Who owns your bank?
Once again in the theme of recent posts on what I learned through the recent recession...
Conclusion 3: Almost all banks are nothing more that boutique outlets for nationalized central banks. In effect no matter what it says on the door they are owned by the government.
Not much of a revelation today as we stand in 2010 with so many banks having been 'bailed out'. But the truth is that nothing has really changed. Even before the recession, the banks were effectively the puppets of the central banking system. The only difference is that now its blatantly obvious.
Thats a pretty sweeping statement and I expect you may be asking yourself how that can possibly be. If that were the case the banking system would not have collapsed surely. Ready for another revalation: it didn't. What collapsed was the belief that the 'independent' banks were actually independent.
Still confused? What about all those shareholders? Didn't they own the banks? And if they didn't why did they lose all that money? Well, they owned the perception of the 'free market'. As soon as the perception was erroded, so was their shareholdings.
Ok, but if the governments didn't own the shares how could they have owned the banks? Simple, they owned the banks debt. Most countries regulations allow their 'independent' banks to lend in the region of 9 times as much cash to would be borrowers as the banks have in real assets. Where does the money come from. Nowhere obviously. Who needs money? All you need to do is enter the amount into a computer system and hey presto it exsists in the system and you can take it out at a cash point.
Ok, but what if there is not enough money to go round?
Hmm...
Not enough money... Someone has got to invent more money and the only people who can do that are...
You guessed it:
The central banks.
Most banks are guaranteed by the national central banks that provided they have the necessary asset base they can lend out 9 times that amount of assets. And also they are guaranteed that all accounts will always recieve a minimum payout (no matter what happens to the bank) by guess who?
The central banks.
... continue to Conclusion 4
Conclusion 3: Almost all banks are nothing more that boutique outlets for nationalized central banks. In effect no matter what it says on the door they are owned by the government.
Not much of a revelation today as we stand in 2010 with so many banks having been 'bailed out'. But the truth is that nothing has really changed. Even before the recession, the banks were effectively the puppets of the central banking system. The only difference is that now its blatantly obvious.
Thats a pretty sweeping statement and I expect you may be asking yourself how that can possibly be. If that were the case the banking system would not have collapsed surely. Ready for another revalation: it didn't. What collapsed was the belief that the 'independent' banks were actually independent.
Still confused? What about all those shareholders? Didn't they own the banks? And if they didn't why did they lose all that money? Well, they owned the perception of the 'free market'. As soon as the perception was erroded, so was their shareholdings.
Ok, but if the governments didn't own the shares how could they have owned the banks? Simple, they owned the banks debt. Most countries regulations allow their 'independent' banks to lend in the region of 9 times as much cash to would be borrowers as the banks have in real assets. Where does the money come from. Nowhere obviously. Who needs money? All you need to do is enter the amount into a computer system and hey presto it exsists in the system and you can take it out at a cash point.
Ok, but what if there is not enough money to go round?
Hmm...
Not enough money... Someone has got to invent more money and the only people who can do that are...
You guessed it:
The central banks.
Most banks are guaranteed by the national central banks that provided they have the necessary asset base they can lend out 9 times that amount of assets. And also they are guaranteed that all accounts will always recieve a minimum payout (no matter what happens to the bank) by guess who?
The central banks.
... continue to Conclusion 4
