Banker Conspiracy Theories?

[lpetrich]

I find banker conspiracy theories odd. What are they supposedly conspiring to do?

Such theories often involve those bankers being Jews, as if there was something especially villainous about that. But let's look beyond the Jews-as-villains connection.

Such theories are common on the Right, the sorts of people who loudly advertise how much they believe in capitalism. Bankers are capitalists, of course, and anti-banker right-wingers don't seem to be very clear about why bank capitalism is supposed to be bad and other forms good or at least tolerable. A likely reason is that they often end up in debt while being dependent on bank loans for the continuing viability of their businesses.


More seriously, there is a problem with the economics of charging interest on loans. Though some people consider that a Bad Thing, I think that it is a legitimate business practice. But I think that there is a problem with lending at interest. It can make moneylenders suck the money out of the rest of an economy, because they usually don't return it fast enough in spending or giving away.

There are various solutions to this conundrum:

• Official forgiveness of debt -- done every now and then in some early recorded-history societies like in Mesopotamia
• Bankruptcy laws -- make the moneylenders accept that they can't collect all that they are owed, at least not right away
• Restrictions on interest rates
• Governments printing a lot of money

There are some charities that buy debt and then forgive it:
These Former Debt Collectors Decided to Ditch the Industry, Buy Up Medical Debt, and Forgive It by Araz Hachadourian — YES! Magazine
Rolling Jubilee

 

[dismal]

If there weren't compensation (interest or something else) why would anyone lend anyone money? It's a risky thing.

I was not aware that there were a lot of anti-bank conspiracy theories and not being familiar with any of them I have no comment on them.

I am not personally "anti bank", but I do think there should be more of a caveat emptor approach with respect to them as opposed to the rigid regulation/government support we have for banking today.

 

[Harry Bosch]

I find banker conspiracy theories odd. What are they supposedly conspiring to do?

Such theories often involve those bankers being Jews, as if there was something especially villainous about that. But let's look beyond the Jews-as-villains connection.

Such theories are common on the Right, the sorts of people who loudly advertise how much they believe in capitalism. Bankers are capitalists, of course, and anti-banker right-wingers don't seem to be very clear about why bank capitalism is supposed to be bad and other forms good or at least tolerable. A likely reason is that they often end up in debt while being dependent on bank loans for the continuing viability of their businesses.


More seriously, there is a problem with the economics of charging interest on loans. Though some people consider that a Bad Thing, I think that it is a legitimate business practice. But I think that there is a problem with lending at interest. It can make moneylenders suck the money out of the rest of an economy, because they usually don't return it fast enough in spending or giving away.

There are various solutions to this conundrum:

• Official forgiveness of debt -- done every now and then in some early recorded-history societies like in Mesopotamia
• Bankruptcy laws -- make the moneylenders accept that they can't collect all that they are owed, at least not right away
• Restrictions on interest rates
• Governments printing a lot of money

There are some charities that buy debt and then forgive it:
These Former Debt Collectors Decided to Ditch the Industry, Buy Up Medical Debt, and Forgive It by Araz Hachadourian — YES! Magazine
Rolling Jubilee

Yes, that's quite a conundrum! However, banks generate the majority of their revenue from their spread (difference between rate they pay for deposits and what they can lend the money at) and fees. If you take away their spread, most won't survive. Secondly, the capital that banks lend out comes from deposit holders depositing their money into the bank for safety and soundness purposes. If you "forgive debt", you'd be wiping out deposits - people's hard earned savings. Finally, we do have pretty good bankruptcy laws. How would you want them changed?

 

[ksen]

If there weren't compensation (interest or something else) why would anyone lend anyone money? It's a risky thing.

I was not aware that there were a lot of anti-bank conspiracy theories and not being familiar with any of them I have no comment on them.

I am not personally "anti bank", but I do think there should be more of a caveat emptor approach with respect to them as opposed to the rigid regulation/government support we have for banking today.

Why should any civilized country willingly put up with caveat emptor?

 

[dismal]

If there weren't compensation (interest or something else) why would anyone lend anyone money? It's a risky thing.

I was not aware that there were a lot of anti-bank conspiracy theories and not being familiar with any of them I have no comment on them.

I am not personally "anti bank", but I do think there should be more of a caveat emptor approach with respect to them as opposed to the rigid regulation/government support we have for banking today.

Why should any civilized country willingly put up with caveat emptor?

It results in better outcomes than the alternatives.

 

[ksen]

Why should any civilized country willingly put up with caveat emptor?

It results in better outcomes than the alternatives.

cite?

eta: btw, merry christmas buddy!

 

[Harry Bosch]

It results in better outcomes than the alternatives.

cite?

eta: btw, merry christmas buddy!

Wat? Hasn't anyone told you about our open war against Christmas?!!

 

[dismal]

The 2008 financial crisis?
The S&L crisis?
The dozens of other banking crisisez?

Compound in the fact that with current technology we no longer need banks (i.e., institutions engaged in fractional reserve lending) to provide the services we typically associate with banks and it seems time for a new model.

 

[ksen]

The 2008 financial crisis?
The S&L crisis?
The dozens of other banking crisisez?

Those don't really support more caveat emptor. They kind of support less caveat emptor and more government oversight.

Compound in the fact that with current technology we no longer need banks (i.e., institutions engaged in fractional reserve lending) to provide the services we typically associate with banks and it seems time for a new model.

I also don't see how this is an argument for more caveat emptor and less government oversight.

Would you mind walking me through the thought process?

- - - Updated - - -

cite?

eta: btw, merry christmas buddy!

Wat? Hasn't anyone told you about our open war against Christmas?!!

Nope, haven't really noticed it.

 

[dismal]

I also don't see how this is an argument for more caveat emptor and less government oversight.

Would you mind walking me through the thought process?

At a minimum the government subsidizes taking uncompensated risk.

At worst, as in the 2008 debacle, the government encourages it.

 

[ksen]

I also don't see how this is an argument for more caveat emptor and less government oversight.

Would you mind walking me through the thought process?

At a minimum the government subsidizes taking uncompensated risk.

I agree the government shouldn't be encouraging moral hazard by continually bailing banks out for their bad decision making.

At worst, as in the 2008 debacle, the government encourages it.

This isn't really an argument against government regulation in the banking industry. Especially when the 2008 crisis was facilitated not by more government regulation but instead by the lessening of government regulation as well as regulatory capture by the financial industry of their regulatory bodies.

 

[dismal]

At a minimum the government subsidizes taking uncompensated risk.

I agree the government shouldn't be encouraging moral hazard by continually bailing banks out for their bad decision making.

At worst, as in the 2008 debacle, the government encourages it.

This isn't really an argument against government regulation in the banking industry. Especially when the 2008 crisis was facilitated not by more government regulation but instead by the lessening of government regulation as well as regulatory capture by the financial industry of their regulatory bodies.

It also encourages customers to blindly place deposits in banks that engage in fractional reserve lending.

It also specifically gave banks incentives to invest in mortgage backed securities backed by complex derivatives, etc.

It seems axiomatic that more transparency about risk combined with not subsidizing and/or encouraging risk would result in less risk being taken.

 

[ksen]

I agree the government shouldn't be encouraging moral hazard by continually bailing banks out for their bad decision making.

At worst, as in the 2008 debacle, the government encourages it.

This isn't really an argument against government regulation in the banking industry. Especially when the 2008 crisis was facilitated not by more government regulation but instead by the lessening of government regulation as well as regulatory capture by the financial industry of their regulatory bodies.

It also encourages customers to blindly place deposits in banks that engage in fractional reserve lending.

How does it do that?

It also specifically gave banks incentives to invest in mortgage backed securities backed by complex derivatives, etc.

How would less regulation have prevented the invention of complex derivatives and mortgage backed securities?

It seems axiomatic that more transparency about risk combined with not subsidizing and/or encouraging risk would result in less risk being taken.

Sure that statement is axiomatic.

What's not axiomatic though is that less government regulation would lead to more transparency about risk.

And I've already agreed with you that government encouraging moral hazard shouldn't be a thing. But I'm still not clear on how it was regulation that caused the moral hazard rather than the regulatory agencies just not enforcing the current regulations due to being too close to the industry they are supposed to be regulating and/or complete regulatory capture.

 

[Alcoholic Actuary]

Credit Default Swaps were completely deregulated under the  Commodity Futures Modernization Act of 2000. They were completely caveat emptor products. How did the government give banks incentives to invest in these things (other than through lack of regulatory oversight)? And why is more of this kind of activity desirable?

aa

 

[dismal]

I agree the government shouldn't be encouraging moral hazard by continually bailing banks out for their bad decision making.

At worst, as in the 2008 debacle, the government encourages it.

This isn't really an argument against government regulation in the banking industry. Especially when the 2008 crisis was facilitated not by more government regulation but instead by the lessening of government regulation as well as regulatory capture by the financial industry of their regulatory bodies.

It also encourages customers to blindly place deposits in banks that engage in fractional reserve lending.

How does it do that?

Deposit insurance? How closely do you vet your bank before you put money into it? How closely do you imagine the Average American does?

How would less regulation have prevented the invention of complex derivatives and mortgage backed securities?

Regulation encouraged the use of complex derivatives and mortgage backed securities.

Mortgage bonds backed with credit default swaps were heavily favored in the bank capital requirement regualtions.

- - - Updated - - -

Credit Default Swaps were completely deregulated under the  Commodity Futures Modernization Act of 2000. They were completely caveat emptor products. How did the government give banks incentives to invest in these things (other than through lack of regulatory oversight)? And why is more of this kind of activity desirable?

aa

Through the bank capital regulations.

 

[braces_for_impact]

You're right about it usually being a Jewish conspiracy for some reason. It also usually heavily involves the Federal reserve bank. This video is long, but it's a good example.

This is a video that starts many a crazed conspiracy theorist down their own personal rabbit hole of crazy. I have a couple of guys at work involved heavily into this stuff. It all kind of comes together with the Jews, the Illuminati (or other super secret organization) wanting to make money and influence world events, prophecy, the gold standard, GMO's, vaccinations, fluoride in the water, sometimes chemtrails, 9/11 "truth" and a few more token items added in. It's interesting because none of them admit they know what's going on, but they're sure there's something happening, and they're always right on the edge of figuring it all out one day.

It just blows my mind because they're both nice guys, and not exactly stupid, but they buy into all this crap. Arguing with them is like playing a game of whack-a-mole, while constantly being accused of being closed minded and (I shit you not) gullible. It's more fun to debate how much it hurts after hitting your own head with a hammer.

 

[Horatio Parker]

I start from the proposition that the only useful thing a bank should do is to facilitate a payments system and provide loans to credit-worthy customers. Attention should always be focused on what is a reasonable credit risk. In that regard, the banks:

should only be permitted to lend directly to borrowers. All loans would have to be shown and kept on their balance sheets. This would stop all third-party commission deals which might involve banks acting as “brokers” and on-selling loans or other financial assets for profit.

should not be allowed to accept any financial asset as collateral to support loans. The collateral should be the estimated value of the income stream on the asset for which the loan is being advanced. This will force banks to appraise the credit risk more fully.

should be prevented from having “off-balance sheet” assets, such as finance company arms which can evade regulation.

should never be allowed to trade in credit default insurance. This is related to whom should price risk.

should be restricted to the facilitation of loans and not engage in any other commercial activity.

http://mmtincanada.jimdo.com/policy-issues/banking-reform/

 

[BH]

I know some people into these banker conspiracy theories. Usually, they claim the Rothchild's were the impetus to all of this and later joined forces with the Rockefellers and J.P. Morgan.

The thing the conspiracists fail to realize is that the banks and bankers are a seperate group from the government and military and dependent on them to enforce whatever they the bankers want. I am sure some wealthy bankers bribed their way into getting their way from time to time but civil government and the military (generic government and generic military) could take out these bankers anytime at least within their own borders. I read somewhere Hitler actually gassed a member of the Rothchild family in one of the concentration camps. It was wrong for him to do that but it does not seem the Rothchilds control everything behind the scenes (at least in Germany) if Hitler could gas one of them.

 

[Nexus]

The thing the conspiracists fail to realize is that the banks and bankers are a seperate group from the government and military and dependent on them to enforce whatever they the bankers want.

Groups outside of official government can control government through regulatory capture. Look into the HSBC and drug money laundering if you think major banks are subservient to the law.

link
link

 

[lpetrich]

You're right about it usually being a Jewish conspiracy for some reason. It also usually heavily involves the Federal reserve bank. This video is long, but it's a good example.

About the US's central bank, the Federal Reserve Bank, we see stuff like Senator Rand Paul - Audit the fed -- it's not clear to me what it is supposed to be guilty of.