The Weiner Component Vol.2 #6 – The Federal Reserve: Part 1

English: Monthly changes in the currency compo...

English: Monthly changes in the currency component of the U.S. money supply as reported by the Federal Reserve at the St. Louis Fed’s F.R.E.D. website at: http://research.stlouisfed.org/fred2/data/CURRNS.txt The data was copy/pasted into an OpenOffice.org Calc spreadsheet, the monthly changes were calculated using a simple formula, then this image was generated from that data. (Photo credit: Wikipedia)

Every industrial nation or group of countries like the Euro-pact, which uses a common currency, has a Central Bank that largely controls that controls its Monetary Policy, the flow of currency within its borders. In Europe it’s called the Central Bank and in the United States it is called the Federal Reserve System or the Fed.

 

Initially when the United States was founded under the Constitution in 1789 the Secretary of the Treasury, Alexander Hamilton, suggested that a Bank of the United States be established; and it was in 1791. The bank served as a repository for federal funds and as the government’s fiscal agent.

 

The bank was privately owned, as money for it was subscribed by private citizens, but its prime function was to serve the new government. It was granted a twenty year charter by Congress and had branches in eight cities. Consequently in addition to acting for the government the bank also conducted general commercial business. Although it was well managed and profitable critics charged that it was favoring the mercantile class over agrarian interests. This brought about its temporary termination after its charter expired in 1811. In 1816 the Bank of the United States was reestablished because the country had faced financial problems during the War of 1812 and it received a new twenty year charter.

 

The Second Bank of the United States would exist until and through most of the second term of Andrew Jackson’s presidency. It’s President, Nickolas Biddle, attempted to force Jackson to sign a Congressional bill chartering another twenty year extension to the bank. President Jackson reacted to this by moved all new government income to a group of western banks, that became known as his “pet” banks, and spent the funds already deposited in the Bank of the United States before withdrawing funds from his “pet” banks to pay for the needs of the Federal Government. The Second Bank of the United States got a state charter and would eventually go bankrupt. The western “pet” banks went on a lending spree which inflated the sale of western land by hundreds of percent, resulting in a depression, when the bubble burst, that affected the entire United States during the tenure of the next President, Martin Van Buren. In any event the nation no longer had a Central Bank.

 

In 1913, during the Presidency of Woodrow Wilson, a new Central Bank was set up by Congress. It was called the Federal Reserve and was supposed to regulate the flow of currency within the nation in order to avoid the large and regular economic dips of recession and depression.

 

Its initial mission was to control Monetary Policy, the flow of money through the entire economy. Gradually Congress extended it purpose by new legislation. These gradual extensions were a broadening of Monetary Policy.

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Keep in mind that at this point in the history of the United States money or currency was specie; that is, it was gold or silver in the form of coins. Paper money did exist but it was a promissory note that could be exchanged at any bank, theoretically at any time, for gold and silver coins. However if this was done on a massive scale there would be a run on the bank and it would run out of money and go bankrupt. In order for business to properly occur more bank notes were printed than there was gold available.

 

Basically these metals, gold and silver, were purchased by the National Government and then minted into different denominations. The coins denoted the weight of the metal. A one ounce gold coin was a $20 gold piece. A one ounce silver coin was a silver dollar. Money, then, was exchanging value for value. The basic value of the metals was agreed upon international; so money as gold or silver could be used anywhere in the world.

 

In 1929, for various reasons, the Great Depression occurred. Under a Republican administration, that of President Herbert Hoover, the country, and, for that matter, the world, went economically downhill for the next decade. Each industrial nation had to work out its own deliverance from the Great Depression.

 

In 1932, the Democrat, Franklin D. Roosevelt was elected President of the United States. He introduced the “New Deal.” His basic program was the three R’s: relief, recovery, and reform. He attempted to offer employment to many of the unemployed, an end to the reasons for the depression, and reform by legislation or otherwise so it could never happen again.

 

Roosevelt was the longest serving President in the history of the nation. He served for four terms, through the Great Depression and most of World War II, dying in office during his fourth term.

 

Sometime during his first administration he had a bill passed by Congress that changed the use of money, first in the United States and then it was copied throughout the rest of the world. The Federal Government collected all the gold coins, with the exception of a small number that could be kept as souvenirs, issued paper silver certificates for one and five dollar bills and Federal Reserve Notes for any amount above that. The gold coins were melted down into bars of gold and stored in underground depositories like Fort Knox, situated around the country, with gold certificates issued for the gold, which the government kept on deposit to verify the value of the Federal Reserve Notes.

 

In essence money being worth its weight in gold became a myth. The gold certificates were never on display or otherwise available. There was never any record kept of actual gold being added or subtracted from the gold supply in the depositories. Money became paper, a token of no real value; everything else was a fiction.

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Early on in World War II the countries that were to become allies of the United States shipped their gold supplies to the U.S. I don’t believe the gold was ever returned to those nations. They spent the gold on buying supplies with which to fight the war. After the gold was spent the United States used a system called “lend lease” to supply its allies with the necessary food and war materials. Those goods were never really paid for monetarily. But World War II ended the last hangovers of the Great Depression. The United States and later the rest of the world emerged in different levels of economic fitness in 1945. All actual money had become paper tokens that were used to exchange goods and services for goods and services. The basic world currency, upon which all the other national currencies were based, after the war was the American dollar. It is still that today.

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The Federal Reserve came into being because of the depression or panic of 1907 and other extreme downturns in the economy. Attempts had been made during the late 19th and early 20th Centuries, by the moneyed class, mainly bankers, to control the economy mainly for reasons of profit. These, in turn, particularly when they failed, had exacerbated economic shifts within the economy, usually in a downward direction.

 

The Panic of 1907 and 1908 was also known as the 1907 Bankers Panic or Knickerbocker Crisis. Its causes took place initially over a three week period when the New York Stock Exchange fell almost 50% from its peak the previous year. It lasted for slightly over a year.

 

Monetary panics occurred during this time of economic recession and there were numerous runs on banks and trust companies. It spread throughout the nation with many state and local banks and businesses going bankrupt. The primary cause of the run was a retraction of market liquidity by a number of New York City banks and a loss of confidence among depositors, exacerbated by unregulated side bets of bank funds by banking executives.

 

The panic was begun in 1907 by a failed attempt to corner the market on stock of the United Copper Company. When this failed, banks that had lent money to the cornering scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company, New York City’s third largest trust. The collapse spread throughout the city trusts as regional banks withdrew reserves from New York City banks. Panic extended across the nation as vast numbers of people withdrew their deposits from regional banks.

 

To simply state what happened was that the object was for a group of investors to gain control of the stock shares of United Copper Company. The group concerned controlled numerous banks and trust companies. They believed that a large number of shares had been borrowed and sold short. (To sell short is to sell a stock at a higher price before one owns it, then when the price drops buy the stock at a lower price, and eventually pocket the profit.)

 

The group believed that a majority of the stock was held by the Heinze family and that a significant number had been borrowed and sold short on the belief that the price would drop considerably. Their aggressive purchasing would drive up the price of the stock. The short sellers would be forced to come to them in order to purchase stocks that they had already sold and they could charge whatever they wished.

 

United Copper rose in one day from $39 to $52 a share. It then went up to nearly $60 a share, but the short sellers were able to able to find United Copper from other sources. The group has misread the Market and the stock price began to collapse. It closed at $30 and then dropped to $10 a share. The manipulators and the banks they represented were ruined. As news of the collapse spread depositors rushed to pull their money out of these banks. The run on banks spread throughout the city. A week later many regional stock exchanges throughout the nation were closing or limiting trading.

 

The hero of the crisis was J.P. Morgan. He coordinated the heads of the banks and trust companies and was able to keep the total economy of the United States from collapsing. The Panic of 2007 was from May 2007 to June 2008, 13 months. While it started and was centered in New York City the entire nation was involved. There was bank panic, runs on banks and trusts with crowds of depositors withdrawing all their funds, and falling stock prices that resulted in massive economic disruption. Production fell 11% in the nation, imports went down by 26%, and unemployment rose to 8% from under 3% two years earlier. Even immigration dropped to 750,000. It had been 1.2 million two years earlier. J. P. Morgan lost about $21 million straightening the situation out.

 

The frequency of economic crises and the severity of the 1907 panic led to a national debate on reform of the system. In May 1908 Congress passed the Aldrich-Vreeland Act that established a National Monetary Commission to investigate the panic and propose legislation to regulate banking.

 

It was discovered that the major difference between European and American banking systems was the existence of a Central Bank which controlled Monetary Policy. They could easily move money to where it was needed. The European nations all had one, the United States did not. The European states were able to extend the supply of currency during periods of low cash reserves. The United States had a great problem doing this.

 

The final report of the National Monetary Commission was on January 11, 1911. For nearly two years Congress debated the proposal. On December 23, 1913 Congress passed the Federal Reserve Act. President Woodrow Wilson signed the bill immediately and the legislation was enacted on the same day, December 23, 1913, creating the Federal Reserve System as the Central Bank within the United States.

 

 

English: Flag of the United States Federal Res...

English: Flag of the United States Federal Reserve Bank (Photo credit: Wikipedia)

The Weiner Component #124 – Justice in America Part3: The Big Banks & the Federal Reserve

The big banking houses, like Wells Fargo, Bank of America, and J.P Morgan-Chase to name a few, that have member banks throughout the United States, seemingly are sacrosanct, they can be fined for illegal or immoral actions but no perpetrator ever goes to prison.  Presumably the reason for this is that currently the country is dependent upon them for the movement of money throughout the national economy.  It is felt that if anything were to happen to them then the nation would go into a serious depression. Since they are presumably indispensable they can and do generally get away with actions that would cause people ordinarily to be sent to prison,

This condition exists because people are afraid of change; they are used to what they have and see anything different as too big a risk.

The banks exist in a free market economy as entities that persist for profit using money, people’s deposits, the safety of which the Federal Government guarantees, for their own general speculations.  In point of fact they are an oligarchy, which under the late 19th Century Sherman Anti-Trust Act is an illegal combination in restraint of trade.  It’s a no lose situation for the banks whose management have no morals in the use of the people’s money

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Following is an edited version of The Weiner Component #57D -The Federal Reserve,

It became obvious during the Panic of 1907 that the Federal Government had no controls over banking practices in the United States.  The Panic was caused by speculators attempting to corner the market on United Copper Company stock.  Failure to do this led to the collapse of the Knickerbockers Trust Company, New York City’s third largest trust.  The failure spread fear throughout the City’s Trusts.  Panic extended across the nation as large numbers of people withdrew their deposits from regional banks.  At the time the United States did not have a central bank to inject liquidity back into the market.  The following year a Senate commission investigated the crisis and proposed future solutions, leading to the creation of the Federal Reserve System in 1913.

The Federal Reserve (FED) is the central banking system of the United States.  It was created in December of 1913 by the passing of the Federal Reserve Act.  This was largely in response to a series of financial panics, particularly the Panic of 1907.  The Federal Reserve consists of twelve regional Banks located throughout the United States, with the main branch in Washington, D.C.  The chairman of the Federal Reserve heads this bank.  Over time the roles and responsibilities of the FED have expanded and its structure has evolved.  It is still in this process of evolution as new financial crises occur.

It was through the Federal Reserve and the Treasury, with the compliance of Presidents Bush and Obama that the nation was saved from total economic disaster caused by the Real Estate Debacle of 2008 that was brought about by the Financial Institutions within the United States.  The assorted banking houses had been bundling and selling mortgages for about the last thirty years; maintaining control over these mortgages with no cash investment in them and then continually using the funds from the sales to issue new mortgages.  The banks made fat profits from continually handling all this paper.

There had been a need for more funds in the National Cash Flow and, in this manner, the banks kept adding money to the economy.  By 2007 the level of money creation reach a point of insanity with a larger and larger percentage going to the banks.  At this point most bankers were in denial that the system could crash and the insanity continued until the crash came toward the end of 2008.

The problem that existed from the 1970s on was a great need for a continual increase in currency in the National Cash Flow to keep up with needed economic growth.  The FED was not in a position to fulfill this need; the banks did so by inflating the value of property, particularly owned homes; and the process became a way of life until it was abused and over-abused and the bubble burst to the point of destroying the economy, if the Federal Government had not interceded and saved it.

Paul Volcker headed a committee that proposed new laws that would reign in bank excesses and put the country on a solid financial footing again but bank lobbyists got these proposals watered down and since 2009 the major banking houses have again endangered the economy by their excesses.  This does not even consider the damage that has been done to a multitude of individual households where, in many cases, the homeowners have lost their homes through bank foreclosures, a number of which were illegal, mainly because the banks did not own the mortgages.  The Federal Government has responded with massive fines for malfeasance but with no criminal cases against any banks or individuals who have brought these abuses into being.  It is time for a change in the situation.  For one or many forms of reform to bring these banks into line with the needs of the American public.

In 2014 Senator Elizabeth Warren made a public statement which was that the big banking conglomerates should be broken up.  A similar situation had occurred at the beginning of the 20th Century when President Theodore Roosevelt had gone after a number of monopolies and caused them to break up.  John D. Rockefeller’s Standard Oil, among others, had been broken up into a number of companies, all with the title of Standard Oil of a particular state.  Each controlled by John D. Rockefeller.

The only way this process can be successfully done and end the irresponsible banking oligarchy in the United States is to upgrade the powers of the Federal Reserve so they can fully and effectively carry out their function of keeping the public safe from the excesses of the financial institutions and also keep the economy at a healthy level.

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How can this be done?  The major banking houses must once again become institutions that deal specifically with people and businesses.  They must become either commercial banks or investment banks; they can no longer be both.  And if some or many continue as investment banks then the FDIC (Federal Deposit Insurance Corporation) must no longer insure their deposits.

Also the Federal Reserve must have its power extended to be able to instantly add or subtract currency from or to the National Cash Flow.  Ben Bernanke did this as the FED chairman.  But he did it in a very interesting or sneaky fashion.  He added 45 billion dollars a month to the National Cash Flow by buying up mortgage paper within the 50 states and then ignoring the paper because they were fractional bits of mortgages which didn’t give the FED control of any of the properties. Instead they also solved the housing crisis mess that the banks created and put money in the pockets of a number of homeowners who had stopped paying their mortgages.  These people suddenly had money to spend.

In addition Congress needs to take a revolutionary step, it has to increase the power of the FED so that it is able to lend money directly to homeowners and small businesses. Each of the Twelve Federal Reserve Banks must also get the power to set up their own lending banks within each of the Twelve FED Zones.

After the 2008 & 2009 Bailouts the banks did not function as they had before the crash. They hoarded their funds and looked for investments that would give them large returns; these were largely in the futures market.  In essence from 2009 on the major banks, which had been saved by the Federal Government and indirectly the taxpayers, found ways to exploit the general public for their own benefit.  They actually worked against economic recovery.  The contention at that point in 2009 that once the Financial Institutions were saved they would return to their traditional roll was a myth since the large banks were solely motivated by the profit motif and could care less about the welfare of the individual worker and homeowner, or for that matter, the welfare of the country.

Since private enterprise, particularly private enterprise backed economically by the Federal Government cannot be trusted with the welfare of the nation it has become necessary for the Government to insure that welfare and that can only be done by the Government taking over the financial structure of the nation in the name of the “People” for the “Common Good” and not for profit.

There will be problems in establishing this system but they can gradually be resolved. There are the smaller banking houses and the Credit Unions that have generally functioned for the welfare of the general public.  Should they continue to be part of the system?  Do they continue to have FDIC insurance?  These questions will be answered as we go along.

The major banks in the United States, JP Morgan Chase, the Bank of America, Wells Fargo, to cite a few examples, have grown in size since the 2008 Disaster.  They are today too big to fail.  Their demise could bring down the economy of the United States and possibly also some of the European nations.  In essence they hold the world prisoner while they act making all sort of economic decisions for their own benefits using public funds.

We need, at this point, to take a closer look at the banks and their ownership and control.  The stockholders obviously own the financial institutions but the people who control these companies and make all the decisions would be the CEO and all the upper management.  The actual owners of the banking concerns have almost no say in what happens in these companies.

The compensation packages of the upper echelon runs into the multi-millions of dollars. The stock dividends of a company like the Bank of America runs into the pennies. The Bank of America pays one cent per share per quarter or four cents per share of stock each year, actually within the last year or so B of A raised its dividend 2 cents a year; it now pays 6 cents a year per share.  One hundred shares of stock that cost anything from $14 to $17 per share pays 6 dollars a year.  For an investment of approximately $1,500 the shareholder earns $6.00 per year.  So much for owning stock in The Bank of America!  The other major banks pay more but not significantly more in dividends.

What happens to all the fabulous profits that the Bank of America makes?  Most of it goes to management as salaries, compensation, and bonuses.  If the Bank of America is a true example of American banking then the financial institutions are making money for the sake of making money.

It is a sad commentary if one remembers President Franklin D. Roosevelt’s comment that he made once during the Great Depression and again later during World War II that an individual can only spend so much during a year, that to earn far more is a total waste in terms of society and that this excess should be taxed, which currently it is as an unbelievably low rate.

The heads of the various banks earn more, in many cases, in one year than they can reasonably spend in a lifetime.  Jamie Dimon, the CEO of JP Morgan Chase had his yearly compensation package cut, after bank losses, from 22 million to only 11 million a year.  This, then, becomes the function of banks in the United States and beyond. It is a silly or stupid reason for running the finances of a nation.

The American economy deals with the needs of over 350 million people.  This is a complex issue.  The large banking houses have failed the public.  To what extent should they be allowed to continue to exploit them?  Or should these major Financial Institutions go off on their own in a Free Market System, functioning within the law and succeeding or failing without protection from the Federal Government and the taxpayers?

Taken together all the games, illegal and otherwise, that the banks have played have been in the trillions of dollars, the fines that the banks have paid have been in the billions of dollars.  How many trillions have the banks extorted; how many average Americans have the banks ruined; and how many additional trillions will they extort before this current system is changed?  Even with new Volcker rules the current system is bankrupt, incapable of working for the welfare of the people.

It is time for a basic, realistic change in the way finance works within the nation.  The needs of the people are far more important than the quirks of the modern day bankers.

As a footnote: considering the blog before this one, the teachers who were found guilty of the RICO Act and given jail sentences and fines for cheating on their student’s tests were guilty of far less criminal acts than these bankers.  If any of the bankers were tried under the same RICO Law they would all get far greater sentences and fines than were given to the teachers.  It would seem that this is an excellent example of Justice in America.

 

 

Logo of the United States Federal Deposit Insu...

 

Description: Newspaper clipping USA, Woodrow W...

Description: Newspaper clipping USA, Woodrow Wilson signs creation of the Federal Reserve. Source: Date: 24 December 1913 (Photo credit: Wikipedia)

 

English: A map of the 12 districts of the Unit...

English: A map of the 12 districts of the United States Federal Reserve system. (Photo credit: Wikipedia)

 

The Weiner Component #57D – The Federal Reserve (Part 5 of 5)

English: A map of the 12 districts of the Unit...

English: A map of the 12 districts of the United States Federal Reserve system. (Photo credit: Wikipedia)

It became obvious during the Panic of 1907 that the Federal Government had no controls over banking practices in the United States.  The Panic was caused by speculators attempting to corner the market on United Copper Company stock.  Failure to do this led to the collapse of the Knickerbockers Trust Company, New York City’s third largest trust.  The failure spread fear throughout the City’s Trusts.  Panic extended across the nation as large numbers of people withdrew their deposits from regional banks.  At the time the United States did not have a central bank to inject liquidity back into the market.  The following year a Senate commission investigated the crisis and proposed future solutions, leading to the creation of the Federal Reserve System in 1913.

The Federal Reserve (FED) is the central banking system of the United States.  It was created in December of 1913 by the passing of the Federal Reserve Act.  This was largely in response to a series of financial panics, particularly the Panic of 1907.  It consists of twelve regional Federal Reserve Banks located throughout the United States, with the main branch in Washington, D.C.  The chairman of the Federal Reserve heads this bank.  Over time the roles and responsibilities of the FED have expanded and its structure has evolved.  It is still in this process of evolution as new financial crises occur.

It was through the Federal Reserve and the Treasury, with the compliance of Presidents Bush and Obama that the nation was saved from total economic disaster caused by the Real Estate Debacle of 2008 that was brought about by the Financial Institutions within the United States.  The assorted banking houses had been bundling and selling mortgages for about the last thirty years; maintaining control over these mortgages with no cash investment in them and then continually using the funds from the sales to issue new mortgages. The banks made fat profits from continually handling all this paper.

There had been a need for more funds in the National Cash Flow and, in this manner; the banks kept adding money to the economy.  By 2007 the level of money creation reach a point of insanity with a larger and larger percentage going to the banks.  At this point most bankers were in denial that the system could crash and the insanity continued until the crash came toward the end of 2008.

The problem that existed from the 1970s on was a great need for a continual increase in currency in the National Cash Flow to keep up with needed economic growth.  The FED was not in a position to fulfill this need; the banks did so; and the process became a way of life until it was abused and over-abused and the bubble burst to the point of destroying the economy, if the Federal Government had not interceded and saved it.

Paul Volcker headed a committee that proposed new laws that would reign in bank excesses and put the country on a solid financial footing again but bank lobbyists got these proposals watered down and since 2009 the major banking houses have again endangered the economy by their excesses.  This does not even consider the damage that has been done to a multitude of individual households where, in many cases, the homeowners have lost their homes through bank foreclosures, a number of which were illegal.  The Federal Government has responded with massive fines for malfeasance but with no criminal cases against any banks or individuals who have brought these abuses into being.  It is time for a change in the situation. For one or many forms of reform to bring these banks into line with the needs of the American public.

The only way this can be done is to upgrade the powers of the Federal Reserve so they can fully and effectively carry out their function of keeping the public safe from the excesses of the financial institutions and also keep the economy at a healthy level.

How can this be done?  The major banking houses must once again become institutions that deal specifically with people and businesses.  They must become either commercial banks or investment banks; they can no longer be both.  And if some or many continue as investment banks then the FDIC (Federal Deposit Insurance Corporation) must no longer insure their deposits.

Also the Federal Reserve must have its power extended to be able to instantly add or subtract currency from or to the National Cash Flow.  In addition Congress needs to take a revolutionary step, it has to increase the power of the FED so that it is able to lend money directly to homeowners and small businesses.  Each of the Twelve Federal Reserve Banks must also get the power to set up their own lending banks within each of the Twelve FED Zones.

After the 2008 & 2009 Bailouts the banks did not function as they had before the crash.  They hoarded their funds and looked for investments that would give them large returns; these were largely in the futures market.  In essence from 2009 on the major banks, which had been saved by the Federal Government and indirectly the taxpayers, found ways to exploit the general public for their own benefit.  They actually worked against economic recovery.  The contention at that point in 2009 that once the Financial  Institutions were saved they would return to their traditional roll was a myth since the large banks were solely motivated by the profit motif and could care less about the welfare of the individual worker and homeowner, or for that matter, the welfare of the country.

Since private enterprise, particularly private enterprise backed economically by the Federal Government cannot be trusted with the welfare of the nation it has become necessary for the Government to insure that welfare and that can only be done by the Government taking over the financial structure of the nation in the name of the “People” for the “Common Good” and not for profit.

There will be problems in establishing this system but they can gradually be resolved.  There are the smaller banking houses and the Credit Unions that have generally functioned for the welfare of the general public.  Should they continue to be part of the system?  Do they continue to have FDIC insurance?  These questions will be answered as we go along.

The major banks in the United States, JP Morgan Chase, the Bank of America, Wells Fargo, to cite a few examples, have grown in size since the 2008 Disaster.  They are today too big to fail.  Their demise could bring down the economy of the United States and possibly also some of the European nations.  In essence they hold the world prisoner while they act making all sort of economic decisions for their own benefits using public funds.

We need, at this point, to take a closer look at the banks and their ownership and control.  The stockholders obviously own the financial institutions but the people who control these companies and make all the decisions would be the CEO and all the upper management.  The actual owners of the banking concerns have almost no say in what happens in these companies.

The compensation packages of the upper echelon runs into the multi-millions of dollars. The stock dividends of a company like the Bank of America runs into the pennies.  The Bank of America pays one cent per share per quarter or four cents per share of stock each year.  One hundred shares of stock that cost anything from $14 to $17 per share pay four dollars a year.  For an investment of $1,500 the shareholder earns $4.00 per year.  For an investment of $15,000 he earns $40.00 a year.  That is a return of .0027%, twenty-seven thousands of one percent.  By putting that much money in a commercial bank the return is at least one tenth of one percent.  So much for owning stock in The Bank of America!  The other major banks pay more but not significantly more in dividends.

What happens to all the fabulous profits that the Bank of America makes?  Most of it goes to management as salaries, compensation, and bonuses.  If the Bank of America is a true example of American banking then the financial institutions are making money for the sake of making money.

It is a sad commentary if one remembers President Franklin D. Roosevelt’s comment that he made once during the Great Depression and again later during World War II that an individual can only spend so much during a year, that to earn far more is a total waste in terms of society and that this excess should be taxed.

The heads of the various banks earn more, in many cases, in one year than they can reasonably spend in a lifetime.  Jamie Dimon, the CEO of JP Morgan Chase had his yearly compensation package cut, after bank losses, from 22 million to only 11 million a year.  This, then, becomes the function of banks in the United States and beyond.  It is a silly or stupid reason for running the finances of a nation.

The American economy deals with the needs of over 350 million people.  This is a complex issue.  The large banking houses have failed the public.  To what extent should they be allowed to continue to exploit them?  Or should these major Financial Institutions go off on their own in a Free Market System, functioning within the law and succeeding or failing without protection from the Federal Government and the taxpayers?

Taken together all the games, illegal and otherwise, that the banks have played have been in the trillions of dollars, the fines that the banks have paid have been in the billions of dollars.  How many trillions have the banks extorted; how many average Americans have the banks ruined; and how many additional trillions will they extort before this current system is changed?  Even with new Volcker rules the current system is bankrupt, incapable of working for the welfare of the people.

It is time for a basic, realistic change in the way finance works within the nation.  The needs of the people are far more important than the quirks of the modern day bankers.

 

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