First, there are no national banks, so that’s a good starting point. The Fed, the state banks, all of them, are privately owned, not owned by the government, not controlled by the government, not managed by the government. In each and every case, the existing banks were constructed and are managed to benefit one group only: the bankers. So the first step is to make a national bank for the benefit of the country, a National Bank of the United States of America. This bank would be entirely controlled and managed by the government.
The first rule of the National Bank shall be: only the government can print money. When “printing money” is spoken of, it does not mean literally printing on paper. It means that debt is issued and sold. As it is, the big private banks “print” money for the government, meantime taking a large cut of it for themselves and leveraging their loans far beyond reasonable limits.
Make a National Bank
of the United States of America,
which is the only entity that can print money.
The second essential is a law that forbids the government from bailing out an independent bank. This would have the salutary effect of making banks maintain more reserve for their loans, because they would have to bear the risk themselves if there were no possibility of a government bailout. In 2007, some banks, large banks, had as little as 1% of their loan amounts in reserve. All of them counted on the government to save them from their breathtaking folly.
Banking has blended two purposes into one over the past several decades, which led to all kinds of conflicts of interest. This must be reversed. Banking operations and investing operations must be managed separately by different kinds of corporations operating under different rules. They must be completely separate, including brick and mortar, executives, and board members.
Make a law that forbids the government
from bailing out an independent bank.
Derivatives must be outlawed. Derivatives are investment instruments that are an amalgamation of other investment instruments. Derivatives cannot pass the test of social utility; they contribute nothing to the general economy. In fact, their contribution is negative. Their only possible effect is to extract money from the economy, and therefore they should be done away with.
Computer trading should be abolished, or at minimum controlled with substantial transaction fees or other limitations. Like derivatives, computer trading has no socially redeeming feature. These algo-bots are like snarling beasts, let out of their cages each day to draw blood from the others. Their sole purpose is to generate profit for banksters by buying and selling many times per minute. All profit goes to the owners of the algorhythm, the banksters, and like all such things that don’t actually do anything for the economy, the money is extracted from the general public.
Separate banking and investment.
Outlaw derivatives and computer trading.
Tightly monitor hedge funds.
Hedge funds are the locus of a great deal of finagling, insider trading, and general evildoing. Hedge funds are not based on anything solid. Rather, they are bets that something will fail. Many or most are grossly overextended and dangerous to the economy. It’s easy to see the effects of insider trading when a fund makes a big profit by hedging against a corporation that soon after loses a lot of value, but difficult to prove in specific instances. Hedge fund managers take home some of the highest incomes in the world, for no particular reason. Hedge funds should be subjected to stringent controls and constantly monitored by an adequate force of inspectors. Their leveraging should be sharply limited.
Although these changes would undoubtedly make the country stronger and greatly improve our record inequality, the chances of any these improvements happening are virtually zero, and we should ask ourselves why. The answer is clear and unequivocal. Banksters have centuries of history behind them of influence, manipulation, and corruption, of virtual control of the government, the sole purpose of which is to enrich themselves at the expense of the rest of us.
In recent decades the money of the financial sector has grown beyond all reasonable bounds, and now equals about 20% of gross national product without actually contributing anything tangible. Banksters were the major force behind the 2007 financial crisis we are still living through. Finance is yet another factor, the major one, that increases GNP because money changes hands, but diminishes national wellbeing.