Blog 33

Maybe it's because I'm a bit naive, perhaps it's because I don't really understand every brand of economics out there, micro, macro or even hyper-macro [my invention]. But it seems to me that if the Governments solution to the bank induced depression is to stimulate the banks into turning the tap for unlimited, unsupervised credit back on, and the only way to do this is to fill the coffers of the banks with money taken from the taxpayers, then why not leave the money in the taxpayers pockets in the first place?

Why involve the 'middleman' Banks at all?

Some, and I am sure it's the greater part of the money taken from the taxpayers and given to the banks will be diverted into bank salaries, bonuses, shiny stainless steel and glass luxury offices, expense account lunches, penthouse suites etc, etc, what is left will then be multiplied up by 900% using the banks magic money creation facility called 'fractional reserve banking' and then lent to the very people who forcibly 'donated' the original 10% 'base capital' in the first place, plus of course what the banks net from the inevitable interest.

If the money is already in the economy (which it must have been for the Government to be able to seize it in the name of income tax) why take it from the people and give it to the banks so that they can then in turn lend it back to the people. It really doesn't make any sense at all.

Doesn't this situation seem ridiculous to anyone else? Or is it just my naivety? It truly is a very strange world we are forced to live in.

I read somewhere that all the income tax collected by the US Inland Revenue Service in any one year barely covers the amount of money the US Government has to pay to the banks in interest alone to service the national debt. Despite the state of the US economy and the bailout of the banks by Government, presumably these colossal interest payments continue to be made to the banks.

How the US Government came to be in so much debt to the Banks is a whole other subject, too big to be discussed in this short piece.

The reason for this mother of all depressions is not difficult to understand, what is difficult to understand is why everyone seems to be hell bent on 'bailing out' the culprits and patching up the old system when it's a proven failure.