that a cull in the financial services sector was overdue. Cull is not exactly the word most people would use these days.

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Postscript to my last blog [Re: Goldman Sachs et al]. What is is with these financial services companies? Not only are they stripping the world of its wealth by creating dubious [as yet unlegislated for] financial instruments they are also boosting their profits by illegal means. Something has to be done – and soon.

I will say again, just moving money around creates ZERO wealth.

Hundreds of thousands of economists around the world are still arguing about ‘what caused the current financial crisis’. In the universities around the world there are whole libraries stuffed full of economic facts, fiction, theories, solutions catalogued to the finest detail. And yet still, the fundamental reason for the world’s financial woes appears to lie dormant.

Why?

Well, perhaps it’s because the real reason is too simple and the solution too radical for those people in society who profit from the financial status quo and who have a vested interest in leaving things just the way they are.

In order to come to the conclusions that I will present here I have coined a new branch of economics that I call Hyper-Macro-Economics. In fact, though I’ve applied the principles of this to economics, it’s equally valid when applied to other social and practical situations. It’s not new; it’s just the principle of stepping as far back as you can to get the biggest possible picture. That means shedding all pre-conceptions and looking for the fundamental cause-effect of any situation in its simplest terms. And even when you think you’re looking at the so-called ‘big-picture’ try to take another step back, just to see if you can.

Now, why is it that the financial community is so cock-a-hoop this week with the announcement that Goldman Sachs reported a 5 Billion dollars profit for the first quarter? Why are the media economic pundits cock-a-hoop singing that this is a sign of economic recovery?

Well before you go off and celebrate, just ask yourself this question, how much wealth did Goldman Sachs actually create for the benefit of society in the first quarter of 2010?

Quick answer, none. That’s right none, not one puny cent. The 5 billion dollar bills they acquired were simply [or otherwise] moved from one repository to another [metaphorically speaking], their gain was somebody else’s loss [moneywise]. Instead of someone else having the cash potential to purchase wealth, that potential was transferred to Goldman Sachs.

Which begs the question, where in there was the economy stimulated? In reality it wasn’t, it’s the same, no wealth creation, just the movement of money.  An economy where no wealth is being created is stagnant, just moving money around does nothing to stimulate any economy, absolutely nothing.

So who was the guy who created the wealth? Well it was ‘Miss Toilet Tissue Packer’ who works 50 hours a week in Wisconsin; she created more wealth on the first day of the first quarter than Goldman Sachs has created during its entire existence.

That’s the hyper-macro-economic viewpoint, money is not wealth, it’s just money. Money is supposed to represent wealth, but since the abolition of the gold standard nearly a hundred years ago governments, banks and other financial intuitions have manipulated the value money to suit their own wealth acquisition programs. Because, in order for those involved in the financial community to survive they have had to become parasitic upon the wealth creation class, it’s as simple as that.

That the financial services sector has over the years become ever more adept at extracting the maximum amount of wealth from those who create it and the recent proliferation of this parasitic class is one of the fundamental causes of the world’s financial woes.

It’s not financial services sector profits and stock market activity that will rejuvenate the world economy, its wealth creation, in other words getting all the people who create wealth, back to work.

I’ll throw a cat onto the pigeon loft here. China, is it a wealth creator or a money-go-round?

What to do about the parasitic classes? Well that’s another story.

Banker Want to make lots of money for virtually no work and minimal outlay?
Want 100% return on your reserves per annum?
Want someone else to put up all the cash?
Punter Eh?
Banker No, you don’t have to rob a bank, all you have to do is set one up. 

First acquire a suitable building, preferable high rise and made of glass and stainless steel, now install counters, all the latest electronic equipment, automaton staff and a few computers and stick a sign outside that says
The Deposit Your Money Safely Here Bank“.

Next, contact your national central bank and apply to join the International Cartel of Bankers [ICB]. Now, for every dollar the public gives you for safe keeping you can lend it back to the public and charge 10% interest.

You now give the depositor 2% interest and pocket a net profit of 8% per annum.

Punter Yes, that’s all very well, but you said I could make 100%.
Banker Ah, well here comes the clever bit. 

Because you’re now a member of the ICB club you can now lend to the public an amount up to ten times the amount you have received in deposits from the public, in other words 10 times more than your total reserves.

Punter But how can that be possible? Sounds like it must be illegal.
Banker No it’s not illegal and not only is it possible it’s encouraged by central banks and believe it or not it’s also condoned by Governments. It’s called ‘Fractional Reserve Banking’ and it really is a license to ‘print money’.
Punter You mean you actually ‘print’ money?
Banker No, that’s just a figure of speech, we don’t actually print money, the additional money you lend doesn’t actually exist. 

The checks and credit cards transactions your debtors make against the loans you grant them end up being processed by other members of the ICB. Conversely, some checks and credit cards transactions issued on loans set up by other banks end up with you, so at the end of each rolling accounting period all you have to do is swap checks and resolve electronic balances.

No actual money exchanges hands, you just start receiving real money plus interest from your debtors, for the most part on money that never existed. As long as people keep borrowing and spending it’s like a giant ‘funny money’ merry-go-round that spins off ‘real money’ that drops straight in to your coffers.

It’s one of several ways we have of stripping the real wealth from those who create it. And the best part about it is this; they are all so busy creating wealth they don’t see, understand or even care what we’re up to. And because the amount of additional money lent is ten times more than the amount deposited, you net 10% interest on an amount that’s ten times more than what you have in deposit receipts [your total reserves] each year.

In other words, for an absolutely minimal outlay – just rented bank premises, computers, software and staff costs – you can set yourself up to receive an annual income equal to the amount of money deposited at your bank, in other words 100% per annum on money that’s provided in the first place by your depositors.

It’s nothing short of exquisite.

Punter It’s outstanding! 

But wouldn’t that cause intrinsic inflation on all goods and services because an element of interest payments would be an integral part of every product cost. It would be over and above the standard inflation created by government as their own final top-up tax. It would reduce the purchasing power of real money, create a nation of unnecessary debtors and be damaging to the social system overall?

Banker Well yes, but the people who create all the wealth and those who help them are so busy creating it they don’t have the time [or the inclination] to worry about our little scheme. Besides by creating mountains of almost unlimited credit people buy more thus stimulating the economy and we can continue to live in the lifestyle we bankers have become accustomed to.
Punter But what happens if you lend so much money that you say ‘doesn’t actually exist’ and commit so many people to so much debt that they can’t pay and the whole system collapses?
Banker Well, I have to admit this does happen from time to time, but over the years we have developed safeguards that ‘kick-in’ during times of financial meltdown. 

We have ingratiated ourselves into the whole social system to such an extent that a collapse of the banking system would have grave socially unbalancing consequences for society as a whole, so grave in fact that no government would now allow it to happen.

Governments come to our aid with help in the form of bail-out packages and the like that see us through the re-occurring crises. When the economy starts to pick up we just buy back the Governments holdings at knock down prices. It’s win-win all the way to the bank (chuckle).

And the beauty of it all is that Governments borrow the bailout money from the banks using the wealth creation prospects of future generations as collateral, so not only are we stripping the wealth from the current generation we’re now stripping it from future generations.

Punter I’m in.

I’m sorry, but am I missing something here. Didn’t the US government bail out the banks by giving them in excess of one thousand billion dollars? So what’s all this about Barack Obama creating a tax to ‘claw-back’ ninety billion dollars? Wasn’t the intention at the time that the banks would have to pay back the full amount they were ‘lent’?

Now most people know how companies deal with tax hikes, they increase the cost of their products and services, so the actual cost of the new ‘claw-back tax’ on the banks will inevitably be passed on to the public.

As far as I can deduce, the claw-back tax is just the latest smokescreen designed to hoodwink a gullible public into thinking that some sort of banking reform is taking place. Like the amount of publicity given to the tax on bank executive bonuses, in reality the gross amount of all the bonuses paid out in the last five years is an insignificant amount compared to the amount the financial services sector has ‘creamed’ out of the system in order to fuel their gigantic money-go-round.

I think many people will agree that a reform to the fundamental working of the banking system is long overdue; world finance is too important to be left to the banks and private enterprise. By their actions over the last hundred years or so the banks have clearly shown they cannot be trusted with such an important task. [Please don’t think for an instant that the US Federal Reserve or the Bank of England or most so-called central banks are owned by any government].

A bank, as was the original intention, should be no more than a money warehouse that provides a distribution center for transferring visible funds between account holders. All other services are anti-social and should be dismantled. It’s high time banks took their rightful place in society as the lowly warehousemen the are. [No disrespect to all other warehousemen in the world]

With the inauguration of Barack Obama I had high hopes that the US would lead the way with some drastic reforms to the whole financial services sector, spearheaded by fundamental changes to curb the anti-social antics of the banks. Instead we have a president who is tap dancing on the fence, balancing the wrath of the public by feeding them with highly disguised, spin-doctored tidbits against the enormous power [and wrath] of the financial institutions.

I will say it once again just for the record; since the beginning of time there’s not a single financial services institution or bank in the world that has ever created a single cent of real wealth. [I’m not talking about money here].

That abused privilege goes to the billions of people who produce the things virtually everyone judges their wealth by and of course the billions of people who assist them in this laudable task. All the remaining millions of people who create zero wealth are simply parasites living on an already overburdened social system.

Are we all so awestruck by the enormity of the national debts of countries that we are blind to the big picture?

 

The national debt of the US has topped eleven million, million dollars, that’s a whacking $100,000 per family. How on earth is it possible for a minority sector of the very society we live in to have acquired so much money that it can afford to lend that amount of money to the US government?

 

Bear in mind that the people who lend all this money have never created a single cent of real wealth. The money they use has been acquired from the real creators of wealth by a myriad of foul means.

 

Also bear in mind that in addition to lending incredible amounts of money to governments this sector also lends all the money needed to finance every mortgage, credit card debt and company loan. Again, how on earth did they become so rich that they can afford to finance the whole world?

 

The financial services sector is so complicated that the public, as well as most politicians are oblivious to the ‘big picture’; they accept the financial status quo as being ‘normal’. Well let me say right here:

 

IT IS NOT NORMAL.

 

Forget all the detail, all the complexities of ‘financial instruments’ just be aware, the people who issue these loans create absolutely nothing that represents real wealth, they control a population of automatons who slave daily to produce all the physical artifacts that are the real source of all wealth and have set up mechanism to strip those people of most of the wealth they create. Thus setting up the system that makes it necessary for those who create the real wealth to have to borrow in order to buy back the very ‘things’ they produced in the first place.

 

One day the bubble will burst and I don’t mean yet another mega recession. Someone, somewhere, sometime will lead a revolt against the current insidious financial system. But don’t hold your breath; it’s not going to happen anytime soon.

 

See my cartoon: http://clifffraser.com/fun-stuff/various-cartoons/01-bankers-equal-misery.aspx.

 

Cliff Fraser

 

An unemployed wealth creator is a tragic temporary loss for any community, an unemployed social parasite is not. When we talk about rising unemployment in society we must also consider the job in which the unemployed person was engaged, otherwise the statistics are meaningless.

It’s a sad fact that many people employed [or now unemployed] in the financial services sector do not fully appreciate that their very existence is a blight on society. They think that because they get up in the morning and put in a full days work that they’ve been gainfully employed. Well I suppose you could say that is the case, except that it’s only them and the financial services company for whom they work that have gained. Society as a whole gains absolutely nothing, zero, in fact in an overall sense those employed in the wealth creation sector will have made a loss.

Now all this would not matter so much if the numbers involved represented only a small proportion of the whole. Unfortunately this is not the case, the numbers of people migrating to the financial services sector has over recent years risen to such a level that a significant proportion of the population of most western countries are now wholly supported by a dwindling population of wealth creators.

Sure, mechanization, industrialization and robotics in manufacturing industries have to a certain extent mitigated the negative effect, [machines incidentally invented, designed, made, advertized, marketed, sold and serviced exclusively by the wealth creationists], nevertheless the recent financial crisis [2008-9] caused by the avarice of the financial services sector has once again tipped the fine balance creating an untenable, worrying situation where wealth creators are now being restricted from, and in some cases, denied the opportunity to create wealth. This is the real disaster.

Virtually all the money ‘in play’ in the financial services sector has in one way or another been stripped from the wealth creators. The profits and losses reported by the ‘players’ in the financial services sector are merely occasional audits at moments in time in the continual movement of money between winners and losers, losers and winners. Of course the money swilling around is supplemented by a continuous flow of newly created wealth as it is stripped from its creators. So you could say then that in the financial services marketplace there are generally more winners than losers, but this is only possible because those in the realm of the wealth creators are always ‘losers’.

The purpose of this article is to highlight, not to offer a solution to the problem, it’s merely intended to offer some solace to those unfortunate wealth creators who find themselves unemployed at this time.

I would however also say this to them, and to those wealth creators still in employment, just one unemployed wealth creator is worth a hundred people employed in the financial services sector.

To those wealth creators who are unemployed, be proud of your past achievements, take satisfaction in the knowledge that your efforts have been beneficial to society, that your inherent skills remain intact and will again one day be utilized by an ungrateful society in the continuance of real wealth creation. Society really needs you, your re-employment is paramount to society’s proper functioning and more importantly your efforts are required in order to feed the financial services sector parasites whose voracious appetite for money continues to grow exponentially.

For a poster of wealth creators and financial parasites please visit: http://clifffraser.com/images/miscpics/wealth-creation-poster.jpg.

Sixty Eight Banks Fail in the USA

I read a news report today stating that the total number of bank failures in the USA during recent times [circa 2008/9 financial crisis] has reached the staggering number of fifty [and counting – 2009-07-31 – now it’s 68!!]. The report mentions this matter-of-factly, like it’s quite normal.

 

What this tells me, without going into any detail is that thousands of people, if not hundreds of thousands, may have lost some or all of their hard earned money. Reports like this tell me that it was the financial system that failed and it was government that allowed a financial system to evolve in which it was possible for fifty banks to fail, that failed.

 

When, oh, when are people going to start questioning what these less-than-desirable people are up to instead of accepting each monumental failure, financial catastrophe and the misery it causes without question or any call for accountability?

 

As for correcting the underlying flaws in the financial system, well after a brief flurry of activity by the new Obama administration it seems to have settled into the same old routine, financial reforms are still a long way away.

 

And it’s still a sad, sad world.

 

Postscript: July 2009

How in this world is it possible for a company that creates absolutely zero real wealth, a company that makes nothing, creates nothing [except money for itself and misery for many people], make 3 billion dollars profit in 3 months in the middle of a recession?

 

For any company in the financial sector to make a profit someone somewhere has to make a loss [perhaps it was some of those banks that went belly up]. The profit announcement was made with whoops of joy and merrymaking by the financial media like we should all be saying wow! well done! handshakes all round, the recession has bottomed out.

 

In my opinion it’s disgusting, I’m talking specifically of course about Goldman Sachs a candidate if ever there was one to be subpoenaed by the US Congress along with JP Morgan, who by all accounts have already received their ‘invitation’ this week to do a bit of squirming.

Research as much as you like, in fact the more you research the more financial instruments you will find. Hundreds in fact all with fancy names and equally fancy effects on the financial system.

But if you cut through all the mystique, all the complicated explanations, it all comes down to one thing, they are all ways to extract wealth from the wealth creators; nothing more.

Economists will have you believe that these mechanisms are there to ensure proper functioning of the financial system. If regular boom-bust, recession-depression cycles are the financial system functioning properly then I think most of us can do without it.

How The Banks Earn A Crust

The first step is to prize that first chunk of money from the unwary, stupid, blinkered, too busy creating wealth to see or care, public. Now, with this first chunk of un-earned money in their clammy palm the banks and financial institutions are in a position to start working their magic.

(Picture at this point a portly banker smiling, hands raised, elbows tucked in, gently rubbing his fingers with his thumbs).

All the money in the financial system starts from this humble beginning. You have to understand that most of the money in the financial services sector was originally either borrowed or plucked out of thin air. They make nothing, they create nothing [misery excepted], they create no real wealth, all their money is acquired initially from investors. Very approximately the ratio between real money and thin air money in the financial system is 1:10.

Before I go on, let’s just summarize the three broad types of investor.

  1. The private investor, a wealth creator or wealth creator supporter who has surplus wealth and wishes to place it in a money warehouse [bank] for ‘safe keeping’ [?]. However in order to counteract the effects of that other global fraud ‘inflation’ he requires payment of interest on the deposit so that his money retains its original value (purchasing power).
  2. The institutional investor is typically a pension fund or similar institution that has extracted some real wealth from a sector of the public on the promise of a future return. Institutional investors gamble on the financial markets to maximize profits for themselves while at the same time providing a modest return for their investors. Like all gambling operations there will be winners and losers. Just your hard luck if your pension fund is in the hands of one of the losers, that you have no say in the matter is another ‘unlegislated for’ social crime.
  3. Finally there are the financial institutions that use a combination of money made up from real money investments and the re-investment of money made from money that did not exist or was made from dealing (taking risks) with other people’s (or institutions ‘thin air’) money. The lowest of the low, these people are true social parasites. Success for them is risking other people’s money for their own gain, they make nothing, they contribute zero to society, they should be exposed and labeled as the social pariahs they are.

Of all trading on the financial services market, roughly 75% is made by financial institutions (groups 2 and 3), only 25% is made by small private investors.

I know I’ve mentioned before the use the banks make of the reserve ratio system to acquire money for themselves, but because this abhorrent practice has such a fundamental effect of the financial system, provides excessive wealth for the bankers and has such a negative effect on everyone else, I feel obligated from time to time to try and find ever more simple ways to explain the principles of such a repugnant and socially abhorrent system.

The Wikipedia entry for the ‘Reserve Requirements’ for banks includes a paragraph on its effect on the money supply. I know most people think that Governments have a monopoly on the money supply, but this is a misconception, even banknotes are printed by the central bank and they are privately owned (by the banks). So back to Wikipedia, which explains very succinctly just how this marvelous little [sic] scheme works for the banks.

Remember that small initial chunk of money the bank acquired from the innocent investor, let’s make the amount just $100, well, the world banking cartel (with the complete backing of Government) is now able to lend 90% of that $100 back to the public. Mr public now puts the borrowed $90 back into the bank, the bank is now able to lend 90% of the $90 ($81), and so on. To show the end result of this, what can only be called a Ponzi Scheme, a small mathematical equation is necessary, for which I apologize:

($100+$90+81+$72.90+… = $1,000), e.g.$100/0.10 = $1,000.

So, that small initial $100 deposit of real money into the bank makes their annual balance sheet look something like figure 1 at the bottom of this article:

I know it begs the question, ‘so why are we not all bankers’? Well because if we were all bankers the human race would soon be just billions of naked people wandering around in a global forest.

But let’s move on, it doesn’t end there, the bankers acquire so much money from this interest on money that doesn’t exist scheme they not only live very well indeed but they have vast amounts of surplus money with which to create other equally devious financial schemes (collectively called financial instruments which somehow makes them sound more acceptable) that double and triple up their illicit profits. Not to mention the control such power gives them over Governments, inflation and almost every other scourge the ordinary people of the world have to suffer.

That almost every western country condones this banking fraud says something for the cleverness of the banking sector. So established is the system that modern day economists discuss the pros and cons of the system on the basis of it being ‘normal’. The reserve ratio (10% in the example given above) varies from country to country and can be set at anything between 0% and ‘no limit’. The USA reserve ratio is currently 10% while in the UK there is no limit. ‘No limit’ means the banks can create ‘thin air money’ and issue credit with no upper limit. By careful control the banks in any country can fine tune the money supply to such a precise level that most of the time they are able to extract the maximum amount of wealth from the wealth creators without causing the system to collapse.

However, such a hybrid system cannot go on ad infinitum, every so often the banks do get it wrong and the piper has to be paid. The result is a sudden collapse of the financial system followed by inevitable recession leading occasionally to a full blown depression. Of course there are cynics that believe the banks actually engineer the boom-bust-recession cycle for their own ends.

That the banks are in a position to wreak such havoc and inflict such misery on the public is a modern day social crime. That they [the banks] are able to protect themselves from the full force of economic meltdowns by recruiting the help of Governments is unbelievable. I am sure that one day historians will look back on this period of economic history with amazement, dumbfounded that such an obvious crime against society persisted for so long.

So to put the situation in it’s simplest terms, most of the money the banks lend does not exist. How can that be? Money either exists or it doesn’t. Well in most cases the banks don’t actually issue banknotes they issue checks, promissory notes, credit or debit cards, which because all banks have agreed to participate in the fraud the amount of money actually swirling around in the system never really gets audited.

But of course the fraud is one thing, its pernicious effect on the economy and ultimately on society is quite another. That it causes inflation goes without saying. By making so much money available through uncontrolled credit, over and above the ‘money supply’, it’s basic economics that the price of all goods will rise as the system re-adjusts the balance between the ‘new’ value of money and the limited supply of goods available. This is intrinsic inflation, not to be confused with the everyday inflation created and maintained by government as a final consumer tax.

Just a couple of topical points to finish off (circa 2009)

  • BlackRock have just acquired a division of Barclays Bank creating a firm with over $2.7 trillion under management.
    ($2.7 trillion, that’s two million seven hundred thousand MILLIONS and this is just one firm, where did all that money come from? For the answer to where most of it appeared from, refer to the text above:)
  • Bail-out banks want to pay back TARP money…
    (Excuse me, the world is currently in the grip of a bank induced recession, bordering on depression, where the’ are these banks getting the ‘pay-back’ money from?).
    Of course it’s understandable that the banks want to repay the money now since the longer the government hangs on to the shares the more the taxpayers are likely to make in the future as the recession subsides and the banking sector shares rise. Now that would not suit the banks at all, ‘the public making money out of the banks?’ A state of affairs that is totally unacceptable.

Figure 1

How to create money out of thin air:

Item Receipts Outgoing Lending
Initial amount deposited $100
Interest paid to the investor $5
Amount lent to the public $1000
Interest received by bank $100
Bank profit/annum/$100 $95

The  Governments of the world are in debt to the limit, the people of the civilized world are in debt to the limit, industry and institutions are in debt to the limit, but why isn’t anyone asking the question; who are we all in debt to? Who is it that has so many thousands of trillions that they can without hesitation, create a world of individual and institutional debtors?

The answer? Well it’s those bloody banks again.
 

 

I’m sure that President Obama also knows all to well who the culprits are and by what mechanism they acquired such a big pool of money that they can lend with impunity, almost without limit.

It’s probably a truism to say that the current world debt mountain nets the banks at least 10% of the worlds gross GDP annually. For an organization that’s never created a single cent of real wealth, that’s quite an achievement. How much it amounts to does not bear thinking about, what we should be thinking about though is what can be done about it? If anything at this late stage.

The problem is that the banks now have such a fearsome stranglehold on society that it’s not going to be easy to release the pressure or mount any kind of counterattack without damaging society as a whole. Which is why all blighted Governments, tail between their legs, are currently [2008-9], frantically trying to patch up the rabid dog that bit them.

Perhaps that’s why PO, wary of an outright assault on the pernicious banks, is starting by nibbling at their heels with credit card reform and new consumer debt safeguards. Pray to your gods this is just the beginning.

Of course it’s easy to say, why were these measures not thought about years ago when credit cards were invented? One would have thought that any knowledgeable Government ‘think tank’ of Tommy Noddy Economists could surely have predicted the consequences of the creation and blossoming of the credit card era, the belladonna of the debt industry, the ‘devil’s cherries’ with which the bankers have tempted and ensnared everyone.

Good luck Barrack, I truly hope your wisdom can prevail.

CliffFraser.com