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Sunday, March 19, 2017

Retail Banking is a Destructive Conflict of Interest

Banks aren't in the retail industry; they are essential services you can't function without. They should be non-profit to avoid the inherent conflict of interest and they need to be to actively regulated.

The main reason banks tells us we need a credit card is to establish a credit rating. The main reason for establishing a credit rating is for getting loans from banks who give out the credit cards. Notice a problem? It’s a vicious pressure cycle of debt for profit. 

Banks were created to eliminate loan sharks and to lubricate and stabilize the financial system. Banks should be financial only through deposits, loan interest, and bonds. No stocks. Issuing stocks makes them beholden to shareholders shifting their primary focus away from a stable financial system to maximizing share value and profit, not to mention executive bonuses. This turns them into the very loan sharks they were supposed to eliminate.

Deregulation has been a universal neoliberal disaster. We all know how hard it is to regulate ourselves, and we don’t have massive profits involved. Self-regulation is no regulation, anarchy. Criminals thrive in anarchy as do tyrants. Regulation limits and protects. 

Just having a check done on your credit rating that isn’t followed by a loan reduced your rating.
It is said that because most people are invested in banks through pension funds and the like profit for banks is good for everyone. This doesn’t justify the behaviour; it makes us complicit in our own exploitation, in usury. Credits rating have become the chains of modern economic slavery.
Credit has replaced labour (defined as time and effort) as the basis of our currency, for the money supply. Banks control credit and thus money. They don’t sell goods and services; they control the financial system and the value of currency. They determine who is in society and who is out because you can’t do much these days without a bank account or credit card. Without a banks account you8 have to pay fees to just get the money you earn. We are supposed to be clients they advise not customers they exploit. Exploitation is the basis of most retail.

Banks were permitted to exist to help regulate and infuse cash into the system, not to skim off profit. This drains the economy and is why when a financial industry grows too large, the economy suffers.  Currency isn’t a good or service but a representation of the labour used to produce such. It has no inherent value. It shouldn’t be possible to make money off of money because this produces nothing of real value, just an increase in abstract numbers. It is a trick of math and the very definition of inflation. Things don’t demand more time or effort to produce but everything gets more expensive because the currency itself has less real value.  The apparent growth in total wealth is just an economic illusion.

The more complex, arcane, and opaque a system is, the more likely it is to be based on utter nonsense or to be a screen for criminal activity. Accounting is basic math: 1+1=2 not 2+10%. The current system is a literal attempt to get money from nothing and that’s magical thinking not the basis of a stable, productive economic system or society. It becomes trapped in the inevitable boom and bust cycle of the stock market. Buy low and sell high. A financial system needs to be reliable for its users than a casino. Right now banks are the House. That’s why they record profits every year, despite the economic reality around them. The House always wins.

If an enterprise is too big and essential to be allowed to fail because of market conditions, it is too vital to be controlled buy those markets. It is too big for private ownership and to be driven by market behaviour which is short-sighted, opportunistic, and amoral. Because it is the basis of system, it spreads throughout the system and society until there is no way to refuse, resistance becomes futile and even nations must bow.

The financial industry has become a chain on the transmission instead of a stabilizing lubricant. The engine is roaring, overheating, and starting to cease in order to go nowhere fast while making a damn loud noise. Banks don’t care as long we keep paying them for gas.
They even punish you with fees for responsible financial behaviour, such as getting a credit card and not using it. Anything to push up the debit and the profit, keeping you chained to the system.
It’s all for our benefit you know.

The sharks are only circling us for our protection.