Banks Are Evil

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I don’t talk to my classmates from business school anymore, many of whom went to work in the financial industry.

Why?

Because, through the lens we use here at PeakProsperity.com to look at the world, I’ve increasingly come to see the financial industry – with the big banks at its core – as the root cause of injustice in today’s society. I can no longer separate any personal affections I might have for my fellow alumni from the evil that their companies perpetrate.

And I’m choosing that word deliberately: Evil.

In my opinion, it’s long past time we be brutally honest about the banks. Their influence and reach has metastasized to the point where we now live under a captive system. From our retirement accounts, to our homes, to the laws we live under – the banks control it all. And they run the system for their benefit, not ours.

A Parasitic Relationship

While the banks spent much of the past century consolidating their power, the repeal of the Glass-Steagall Act in 1999 emboldened them to accelerate their efforts. Since then, the key trends in the financial industry have been to dismantle regulation and defang those responsible for enforcing it, to manipulate market prices (an ambition tremendously helped by the rise of high-frequency trading algorithms), and to push downside risk onto "muppets" and taxpayers.

Oh, and of course, this hasn’t hurt either: having the ability to print up trillions in thin-air money and then get first-at-the-trough access to it. Don’t forget, the Federal Reserve is made up of and run by – drum roll, please – the banks.

How much ‘thin air’ money are we talking about? The Fed and the rest of the world’s central banking cartel has printed over $12 Trillion since the Great Recession. Between the ECB and the DOJ, nearly $200 Billion of additional liquidity has been – and continues to be – injected into world markets each month(!) since the beginning of 2016:

With their first-in-line access to this money tsunami, as well as their stranglehold on the financial system that it all runs through, the banks are like a parasite feasting from a gusher on the mother-lode artery.

Rent-Seeking Racketeers

It should come as little surprise that, with all this advantage they've amassed, the banks have enriched themselves and their cronies spectacularly. They have made themselves too big to fail, and too big to jail. Remember that their reckless greed caused the 2008 financial crisis, and yet, in 2009, not only did bankers avoid criminal prosecutions, not only did the banks receive hundreds of billions in government bailouts, but they paid themselves record bonuses.

And the bonanza continues unabated today. By being able to borrow capital for essentially free today from the Fed, the banks simply lever that money up and buy Treasurys. Voila! Risk-free profits. That giveaway has been going on for years.

Couple that with the banks’ ability to push market prices around using their wide arsenal of unfair tactics – frontrunning, HFT spoofing and quote stuffing, stop-running, insider knowledge, collusion, etc – the list is long. James Howard Kunstler is dead on: we don’t have a free market anymore. Instead, we have rackets, run by racketeers. The rest of us are simply suckers to be fleeced.

Nobel Prize-winning economist Angus Deaton recently agreed:

Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might, said Nobel-winning economist Angus Deaton on Monday.

If an entrepreneur invents something on the order of another Facebook, Deaton said he has no problem with that person becoming wealthy.

“What is not OK is for rent-seekers to get rich,” Deaton said in a luncheon speech to the National Association for Business Economics.

Rent seekers lobby and persuade governments to give them special favors.

Bankers during the financial crisis, and much of the health-care system, are two prime examples, Deaton said.

Rent-seeking not only does not generate new product, it actually slows down economic growth, Deaton said.

“All that talent is devoted to stealing things, instead of making things,” he said.


As further proof, let’s look at this data recently obtained by Zero Hedge. In the past 4 years, JP Morgan’s in-house trading group has had exactly 2 days of losses:

That's not trading. Trading involves uncertainty and risk. This situation has none. It's an extraction process -- siphoning value from the market day after day with ironclad dependability.

And it’s not just a few dollars here and there. In 2016, JP Morgan’s daily average trading revenues were $80 million. Per day! That’s nearly $20 billion for the year.

Sanctioned Theft

So if not "trading", what should we call it when a bank can extract tens of billions of dollars a year from the markets, with no downside risk? "Sanctioned theft" sounds about right.

Because for every trade there is a buyer and a seller. If JP Morgan is the winner every day, who is losing? Turns out, it’s the big pools of “dumb money” that don’t have the cheat codes for the system the way the banks do. These are the pension funds, the index funds, the retirement accounts – the aggregated money of all the ‘little people’ out there. Little people who don’t have visibility into how they’re being constantly fleeced; nor do they have agency to do anything about it even if they did.

So yeah, “theft” feels like a pretty accurate term.

And it has reached the point where the banks don’t even care about hiding it anymore. If you had a nice inside racket going on, wouldn’t you at least pretend to hide your advantage, to avoid drawing attention? Not the banks. They’re either too proud or too obtuse to conceal it. Look at our string of perfect trading days! Look at our record bonuses!

These boasts fall on the ears of everyday Americans as the modern version of Let them eat cake!

And just like the out-of-touch French monarchs, the banks have positioned themselves as the enemy of the public. For as I claimed at the beginning of this article, a tremendous amount of the injustice in this country can be laid at the feet of the banks directly, or indirectly via the Federal Reserve.

  • Are you a senior who can't afford to retire because you can't live off your fixed-income savings? Thank the Fed's 0% interest rates for that.
  • Are you a millennial who can't afford to buy a home? Again, thank the Fed's policy of suppressing interest rates and thereby blowing another housing bubble.
  • Are you struggling to get out of poverty? Are you finding it hard to remain in the middle class? Whatever your income, are you having to work harder and harder to just stay in the same place? The video below explains how the Fed's money printing (and the banks' first-position access to it) has created the most concentrated imbalance of wealth in our country's history:

  • Are you frustrated with how our lawmakers seem to serve corporations instead of the people? Listen to this mind-blowing podcast of how gobs of lobbyist money, much of it provided by Wall Street, dictates how our politicians legislate:

(Click here to launch podcast)

Turning Up The Heat

Whether it's social equity, the security of your job or retirement, your day-to-day existence, or the fairness of the laws we live under -- our fate is currently in the hands of the banks. And, of course, should their behavior trigger another meltdown of the global economy -- something we warn about often here at PeakProsperity.com -- we'll have them to thank for that, too.

Yes, the banks are going to keep writing the rules in their favor; and yes, there’s little agency any of us has individually to do much about it. But as a society, we need to start addressing the dire situation we’re in honestly and openly. By whatever path, we have granted the banks far too much control over our lives, and they are taking gross advantage of that. Exactly like a parasite, the banking system is siphoning off our wealth and limiting our freedoms and future prospects – all for the benefit of an elite few.

That’s wrong. It’s immoral. And it’s Evil.

It’s far beyond time to call a spade and spade. The path to change always begins with an accurate assessment of the problem. We need to start using accurate language – like “evil” – when discussing the harm we’re being subjected to. We need to make it clear to our elected officials and to our communities that we understand what the banks are doing and that we find it unacceptable.

We need to make the criticism specific and personal. To JP Morgan CEO Jamie Dimon. To Fed Chair Janet Yellen. We need to turn up the heat on the perpetrating decision-makers, so that the borg-like structure of the banking system no longer serves as a deflective shield to scrutiny and criticism. These people need to feel the disapproving stares when speaking to the public. They need to hear the disdainful boos, and see their faces on the protest signs and nightly media reports.

And if you yourself work in the financial system, I’ll be blunt: You’re part of the problem. Just like my former classmates, I’m sure you’re a very nice person in many ways – but you’re complicit in the banks’ rapaciousness.

I know it’s not pleasant to hear, or admit. I worked for an investment bank for a few years early on in my career. I was part of the problem, too.

But we have a choice, both as individuals and as a society, to align our actions with our values. It’s not always easy. And likely not as profitable if you indeed end up leaving the financial industry (as I can tell you from personal experience). But it’s the only way we’ll ultimately gain back control of our destiny.

The Inevitable End (And How To Prepare For It)

The banks' dominion is going to end one day. Either due to collapsing under the weight of the stupendous amount of debt they've helped laden our economy with, or due to an uprising from the bottom 99% once it has become fully destitute. Neither path is appealing.

So our best choice here as individuals is to position ourselves where we can be least subjected to the game the banks want to force us to play.

The 3-part series we’ve just concluded: The Mother Of All Financial Bubbles, The Coming Great Wealth Transfer, and When This All Blows Up offers our best guidance for preserving wealth from the predation of the bankers. If you haven’t read them yet, make that your weekend reading assignment.

Finally, as a society, we need to wake up and make some hard, courageous choices. Obviously, the banks will not relinquish their control willingly. But if we start speaking truthfully and openly about the evil we’re dealing with, we’ll start fearing it less. It’s time for us all to speak up.

This is a companion discussion topic for the original entry at https://peakprosperity.com/banks-are-evil/

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Who Owns The Federal Reserve? (GlobalResearch.ca)

Quote:
“Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.” – The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s
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Even though you’ve had a change of heart, and are now against the banking industry, I’d be willing to bet the money that was once made by you in this industry still sits in your bank account…

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paulanders wrote:
Even though you've had a change of heart, and are now against the banking industry, I'd be willing to bet the money that was once made by you in this industry still sits in your bank account...
Be careful what you assume. It wasn't so much I had a "change of heart". I never was in love with banking, nor felt proud working in the industry. When my plans to go to medical school changed during my senior year in college, I needed to find a job quickly and was recruited on campus into an i-bank analyst program. Once I arrived on Wall Street and learned how things operated, I developed a hatred for the banking cartel and used business school as a means of ejecting from it. Not saying this doesn't absolve me from the culpability of my time spent working for the rapacious system. But I wasn't a cheerleader for it. Also, back in the mid-1990s when I worked on Wall Street, a fresh-out-of-college analyst like me was low man on the totem pole. Not only did this mean I worked 80-100 hour weeks, but the pay (especially on an hourly basis) was pretty poor. The money had yet to trickle down much below the Vice President level back in those days. That all changed once the Tech sector offered a path to earning good/great money with much less abuse -- but that revolution happened after my time. When I was there, it was a "There's the door if you want to leave. There's a long line of kids who'd kill to take your place" attitude towards the analysts and associates. My first-year salary was $30k/year, which even back then left little money for other living expenses after you paid your Manhattan rent. The money I was able to save paid less than half my loans for grad school. Again, I'm not expecting any sympathy for my experience there nor think I deserve any. I'm just setting the record straight: I never drank the Kool-Aid, nor got rich from my time there.
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Your intentionally specific use of the word “evil” reminded me of this recent post on naked capitalism - I found it one of the most fascinating reads that I’ve chanced upon over the past few years:
http://www.nakedcapitalism.com/2017/02/michael-hudson-why-failing-to-solve-personal-debt-and-polarization-will-usher-in-a-new-dark-age.html
A very loose and imprecise summary is that the privatization of lending (the practice of entities holding debts as an asset) goes against the oldest foundational teachings of the world’s major religions. Christianity was not able to get any traction on its ascent into a major religion until it abandoned this position (which included favoring debt jubilees as moral imperatives) and in its place emphasized charity.

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I would suggest the bankers are not the problem. Bankers will do whatever the politicians and the judicial system allows them to. In fact it is their fiduciary duty to maximize profits. My beef is with the corrupt people on our payroll that are supposed to protect us from these predators. Why are they not in jail?

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Why are the predators protected by our politicians? Because of money in politics. Money supplied by – you guessed it – the banks.
I used the word “captive system” very intentionally in the article above. The banks support the candidates they want elected, who then write bank-friendly legislation (or water down bank-unfriendly regulation) once in office.
You should listen to the podcast I highlighted above. It’s nauseatingly shocking how much time our elected officials dedicate to pandering for money as part of their daily schedules.
This is the world the banks have created. So that’s where I lay the blame.

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Adam
I admire you for putting yourself out there like you have. Those of us who profit from the medical corpratocracy or have in the past have been at a similar crossroads. As Jesse points out in his blog the credibility gap keeps many from telling the truth about the evil that leads to avarice and our possible (unintentioned many times) complicity in it.
I don’t want to derail the discussion but I fully support identifying evil for what it is, pure destruction and malice. And as a favorite PhD I follow states, the major evil affecting the USA is Avarice (greed of the highest order).
Thank you for article and your candor.
D

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Hi Adam, I think we are going to need a stronger response than you propose… “These people need to feel the disapproving stares when speaking to the public. They need to hear the disdainful boos, and see their faces on the protest signs and nightly media reports.” The trouble is, it has been pretty well shown that most people who rise to the top of these financial food chains are, at the least, sociopathic. Thus they will not care a wit for disapproving stares, they will ignore disdainful boos, and they will use their ill gotten gains to buy off or silence media reports and put down protests with corrupt law enforcement or self serving laws.
I don’t know what the long term solution to this is in the matter of direct action, but in the short term, finding some way to distance ourselves from their economic ecosystem, to not feed their geed with our own, may be a good first step. Go local, reuse, barter. Transition to a different ecosystem. Their’s is bound to eventually fail anyway, as it’s structure is obviously built with positive feedback loops, which are ultimately self destructive.

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It’s incredibly hard to opt out of the banking system. First of all, one would need work that paid in cash. Then, imagine paying one’s rent, or taxes, using money orders! Even then you are paying the money-order corporation for the privilege of paying a bill. Since the 2008 debacle, people are slowly waking up to this rigged, rip-off system. Banks should be public utilities, not privately owned parasites. The solution is locally owned public banking. But more than that, we need a new ethic with some value to strive for other than profit.

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Part of my weekly update now incudes a “oh hey, you just happened to catch me…” as if the viewer had just somehow walked into a carefully staged filing.
So here it is:

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It’s not just banks. The US parliamentary system which attempts to micromanage everything from the senate is lobbied six ways from Sunday by corporate interests everywhere. The end result is that basic institutions like those that oversee the food industry, defense, the environment and infrastructure etc… are subject to the push and pull of self-interest groups who don’t care about the country as a whole. Corruption and polarization under those circumstances is guaranteed especially during hard times.
Democracy fails if the people voted for have their hands tied by the lobby groups funding every candidate’s campaign. Relying on corporations like banks to be intrinsically honest is to be ignorantly hopeful. Clearly some constitutional changes are needed to make the legislature work better, however first the arrogance of assuming its perfection needs to be overcome.

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This is Max Keiser and Stacy Herbert on banking fraud. The second half is an interview with MISH.

A hedge fund buying up it’s own assets. Fraud in broad daylight.

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The essence of the banking industry.

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Thanks for an awesome truthiness outburst here, Adam, and a wonderful explanation of the social effects of low interest rates and organized skimming on us human beings.
So, how is this corrupt system maintained?
It look to me like the social control structures form a web:
bankers, (who fund and de-fund)
the “elected representatives,” (who hire and fire the)
government appointed personnel (FDA Chairman, SEC Chairman, judges, etc.),
and the media who herd the sheeple and maintain the general ignorance of the masses.
And it all seems to be coordinated with BIG MONEY.
A tight knit group owns and operates this control web. Call them the oligarchy, or the 0.0001% or “the elite.” They are a multinational group who owe allegiance to, and identify with, their social class primarily. They attend the same universities, social clubs and intermarry. And though they squabble some, they are unwaveringly dedicated to the ascendance of their class and the system that keeps them in control.
Most of my neighbors and friends do not believe that:
-money can be printed out of thin air.
-that the Federal Reserve is not a part of the government (it is in Washington DC right down the street from the Supreme Court and the Capitol, has a stately marble building face, honorable looking spokespeople, the chairperson is appointed by the president and is called “Federal”).
-that the setting of interest rates creates a transfer of money from one part of the population to another. That income inequality can be created as a mater of policy. That interest rates and money supply manipulations affect all of society and its social arrangements.
-that trading in bonds and stocks can be front-run and manipulated by computer algorithms all with the blessings of the SEC.
I suspect that it is only through ownership of the media that this magnitude of ignorance can be maintained. That and perpetual limbic-system-triggering distractions. And that the public still trusts the media.
The pain is not yet at 11, so we have no reason to deeply ponder the system itself. Yet.

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So just looking at the numbers, banks weren’t always evil. When Glass-Stegall was in operation, banks were much smaller, had much less influence on how government ran things, and took a much smaller skim from the overall economy. If they were evil, then perhaps they were just impotent.
Glass-Stegall was officially removed in 2000 by Bill Clinton & crew. Notice the big jump in profitability immediately following that event.
The Democrats of old had it right, I think; keep the players small, and they won’t control government, government will control them. And that’s how it should be.

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As the total debt/GDP rose, so did the profits of the financial companies.
Is one connected to the other? You tell me.
Glass Stegall, or the debt supercycle? Or both?

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Aloha! Simply put the US Federal Reserve, though a creation of Congress via Federal Reserve Act, has no business having members who are the top banks policing banks. This is the same anti-trust that busted up the oil companies. The Federal Reserve needs to be dismantled.
The banking system, which I mainly mean is the swift/credit card sector, is another Standard Oil. If you really want to inspect this system down to its micro bits then you’d find that JP Morgan Chase controls the EBT system, which is the credit card that replaced food stamps. Every time a poor person swipes their EBT JP Morgan gets paid! The JP Morgan Treasury Dept is one of their fastest growing and most prized possessions. It pays to bribe Congress! JP Morgan makes more fees as more Americans succumb to financial debts. Like the legal profession JP Morgan gets paid whether Trump fails or succeeds! Also add in their ClimateCare division. That is where JP Morgan gets paid by guilt ridden Americans for carbon credits. Bank America also has a carbon credit division. That is how you know Global Warming is a farce. Started by a politician, legalized by politicians and administered by bankers. They laugh all the way to their … bank … literally!
What is a monopoly?

I am pretty sure that the US Federal Reserve meets that definition. A monopoly approved by Congress but designed by and for the monopolistic banking industry. Try not using “major bank services” and see how far you get in this society conducting business or just paying your monthly bills! The US Federal Reserve regulates banking and consumer credit, all bank controlled. There is no accountability in the system! With no accountability you get unchecked corruption at the highest levels. This is the basis of our Kakocracy we are governed by.

Like North Korea setting off a EMP missle the banks have their own EMP they call SWIFT!
There needs to be a complete and total overhaul of the government and banking partnership! One that begins with anti-trust!