The predictable cry has arisen that this shortfall should be made up by governments. Really? So, let’s see. Setting aside the bailouts of late 2007 and early 2008 and just starting when it got serious, we have the bailouts of Fannie Mae and Freddie Mac in early September 2008, which triggered the collapse of just about everything (most notoriously Lehman Brothers), and the bailouts of Autumn 2008. Then we had the bailouts of Spring 2009. The US version of quantitative easing involved the Fed buying up loads of the loss-making collateralised mortgage obligations that triggered the bust, so the bailouts continued through 2009. Then from early 2010 we started re-branding our banking sector bailouts as “sovereign debt bailouts”, as if changing the name would make it any less so that these were bailouts of banks. So we had the “Greek” bailouts of the European and US banking sectors of Spring 2010. Then the “Irish” bailout of the European, US, and UK banking sectors of Autumn 2010. Then the “Portuguese” bailout Spring 2011. Then the “Greece II” bailout of Summer 2011. All banking sector bailouts. All good money thrown after bad.
Four years. Four years! And still it appears that many folks don’t get it.
…they tax the poor to provide money to bail out the rich. This is immoral, as well as economically destructive.
Read the whole article here.
The reform that Positive Money is proposing would make the financial sector less of a drain on the rest of the economy and would make banks significantly more stable.
We are often told that the banking industry is one of our greatest assets, a “creator of wealth”. When we factor in all the subsidies that we give the banking sector, it’s clear that the banking sector is really an “extractor of wealth”. The banks charge the whole economy interest on every penny, every year, for money they created when that money could have been created for free for everyone by an independent transparent body of the state working in the public interest.
With our plan, banks will act as a go-between for people who have money to invest and people who want to borrow some money.
When acting as a “credit broker” rather than a “credit creator” a bank is going to have to look after its customers a lot more than they have done in the past, and as they will rely on their customers to invest in their businesses we will see a greater level of concern from both bank and customer as to where their money is going.
As customers of banks we will have great power to, for instance, demand that our money is only used for ethical purposes or invested in the local community.
Lending and investment by the will of the public would naturally flow to entrepreneurs and productive businesses, rather than being used to drive up house prices and push costs out of reach of ordinary people.
Banks will also have a strong commercial incentive to encourage people to save as much as possible and to look for good-quality borrowers.
This is in direct contrast to the current situation, where the bank benefits most if everyone is in debt and the level of savings is not important.
Do we really need more bailouts, more debts, more bubbles, more regulations and complete nationalisation of our banks just because we refuse to address the real issue that our money supply is created through debt?