We Should let the Banks Burn Down, by Bob Moriarty.
In late 2008 during what is now referred to as the Great Financial Crisis, government and financial managers had an opportunity to reset a badly out of balance dysfunctional banking system. It would have required pain from bank bondholders, shareholders and taxpayers in general. Everyone recognized the banks were burning down, seemingly out of control.
We should have let them burn down.
What we have done in the decade past that point is going to make the problem an order of magnitude greater. The next time we see the banks burning down we need to let them.
In the modern system, money is debt:
It’s a self-evident axiom that all debt gets paid. If not by the borrower, then the lender must pay. Obvious but often ignored.
All money is loaned into existence. When the banks create money by means of making loans and then they charge interest there is always more debt than assets. The debt will continue to grow until the financial system explodes one day. It has to happen mathematically no matter what governments and central bankers may say. There is no way around the simple math of the equation.
Debt is a mild form of slavery:
No one ever dares mention this but basically debt is slavery. The borrower is the slave to the lender unless and until the debt is satisfied either by repayment or by default. The banks certainly know that even if borrowers don’t.
Why aren’t banks allowed to fail, like other businesses?
This was true in 2008 when the Fed dumped $182 billion of taxpayers’ money to prevent insurance giant AIG from collapsing in spite of their entire condition being a function of criminal behavior on their part. Then the Fed poured trillions into the banking system both domestically and worldwide. For the banks it was a license to steal.
That was pretty stupid. If financial institutions make poor financial decisions or engage in criminal activity, why don’t we let them fail? Why would anyone not bribed believe that criminal activity on the part of banks should be rewarded at taxpayers’ expense? There is no shortage of well-run banks or insurance companies to service the customers of failed companies.
The reason we don’t let the criminal banks collapse is because they have bribed Congress. The largest financial contribution to reelection campaigns comes from the banking industry and insurance companies.
Congress changed the law so that people in the US cannot get out of student loans via bankruptcy:
The best example is the totally financially and morally corrupt student loan program. …
But the real winners were the banks. In theory banks charge borrowers interest to offset the risk they take in making the loan. But if a bank makes a loan that cannot be discharged in bankruptcy, there is no risk. It’s free money for the banks.
So when Joe Numbnuts wants to study underwater basket weaving for ten years so he doesn’t have to actually work for a living, the banks are free to make that loan with no risk. They don’t care if Numbnuts is a deadbeat or there is really no demand for those good at underwater basket weaving. When he defaults, as he most certainly will, they have just gained a slave they can hound until the day he dies or pays up. …
The end of the current road is approaching:
Since debt continues to rise anytime interest is charged on loans, eventually the system must fail. We are very near that point. Frankly I see evidence of the massive distortion in the world’s financial system right now. We are in the midst of the crash that can only lead to The Great Reset. Must we continue to reward failure and criminal behavior?
Part of that Great Reset is a debt jubilee where debts are forgiven and we start all over. Having balanced budgets and honest money would help a lot. Don’t even think that it’s possible to change the system through voting for the candidate of your choice; Google and the FBI are now in charge of selecting the president.