News & Analysis
Is Bigger Banking Better?
Big banks are good for society, says George Osborne ... Big banks are good for Britain and must not be broken up, according to George Osborne, as he argued the country's largest lenders were beneficial to society. George Osborne told the Commission on Banking Standards: 'If we aggressively broke up all of our big banks, I am not sure that, as a society, we would benefit form it.' – UK Telegraph
Dominant Social Theme: Big banks are necessary for the progress of civilization.
Free-Market Analysis: So now the truth comes out. Perhaps "big" banks did not evolve out of marketplace necessity after all. Perhaps they are part of what we call directed history.
We're led to believe that big banks are part of a larger evolution of commerce. But if there is one thing the Internet Reformation has shown us clearly it is that much of what we assumed was an evolution of reality was actually a procession of regulatory impositions.
In other words, the current financial situation in the West and even worldwide is manufactured by regulations and power brokers. In aggregate we call this group the power elite. We believe it gains most of its clout by controlling the trillions and trillions pumped out by central banks, especial in times of crisis.
This elite does NOT necessarily gain its wealth via interest flowing to the top but by CONTROL of numerous corporate and financial entities that create wealth in NUMEROUS ways.
But large banking establishments are certainly part of the larger control that the elites attempt to exercise over society. Some have suggested that the massive nature of these entities illustrates they are nothing more than bookkeeping establishments, designed to keep track of people's assets on behalf of the uppermost elites.
This makes sense within a larger perspective. Grant that a system of modern servitude can be effectively imposed if one is constrained, taxed and tracked. People in such a situation, and wishing to change the system, will have a paucity of resources with which to work.
Again, if we accept this perspective, it is perfectly understandable that top men (serving the power elite) would come out in favor of large banks. It has nothing to do with efficiency or the "reality" of the economy and everything to do with the larger control that big banking establishments provide to those who run them. Here's more from the article:
The Chancellor warned that "aggressively" breaking up banks would do little to benefit the UK and insisted the Government's plans to put in place a so-called "ring fence" to force banks to isolate their riskier, investment banking businesses from their retail arm was the right way to make the financial system safer.
"If we aggressively broke up all of our big banks, I am not sure that, as a society, we would benefit from it," he said. "We don't have a huge number of banks, sadly, large banks. I would like to see more."
His comments came as he gave evidence to the parliamentary commission on banking standards where he was accused of attempting to pressure members into supporting his ring-fencing reforms.
... Several members of the Commission have argued in favour of breaking up large banks, including former Chancellor, Lord Lawson.
Ring-fencing will not require banks to formally split themselves up and instead will see them place a firewall between their retail and investment banking arms that would isolate riskier activities from customer deposits.
But Pat McFadden, a Labour MP and member of the Commission, hit back at Mr Osborne, accusing him of "bullying" over his attempts to push through the ring-fence approach. "I don't think that the Chancellor's attempt to bully the Commission, which he himself set up, will work," said Mr McFadden.
We can see from this excerpt that a kind of elite dialectic is playing out ... with some in power wanting to break up banks and others (Osborne) wanting big banks to self-separate into various financial elements that would not correspond with each other.
Of course, this is probably unrealistic. At the very top, the leaders of such larger institutions know what's going on and can arrange things so various units benefit from certain synergies even if those synergies are not obvious.
But beyond this, what should be discussed is the necessity for banking at all. Once one begins to discuss fiat monopoly money and how people can build competitive currencies on their own in the Internet era, the necessity for banking in modern (Western) terms seems to diminish.
Certainly, large commercial banks, when seen in this light, do not have much of a reason to exist. They are basically distribution arms for central banks, disbursing currency defined by governments and central banks and moderating their commercial perspectives based on central banks' larger interest rate mandates.
An excerpt from an article by Leonhard Schmitz, Ph.D., F.R.S.E., Rector of the High School of Edinburgh, explains both Greek and Roman banking as follows (paragraphing ours):
Greek: The bankers at Athens were called Τραπεζ?ται from their tables (τρ?πεζαι) at which they sat, while carrying on their business. Public or state banks seem to have been a thing unknown in antiquity, though the state must have exercised some kind of superintendence, since without it it is scarcely possible to conceive how persons could have placed such unlimited confidence in the bankers, as they are known to have done at Athens.
They had their stands or tables in the market place, and although the banking and money changing business was mostly carried on by the μ?τοικοι, or resident aliens and freedmen, still these persons do not seem to have been looked upon with any disrespect, and the business itself was not disreputable.
Their principal occupation was that of changing money at an agio; but they frequently took money, at a moderate premium, from persons who did not like to occupy themselves with the management of their own affairs. Thus the father of Demosthenes, e.g., kept a part of his capital in the hands of bankers.
These persons then lent the money with profit to others, and thus, to a certain degree, obtained possession of a monopoly. The greater part of the capital with which they did business in this way, belonged to others, but sometimes they also employed capital of their own ...
Roman: The Argentarii at Romeb were also called argenteae mensae exercitores, argenti distractores and negotiatores stipis argentariae (Orelli, Inscript. n. 4060). They must be distinguished from the mensarii or public bankers, though even the ancients confound the terms, as the mensarii sometimes did the same kind of business as the argentarii, and they must also be distinguished from the nummularii [Mensarii; Nummularii.]
The argentarii were private persons, who carried on business on their own responsibility, and were not in the service of the republic but the shops or tabernae which they occupied and in which they transacted their business about the forum, were state property. As their chief business was that of changing money, the argentarii probably existed at Rome from very early times, as the intercourse of the Romans with other Italian nations could not well exist without them; the first mention, however, of their existing at Rome and having their shops or stalls around the forum, occurs about B.C. 350, in the wars against the Samnites (Liv. VII.21).
The business of the argentarii, with which that of the mensarii coincided in many points, was very varied, and comprised almost every thing connected with money or mercantile transactions ...
We can see from this that much that is today characterized as "banking" was conducted on stools in marketplaces. The vast array of securitized products that cause so many problems when linked to central banking ebbs and flows did not exist.
And yet these were sophisticated societies. The Greeks and Romans provided foundational elements for modern, Western culture. The biggest difference (outside of technology) is the modern banking system itself. And yet both the Greeks and Romans managed to do without it in the fully modern sense.
It is difficult to avoid the conclusion that the West's massive banking system is more of a command and control device than a 21st century necessity. Not only are big banks not needed, possibly, but really, as in ancient ages, maybe a stool might do. Perhaps several.
Conclusion: Okay, perhaps we are exaggerating to make a point. Or perhaps not!
Posted by Danny B on 11/23/12 01:18 AM
Not completely off topic. Bernanke says that he is out of bullets. What about his vaunted technology,,, his miraculous helicopters?
'I don't think the Fed has the tools to offset that.'
Click to view link
What a pompous fool. History has been painfully clear that his central plan could never work.
The world is drowning in debt,,, he offers more.
He should have opted for Social Credit instead.
Bankers strive mightily to only offer credit for investment. Bankers never want to offer credit for consumption. Their mentality is that credit offered for investment will be repaid and credit for consumption will NOT be repaid.
The fool bankers offered credit to GOV who can not pay and just piss away the money on each other. Had they offered the money as social credit, it would have been spent into the economy and got things going a bit. They wouldn't have gotten repaid but the economy would have improved. The debt is unpayable anyway so why not put the money where it would help the economy. GOV pisses away the money on wars and high-priced attorneys.
If the first-spender were individuals instead of bankers, the money would have helped the general economy. Social credit may not seem like a wise way to spend money. Buying up $ trillions in bad loans is far worse. Toxic asset purchases helped the rich at an enormous cost to the rest. Funding social credit would have cost far less and would have been a direct stimulus,,, not trickle down.
As I said before, there is nothing particularly good about social credit. It IS more productive than corporate welfare.
The bankers may believe that they will ride it out and end up owning everything foreclosed. Apparently, they base their belief on the past, not the future. The dollar as reserve currency is coming to an end. After this blows, the world will once again demand a non-fiat reserve currency. The FED will have little to say unless they can provide gold convertibility.
Posted by laceja on 11/22/12 08:50 PM
The problem with owning anything of long terms value (like real property) is, when the PTB cannot take it due to default, they will simply steal it by taxing it away. The bankers will take away, by credit default, as much as possible, and it will be left to the government to tax away the remainder.
Posted by Summer on 11/22/12 07:51 PM
DB: "This elite does NOT necessarily gain its wealth via interest flowing to the top but by CONTROL of numerous corporate and financial entities that create wealth in NUMEROUS ways."
And how do they buy that control? Through interest profit - the flow of 80% of the wealth to 10% of the population! If you can count trillions that central banks create, you can count trillions upon trillions lenders earn via interest on it, and bank created 'money' (which is over 95% of the 'money' in circulation) that necessitates monetary inflation. What's the bigger problem in all honesty? It is interest.
Posted by laceja on 11/22/12 06:15 PM
Maybe this is why the modern day Greeks, Italians, Spaniards, and Portuguese, are in such difficulty. The basis of their societies are based on the style of ancient bankers... CASH. Given the opportunity to borrow, they simply don't relate to the concept of repaying the loan. Take away fractional reserve banking and the whole world would be in far better shape.
And, it would be far less difficult to maintain our individual rights. The bankers have managed to convince nearly 50% of society to relinquish their personal rights for the opportunity to get free stuff, which in reality, as those who read the DB know, aren't free at all.
Posted by Danny B on 11/22/12 02:49 PM
I sent a post on this subject to 2 free energy groups. Rather than dissect and rearrange the parts, I'll post the original here.
BANKING and MORALITY
Corollary #1 Gold is money
Corollary # 2 All false money is just credit.
Corollary # 3 Credit is just information
Corollary # 4 Capital never self-diminishes.
Banks don't print a bucket of money when you come in for a loan. They give you a bank chit saying that you are approved to receive goods and services from a vendor. Before a bank issues you a chit, they verify that you are a productive person AND they verify that you are likely to choose to repay the chit. The bank makes a judgment of both your prospective productivity and your character (morality).
This power to dole out chits that can be exchanged for tangibles is a great force.
Lord Acton said that power corrupts. When this corruption occurs, bankers issue chips to people who are non-productive, dishonest or, both. Usually to themselves or to cronies.
Often to government.
The public printers of chits do the same thing. They issue chits to themselves and their cronies (voters). Productive people receive their chits from doing hard work. Non-productive people (bankers and beggars) receive their chits with only a minimum of work. The latter are a drag on society and productivity. They necessarily use subterfuge and force to get their chits. Eventually, the producers get tired of this and withdraw their productivity. The non-producers attempt to use force where genuine motivation is lacking.
Paper money is a chit stating that you have already been productive. Credit instruments are chits stating that you will be producive and moral in the future.
All paper money schemes eventually fail because the emitters of the chits invariably pass out chits to those who aren't honest or productive.
Paper money that is convertible to gold isn't susceptible to over-emission. It is much more difficult to emit gold-backed paper money to persons who are immoral and non-productive.
Gold can't be multiplied, Promises can be multiplied.
Electronic money is even more desirable to those who don't produce.
Imagine stealing $ 1 million in gold from a bank. Then, imagine stealing $ 1 million electronically from a bank. Cyber crime is flourishing.
Current "money" is just information; how productive you have been or how productive you will be in the future. The credit side of "money" is just a judgment on your productivity and morality.
"When Untermyer had J.P. Morgan on the witness stand, he asked him, "Is not commercial credit based primarily upon money or property?"
""Morgan responded, "No, sir, the first thing is CHARACTER."
Before money or property?"
Morgan reassured, "Before money or anything else. Money cannot buy it. [credit]"
Click to view link
Douglas MacArthur said that economic collapse always follows moral collapse. The bankers are now bringing this to fruition.
"Money" is just information and we live in the information age. Bankers created enormous piles of false money to keep their "industry" going. The approaching reality is that the financial industry will shrink to a fraction of it's current size.
The financial industry tries to keep growing at the same time that the productive sector is shrinking. It will eventually be reduced by about 65%.
Posted by dave jr on 11/22/12 02:32 PM
Excellent video, thankyou. My only disagreement is with Bill Still. The problem is not that banking is in the hands of private enterprise, but that it has government protection. In 2008, the perpetrators should have been left to twist in the wind. To reap what they have sown. But gov helped make sure WE are the only ones twisting, through selective bailouts.
The whole edifice is built on monetizing debt, both public and private. It may be workable, but only when it requires the integrity to stand on its own. Government intervention destroys that.
First they came for our government. With that in pocket, our businesses next. Then our homes. All that is left to preserve their stature is to come for us. This is what the likes of Bill Still and Ellen Brown help instigate. Direct government printing and a command economy. Out right slavery under a kind and benevolent master. I would wish them luck, but it wouldn't be sincere.
This Thanksgiving, I am thankfull for those who understand.
Posted by 1776 on 11/22/12 12:18 PM
The answer is NO!
How central banks collude with corporations to control the government.
Click to view link
Posted by dave jr on 11/22/12 11:58 AM
I don't see any exaggeration.
But also, I am not concerned with the size of a banking establishment or even if it managed to monopolize the market on it's own recognizance. What I am concerned about is the role of government where it has no business operating. Monopoly by decree, backed by weapons is a travesty. Government and business, like water and oil do not mix; or at least are ruinous of each others purpose. It does not have to be a choice of one or the other, but if society wants an economy, it must stand in the middle keeping the two seperated.
People will see.