Let's See What We Can Learn about Banking

But wait: isn't banking something best left to the experts, though?

Far be it from me to say that banks are all fraud — but neither are they flawless. Here is an attempt by Investopedia to explain banks:

Banks make loans to consumers and businesses. The cash that is deposited by their customers is lent out to other customers

Well gee, isn’t that hunky-dory; it all seems so simple, the way they explain it. Do you get that impression? I got the impression from that webpage: this is too simple. It cannot be. If it was simple, then everybody would start their own banking operation; and, so, you are kicking you damn self, saying “Why didn’t I start my own bank?” Are you doing that? In the quote above it also seems that everybody is a customer.

The question this forms for me, and I am a “real” economics theorist, is not something you are ordinarily going to be thinking. The question is: if the bank is mediating a relationship, and if this relationship is between those who lend and those who borrow, is that relationship a close, personal one or an impersonal one? In o. words, is that relationship personal or is it not?

If you do not personally know the businesses who are borrowing the money you deposit it is not personal. On the other hand, the banks I have seen all have a lot of desks for customers, and these are so that one may get up close and personal with a banker. Well — that is how I look at it, but something I have noticed is that most of these bankers do not really know the arcane mysteries of banking.

I suspect that every time they figure out another piece of the puzzle, they get a promotion. And a substantial number of persons within the economy work for a bank. It starts to look personal after all. Don’t it?

But they are not personal because friends would not charge one another interest. You are forced to pay interest because otherwise you would not get the loan. And once you pay the interest you get the chance to make more money with your “private” business venture.

So you have to wonder who is fooling who.

Basically—? ~ it’s the bank. Yep. Leave it to me to undermine your trust in banks.