On money and banking
Ted Trainer
Much of the last ERA Review was on money and the banking system, but I do not think that the main faults in the system were made clear. Here is the way I see it.
Who decides what is to be developed in society? Who decides what money will be invested in? The answer is, the banks. They decide who money will be lent to. Do they consider requests for loans by reference to the needs of the society? No they don’t; they consider only whether or not a proposed venture is likely to be profitable. A market economy is driven by profit maximisation, so loans are a commodity allocated primarily to those who can pay most for them. So poor people don’t get much of the money available to be lent. The nation’s vast resources, technical power and skills get devoted to ventures which mostly benefit the rich and ignore those which might meet massive social and environmental need.
Banks and all other basic public services should not be privately owned, and they should be run according to charters stating socially beneficial lending priorities. This would not only ensure that loans were going to the right purposes, it would save huge amounts of wealth from going to the already rich. Bank profits and returns to shareholders are obscenely high, around $45 billion p.a.
The US Bank of North Dakota is the only public bank in that country. On all measures of effectiveness including net income, it is far more effective than the private banks. It targets public need, and sends its surplus income to the state’s revenues not to shareholders. (A shareholder is a person who expects to get an income without doing any work for it.)
Why is this issue never on the agenda? Marvel at the power of capitalist ideology.
The most incredible and outrageous aspect of the situation is that banks are allowed to the create the money they lend. When you get a loan no one has gone down to the vault to bring up the money to give to you; they simply write numbers in your account. Even the Bank of England states this. They expect that money to be paid back by you someday, plus interest. This is literally a process whereby private corporations are allowed to print and own and rent out again huge quantities of money. There has been no scam in history more astronomically stunning. But again no one cares, except for a tiny number in monetary reform campaigners. Again Consider the power of capitalist ideology in keeping such lucrative looting off the agenda.
