The solution is obvious…

Brain Dropping #56

              The morass of economics.  I’m still searching for clarity in the world of finance and banking.  This is not merely an academic exercise.  The one bit of clarity I do have concerns the way in which these distant manipulations we read about in The Wall Street Journal or the business section of The New York Times affect our lives directly and dramatically.  Whether it’s the interest on your mortgage, or car loan, or even the buying power of your weekly pay check, or making ends meet, or worse, ending up homeless on the street.  A good example is the LIBOR (London Inter Bank Offered Rate) wherein about a dozen banks poll each other about what interest rates are being charged for bank loans in order to come up with a reasonable figure to charge borrowers world-wide.  Simply put, those bankers lied – fudged the figures to increase their profits, and in the process screwed hundreds of millions of mortgagees and other borrowers.
              Those optimists who haven’t given up on a system which encourages such corruption talk a lot about stricter regulation.  We have dozens of regulating agencies – the Securities and Exchange Commission, The Commodities Futures Trading Commission, the Office of the Controller of the Currency, the Federal Reserve etc.  And each state has its own regulatory structure sometimes overlapping with federal agencies, with little or no coordination with the rest of the country.  The competency and effectiveness of these overseers in the age of “regulatory capture”, when the regulators are in bed with those they regulate, has been proven to be lacking. Most regulators are paid a pittance compared with those they are bound to watch over, therefore the temptation to pave the way for a  more remunerative career advancement in the private sector lures each federal bureaucrat to offer a less painful deal, in payment for bank crime, in the hope that it will be reciprocated by a six figure job on Wall Street.
                Without exaggeration, federal regulation is a farce, a cruel joke perpetrated on the mass of citizens.  If your  Congressman or Senator, in response to your complaints about the Wall Street crooks, assures you that he will fight for stricter regulations, hold on to your wallet.  The revolving door between the banks and their regulators whirls about at breathtaking speed.  You can’t begin to count the number of Goldman Sachs hacks who are working in the halls of government – and visa-versa.  This “palsy-walsy” relationship explains why not one single, major bank fraudster has done any time.
  (The capacity for fraud among the money men goes back to ancient history and is captured in the latin phrase: “Quis custodiet ipsos custodes?”  Loosely translated: “Who will regulate the regulators?”)
                 The obvious solution to all this chronic “flim-flam” is a publicly owned state bank like the one in north Dakota, in existence for nearly a hundred years and directly responsible to its depositors.

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