One of the most relevant facts about the ever-lasting financial crisis we’re in it’s about the ultimate fate of the banks as we know it. And it’s related to our business relations with them. Like it or not, we need some financial institution to make money go round and some form of bank it’s with us since the Middle Age.
Do you already know that banks come out from that period, don’t you? Of course, it works in a different way back then. You used well-established merchants to deposit gold or silver, getting credit letters – a form of warrant where the said merchants guarantee your deposit, all for a price. Yes, back then you actually pay the bank to keep your money safe.
What? Are you losing money with the banks, right now? Oh, my. I’m not surprised, not at all. You see, it’s about the numbers. Central banks worldwide are keeping the money cost to the minimum (yes, money does have a cost), governments agree with the central banks and international institutions (like World Bank and International Money Found) to have as much money as possible on the markets to keep up and running our economies. A pity it’s not working.
We’re going up and down. This is not a double-dip crisis, it’s more like a saw blade crisis. Slow demands from the industry forces the oil price down, the state-owned investors are losing billions and they’re withdrawing from stock exchange like never before. All the false money generated by three decades of financial instruments is burning like incense in a buddhist temple, leaving a lot of people with paper that is basically junk. Then BOJ wake up and announces negative interest rates. Boom! In a moment we’re back to Middle Age.
What now? Are we seeking a new parity with real-world valuables like gold and silver? Sorry, it will not work. Not with a 20-to-1 ratio between money based on financial instruments and money based on real economy. Can we revert any on of our economies to a new model, like e-money (Bitcoin and the like)? Sorry again, without a real set of regulations on the run this simply can’t work. It looks like we will have a new recession in the making, strong enough to kill in the cradle all the improvements we’ve seen in the last quarter of 2015.
Take a look at the major players in the bank market. Seriously, go take a look. All of them are going down the hill, selling assets and cutting the workforce (again!). All of them are trying to figure a brand-new generation of products, derivate-like, to scoop as much money as they can to patch their lame balances. We’ve had billions of bad debt before, now we have trillions of it and the figure will rise again (and again) in 2016. Face it, this kind of super-duper-bank is over and nobody knows what to do next.
An idea? Well, why not. CUT the national debt of all countries, DO it in a proportional way and GIVE back to national government the money they need to restore our infrastructures and promote a greener economy. By the way, it’s also time to jail a lot of people. For a hint about the names, take a look at the top roster of the banks, it will be a good start.