I doubt that would be true, even though I would NEVER doubt the ABC. And if it was, the US banks would be making it up with 0.25% on both sides of the lending book. It is ALL about the cost of funds, and the return on funds. OC
Yeah, I hate these high profits from the banks and the industrials and the commodities, they are all blood suckers. I'm writing to my superannuation fund straight after this post. I am going to tell them to take my super out of all these high yield companies. I don't need a return on my 9% investment, which incidentally is factored into my package. I think that the workers of Australia should unite and insist on only ethical investments like Dick Smith's Peanut Butter! I believe that the Australian public should realise that when they complain about "They", it is them who are they. The superannuation of this public is the biggest investor in Australian businesses. I've heard no-one bragging about how little return they get on their super each financial year!
So it's OK because we all have a (small) chance to share in bank profits? You're also mixing banks in with "industrials and the commodities". Banks do not produce or create anything. Banks clearly miss-allocate the flow of money and create asset bubbles.
"You're also mixing banks in with "industrials and the commodities". Banks do not produce or create anything. Banks clearly miss-allocate the flow of money and create asset bubbles." Banks provide capital for factories, mines and infrastructure. These generate JOBS! I will bet Lindsay fox borrowed money to buy trucks and warehouses and lord knows what else, and LF employed men and women to make his company work. Maybe you work for Lindsay Fox? Maybe a better idea would be for the government to control the "means of production, distribution and exchange". Worked well in Russia. OC
Russia worked for a while too. Because it has the appearance of working now does not mean it will continue. It's certainly not a sustainable model where banks create all money with interest attached. Mathematically failure is inevitable. The only solution is some form of honest money/currency.
A Gold Standard perhaps? But that will not change banking practice. ....and have you read a bank balance sheet recently, tell me what it says about deposits and loans totals. OC
Have you ever had a portion of your bank deposit reserved because it's 'loaned' out? And do you agree banks create money with every loan? If not what process creates new money? (given that physical currency is around 5% of the total money supply, and shrinking)
I wouldn't have anything against the modern banks if they were lending REAL money provided by their founders + deposits of people. Banks are essential for the Capitalist economy, but not more or less important than any other business. Instead they pay 5% on $100 deposited then turn around and lend $1000 on 7% making 65% profit and can keep doing so unless too many loans goes sour. But don't you worry they got even that covered, because in that case they will be bailed-out or bailed-in. See what's wrong with this picture? And yes you can't see fractional lending from banks public balances as they show mortgages as assets/capital which it is not. We discussed it before and you probably won't agree, but I want other people to see this. No wonder banks has the best offices in the city, super profits and insane CEO salaries. What other business could compete with 65% profit of the above example when you don't even have to move an ore for that? May be if drug lords were allowed to have public companies they could, but I doubt just based on their volumes compared to mortgages. DESTROY Central Banks, fractional lending and bring REAL money then we'll talk about morality of it all! /rant over P.S. Don't even need to destroy them, just repeal legal tender laws and allow competing currencies and nature will take care of the rest. P.P.S. this was a reply to Old Codger's post.
It is not. Just read some good economics books about fractional reserve lending. Don't take my word for it. I can give you sources if you want.
Banks produce a service that most of us use on a daily basis. Banks create, among other things, the ability to finance business, investment etc. (not going to ramble, I'm sure it's obvious). To say banks produce or create nothing is analogous to saying the transport, retail, or health sectors create or produce nothing... they are all merely service vehicles.
CH, Until such time as you can show me a Big 4 balance sheet that shows loans at 10 times bigger than deposits/borrowings, then you have NOT proved your claim. OC
Why not? A mortgage is an asset to the bank because it is an income producing product. No different to Joe Public taking on a loan to finance an income producing rental property - which no doubt would be considered an asset, and bought with money he didn't have.
PS, In all Australian banks, they take $1 as a deposit (or as an inter-bank loan), they put 10c into 'reserves, and lend out 90c. Simple really, and to dispute or disprove that you MUST show me the balance sheet. OC
Nothing convinces me more of the corruption of the banking system than 10 million a year for a CEO and a quarter of a million for a Board table. The 'returns' are the crumbs to the peasants. A proper banking system would have direct benefits to the people and not be just a means to a filter so the parasites can gorge on the profits.
Exactly. And then that 90c gets deposited into bank B. Bank B keeps 9c in reserves, and lend out 98c. Exactly. And then that 98c gets deposited into bank C. Bank C keeps 8.9c in reserves, and lend out 89.1c. Exactly. And then that 89.1c gets deposited into bank D. Bank D keeps... ... You see where this is heading? OC you can't look at one bank's balance sheet. You need to look at the overall money supply growth and realize the above is exactly how money gets created.
People cannot extract cash that banks don't have, but banks can create credit that is not backed by cash. If the credit is accepted then it is as good as cash.
