How Did We End Up In This Situation?
This current model of banking was born out of a con-trick used by goldsmiths hundreds of years ago (more about this here).
It became enshrined in law and legalised in the form of the ‘fractional reserve’ system of banking. This system worked reasonably well when all transactions had to be completed with a physical form of money (either coin or paper notes) but as we moved to a electronic banking system, with credit and debit cards used for all but the smallest transactions, the natural constraints on the system disappeared.
In other words, the system worked reasonably well for the last 400 years, but is now completely unsuitable for the current, digital, globalised economy that we have now.
The laws that govern banking have not been updated to take account of this new form of money, and it is this that has led to the current financial crisis.
Who Should We Blame?
It is the government who are responsible for the crisis, thanks to their major oversight in allowing the banks to create 97% of all money. Blaming the bankers allows the government to ignore this problem. If you build a house on sand it will collapse - but you might find the architect blaming the residents of the house for being too heavy!
The anger currently directed at the banks is misplaced.
Granted, many workers in the financial sector have been greedy, irresponsible and reckless. But the truth is that the whole crisis would have been technically impossible under a system where only the state was able to create money. (The crisis would have been technically impossible under the system that I have outlined here)
The government is the only agency that has the authority and the power to fix this flawed system and end the financial crisis and global depression. We need to put the pressure on them and get them to make some simple, cost-free changes. I have outlined the changes that we need to make and exactly how to make them – all they need to do is implement them.
Read On: The Solution to the Financial Crisis