Banks Are The Actual Thieves

Money bleaching is not even close to the biggest theft of all. The real fraud is actually totally legal. Not only do banks not get penalized for doing it, but they get rewarded! I’m talking about the invisible banking system that endlessly and unabatedly funnels wealth from the bottom of society to the top...

Banks Are The Actual Thieves

How the Central Bank Sustains the Widening Gap Between Rich and Poor

he Hollywood scene where a bank is getting robbed is all too common in everyone’s mind. With a few exceptions, the movie portrays the robbers as the bad guys, and in some cases diabolically so (like the Joker scene in Batman). In the 2006 crappy rendition of Superman (Returns), Hollywood had Superman rise up to outer space (not clear why), where he uses his “super hearing” to listen to everything happening on Earth all at once. And of all the horrible things, one thing catches his attention and calls for his immediate intervention. War? Famine? Disease? Rape? Genocide? No. It was the alarm bell at a bank getting robbed! [Watch clip]


When will Hollywood make a DC Comics Justice League movie where Wonder Woman and Superman destroy Wells Fargo headquarters after discovering that they were helping Mexican drug cartels launder billions of dollars? Or how about a Marvelflick where the CEO of every major US bank (JP Morgan Chase, Citigroup, Goldman Sachs, Bank of America, Wells Fargo, etc.) and their government enablers are punched and hammered repeatedly by the Hulk and Thor when we find out that they’ve been fined only millions of dollars when caught washing trillions each year? 


But money bleaching is not even close to the biggest theft of all. The real fraud is actually totally legal. Not only do banks not get penalized for doing it, but they get rewarded! I’m talking about the invisible banking system that endlessly and unabatedly funnels wealth from the bottom of society to the top.


Musical Chairs


Money, in and of itself, is worthless. Money’s value is in what it can buy. Imagine a cinema that has only one screen with 100 seats. Even if the cinema were to use every hour of the 24-hour day, they can’t have more than 12 shows a day.Hence, the maximum daily sale possible is capped at 1200 tickets. If you wanna buy 1300 tickets, the cinema will not be able to oblige no matter how much money you offer to pay! So if the demand is greater than capacity, all that will do is push the ticket price up, and let he who has more money get the limited tickets.


This is why printing more money in a country (without exceeding its production capacity) does not mean we’ll get richer. In fact, printing or –let’s use the more accurate word –“creating” more money has the exact opposite effect: it makes the poor people poorer.


To explain how, think of our banking systemas a game of musical chairs. You have six people walking around five chairs. When the music stops, everyone rushes to sit on a chair, and the slowest (or the unluckiest), with no chair to sit on, is ousted. The music starts again, and this process repeats until there’s only one chair left for one winner.


When the central bank creates more money, it lends it to other banks. Then those banks lend most of it to people they can trust to pay it back with interest (i.e. to the super rich first, then some for the upper middle class, and so on). Now these already-rich people have extra money to spend – for example, buying a new mansion or a luxury car. This means that the demand for homes and cars has gone up, and since we can’t instantly build more homes and manufacture more cars, this means that prices will slightly rise (like the cinema tickets). As for the middle class and the poor, i.e. the majority in any society, who didn’t borrow any extra money because they can’t afford to pay it back, now they have to suffer the general rise in all prices of the things they used to buy regularly, which means the little money they thought was adequate is now not enough. They would like their employers to pay them more, but that's not how employment contracts work. Usually a worker is stuck with a fixed salary over one or more years. And when time comes to renew those contracts, if the worker demands too big of an increase, the employer will simply find a replacement who can do the same job for less money, especially with the government refusing to increase the minimum wage on an annual basis to catch up with inflation.


So how do the middle and poor classes handle this inflation? Well, they adapt. They either have to move out of their apartment and find somewhere cheaper, or they have to withdraw from their little savings funds, or they have to cut spending on non-essentials. And if they reach a desperate level (and some of them will always do), they’ll have to borrow money (e.g. take out small loans or use credit cards, both of which usually come with very high interest rates). And unless their situation gets better soon (like a wage increase or find a higher-paying job), they will never be able to catch up and pay off their debt. It will just keep accumulating and they’d be lucky if they could pay off just the interest on those loans. But if they can’t even pay that, they’ll face serious consequences, starting with eviction.And who wants to be homeless?


But, of course, not all middle-class people are on the verge of getting broke. A lot of them can still handle the gradual rise in prices. So now that the poorest section has been evicted, we’re down to four chairs and five players. The music starts again (the banks lend out more money to the rich), and the average price level rises again, and then another section of the lower-income folks lose another chair. 


As for the rich, what they do with their borrowed money is to generate even more money – enough to pay off the loan with interests and have some more money left. And it’s not because they’re smarter or better money managers. You see, the rich were the first to get that new wave of money created by the banks, when the price of a house was only $80,000, or when the new oven they bought for their pizza parlor was only $5,000. A few years later, the price of that home they bought has gone up to $120,000, and the new oven decreased the cost and time of making pizzas that the profit generated because of that new oven far exceeded the $5,000 spent on it. That’s how the rich are able to pay off their debt, with interest, and still have some extra money left to spend. For them, borrowing money only puts them in debt temporarily, and they eventually end up with more money than they had borrowed. The guy on fixed income, who did not borrow any money from the bank, now sees the $80,000 house he had his eye on go up to $120,000, and the pizza slice that was for two dollars is now $3.50. In other words, by living from paycheck to paycheck, he was unable to save or invest his money in anything, and the prices of the things he buys on a regular basis have gone up, even though he did not do anything to cause that inflation!


Remember I said that the value of money is not in itself, but in what it can buy. So the real measure of wealth is not in how much money you have, but in how many products you can possess: how many homes, cars, computers, entertainment, vacations, quality health care, quality education, and so on. Those who can afford to borrow money (i.e. the rich) end up with more products. And those who weren’t able to end up with less products. The banking system we have is literally shifting the purchasing power from the poor to the rich, and it does so in a very diabolical way – because it is invisible to the average individual. When you see some rich guy walk into a bank to take out a multi-million dollar loan, you don’t connect the dots to see that he’s actually taking that money out of your own pocket and the pockets of millions others, money he never has to pay you back!


It’s Much Worse Than You Think


When it comes to speculative investment (often dubbed as Wall Street), it’s actually much worse! In the example above, the rich were borrowing money to buy a new home or a new car. In other words, their purchases, although driving prices up, were creating economic incentives to car manufacturers and home builders to increase their production (if they were not at capacity). But you have to remember that the very super rich do not need another home or another car every day. So what do you think they do with all that borrowed money? 


Speculative investment is when you buy something for the sole purpose of selling it again at a higher price. It’s generating new income out of thin air, like gambling at a casino. This includes stocks, bonds, gold, silver, foreign currency, antiques, real estate, andso many other instruments. So imagine this: you borrow a million dollars, you buy five houses (each worth $200,000), the price of houses goes up due to wildly increased demand (because others are doing what you’re doing as well). After two years, the same houses you bought are now worth $300,000 each. You sell all five houses; you get paid $1.5 million. You pay the bank the original million plus interest, and you’re left with $400,000 that you’ve extracted from this system. You’ve just earned money from playing the market, which gives you more purchasing power to demand other goods and services, inadvertently pushing their prices up as well.


But where do you think the guy who bought your five houses got the 1.5 million? He, too, borrowed them from a bank. Like you, he also waits a year or two.The total price of all five houses now has reached $2 million; he sells. He, too, made $400,000 out of thin air, and will spend it on different markets creating yet another pull on prices. And this cycle continues, with banks creating more money to loan out, while of course generating profit in the form of interest. 


Prices continue to soar, and then one day, the music suddenly stops. Whoever was holding those five houses last is in big trouble. He had bought them for $5 million, and was hoping to sell them for $6 million. But he can’t find a buyer! So, he lowers his asking price to $5.5 million. And when that doesn’t work, he lowers it again to $5 million (at least he can pay back the money he had borrowed from the bank). But still, no buyers at that price either. So now he’s just trying to cut his losses, selling at a total price of $4 million. And keep in mind that other speculative investors are also trying to sell as quickly as possible to minimize their losses, which collectively drive the housing prices even further down.


The price has now dropped to $1 million, and still no one is willing to buy them. Now he’s screwed. He can’t even make his monthly mortgage payments! And failure to pay leads to eviction, which means the bank takes the five houses and whatever money he’s able to pay. He’s the guy who can’t find an empty chair to sit on. He’s now bankrupt and his life is ruined. And when the market finally settles and stabilizes at $1 million, peace and calm returns to the markets, and the bank turns the music back on and says, “Hey, I got five houses, for the low price of $1 million. Any players out there?” And you start hearing “experts” saying things like, “Now is the time to invest! Prices got nowhere to go but up!”


Our banking system has basically become the largest casino in the world. They lend money to speculators, and they know they’re gonna generate billions of dollars in profit, because they’re the ones who control the music! 




And this, ladies and gentlemen, is how the super-rich have devised a completely legal system to continue to steal wealth, sucking it out from the pockets of the poor and middle classes. And with each chair removed, the music will start again, and in a few years another wave of losers go broke, and this continues until there’s only one chair left.


Where do you think all these masses of “losers” are gonna go? You think they’ll all believe that their poverty is their own fault, as the rich always love to say? You think most of them will become bums and beggars waiting death or suicide? You think only a few of them will resort to robbing homes and gas stations and, occasionally, banks? You think the threat of incarceration and Hollywood productions can deter the desperate?


Well, we already know how this movie is gonna end. Two hundred years ago, the French revolted against their “Feudal Lords” and executed them in the name of liberty and capitalism. And just a hundred years ago the Russians revolted against their “Capitalist Masters” and hung them to death in the name of justice and socialism. When will the next one come? And under what banner will it rise against the wealthy? 


Truth is nobody wants to risk their life in some attempted revolution (most revolution attempts fail). Most people, when faced with financial hardship, try to find the solution within the existing system. Some poor people keep buying lottery tickets, others work two or three jobs instead of one to make ends meet. Some will seek charity, or accept more horrible jobs (e.g. prostitution, military service). 


But the people on top can’t seem to have enough! Their wealth has been increasing at every financial decision they have made in their lives, which reinforces their misguided belief that their fortune is due not to a rigged system, but due to how good they are at walking around the chairs and correctly predicting when the music will stop (sometimes because they’ve got their finger on the Stop button, or they know who does). They will gladly spend millions of their loaned dollars to prevent our system from being reformed. And even if a bloody revolution does succeed, they have several contingency plans – several countries or tropical islands they can escape to on their private jets.


I personally do not want to experience a bloody revolution. I want the system to be fixed. I want the legalized robbery to end. I want wages and salaries to rise along with the inflation rate. I want speculative investors to be taxed at 95% on their “profits,” and to use all that tax revenue to provide better jobs, better housing, better health care, and better education to those who need it the most. I want us to stop sending our military overseas on behalf of the super-rich who want nothing out of war and death and destruction but to make even more money. 


These fixes are neither difficult nor impossible to achieve. We’ve already done it once in the 1930s, when we saved the US (and the global economic order along with it) from total collapse. But over the past 40 years, the super-rich have worked tirelessly to reverse and undo those fixes. The banks have restarted the music again, and we all got up and started walking around the chairs again like a bunch of confused fools, wondering why do we have to play this sick game where everyone ends up being expelled except one.