Customers could end up paying more for banking services if financial companies profitability remains strained in 2012, according to The Telegraph, 9th Jan 2012. Two new reports paint a bleak picture for consumers, with investment companies and insurers less confident about future growth and banks in particular concerned that regulatory changes will increase costs…
It was quite predictable that the banks’ reaction to regulatory changes which threaten to eat into their profits would be to pass on any additional expense incurred to their customers. After all, their primary purpose is to make money, not to consider the well-being of the wider economy.
How would reform of the financial system improve matters?
Well, if banks no longer exercised a virtual monopoly over creation of the public money supply while simultaneously attempting to maximise their profits as private businesses, there would be no excuse for government interference in their internal policies.
If they really wish to escape from government scrutiny, why on earth aren’t banks foremost in campaigning for legislation which would confer the right to create our national currency solely upon a public agency under democratic control? Relieved of their public role, they would be free to negotiate their own private contracts, and to set their own interest rates and bonuses.
Presumably, wealthy bankers (as opposed to those working in the high-street branches, who would benefit, like the rest of us, from a more stable financial system) are determined to have their lovely cake and eat it. They wish to enjoy all the benefits of their public role as effectively sole suppliers of money to the nation while taking no responsibility for the damage which their policies, as private, profit-making businesses committed to multiplying the financial units in their own coffers, may inflict upon the real economy of production and distribution.
To make matters worse, the financial sector is now doing its best to ring-fence and increase its profits by cutting down on labour costs. As this article points out, it shed 9,000 jobs in the last quarter of 2011, and is expected to shed a further 11,000 in the first quarter of 2012. So isn’t it time to ‘screw banking as usual’, as advocated by Simon Dixon, and focus on a new form of funding which would encourage small businesses created by potential entrepreneurs – people who, at present, are unable to get funding, but who have the ideas and the talent which would foster economic renewal from the grass-roots up?
Of course, the new-style banking proposed, in which only pre-existent money would be lent, will not be possible until financial reform has provided us with a stable, well-distributed money supply, issued by public authority, and free from any debt at source.
Once the necessary legislation has achieved this reform, banks will be free to compete for customers in the open market without affecting the nation’s money supply – and, therefore, without any need for government interference in their internal affairs.