Share on Google Plus Share on Twitter 4 Share on Facebook 9 Share on LinkedIn Share on PInterest 1 Share on Fark! 1 Share on Reddit Share on StumbleUpon Tell A Friend 34 (49 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   39 comments

OpEdNews Op Eds

It's the Interest, Stupid! Why Bankers Rule the World

By   Follow Me on Twitter     Message Ellen Brown     Permalink
      (Page 1 of 2 pages)
Related Topic(s): ; ; ; ; , Add Tags Add to My Group(s)

Must Read 9   Well Said 8   Valuable 6  
View Ratings | Rate It

opednews.com Headlined to H1 11/9/12

Author 7471
Become a Fan
  (194 fans)
- Advertisement -


Money that works for the .001% by legalschnauzer.blogspot.com

In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest.  This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP.   That helps explain how wealth is systematically transferred from Main Street to Wall Street.  The rich get progressively richer at the expense of the poor, not just because of "Wall Street greed" but because of the inexorable mathematics of our private banking system.   

This hidden tribute to the banks will come as a surprise to most people, who think that if they pay their credit card bills on time and don't take out loans, they aren't paying interest.  This, says Dr. Kennedy, is not true.  Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills.  They must pay for labor and materials before they have a product to sell and before the end buyer pays for the product 90 days later.  Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer.  Dr. Kennedy cites interest charges ranging from 1 2% for garbage collection, to 38% for drinking water, to 77% for rent in public housing in her native Germany.

Her figures are drawn from the research of economist Helmut Creutz, writing in German and interpreting Bundesbank publications.  They apply to the expenditures of German households for everyday goods and services in 2006; but s imilar figures are seen in financial sector profits in the United States, where they composed a whopping 40% of U.S. business profits in 2006.  That was five times the 7% made by the banking sector in 1980.  Bank assets, financial profits, interest, and debt have all been growing exponentially. 

                                             
U.S. Bank Assets by http://www.oftwominds.com/blogsept12/cui-bono-Fed9-12.html.

Adapted from http://www.oftwominds.com/blogsept12/cui-bono-Fed9-12.html.

Exponential growth in financial sector profits has occurred at the expense of the non-financial sectors, where incomes have at best grown linearly.


Household Income by http://www.oftwominds.com/blogsept12/cui-bono-Fed9-12.html.

- Advertisement -

http://lanekenworthy.net/2010/07/20/the-best-inequality-graph-updated/

By 2010, 1% of the population owned 42% of financial wealth, while 80% of the population owned only 5% percent of financial wealth.  Dr. Kennedy observes that the bottom 80% pay the hidden interest charges that the top 10% collect, making interest a strongly regressive tax that the poor pay to the rich. 

Exponential growth is unsustainable.  In nature, sustainable growth progresses in a logarithmic curve that grows increasingly more slowly until it levels off (the red line in the first chart above).  Exponential growth does the reverse: it begins slowly and increases over time, until the curve shoots up vertically. Exponential growth is seen in parasites, cancers . . . and compound interest.  When the parasite runs out of its food source, the growth curve suddenly collapses.     

People generally assume that if they pay their bills on time, they aren't paying compound interest; but again, this isn't true.  Compound interest is baked into the formula for most mortgages, which compose 80% of U.S. loans.  And if credit cards aren't paid within the one-month grace period, interest charges are compounded daily.

Even if you pay within the grace period, you are paying 2% to 3% for the use of the card, since merchants pass their merchant fees on to the consumer.  Debit cards, which are the equivalent of writing checks, also involve fees.  Visa-MasterCard and the banks at both ends of these interchange transactions charge an average fee of 44 cents per transaction--though the cost to them is about four cents.  

- Advertisement -

How to Recapture the Interest: Own the Bank

The implications of all this are stunning.  If we had a financial system that returned the interest collected from the public directly to the public, 35% could be lopped off the price of everything we buy.  That means we could buy three items for the current price of two, and that our paychecks could go 50% farther than they go today. 

Direct reimbursement to the people is a hard system to work out, but there is a way we could collectively recover the interest paid to banks.  We could do it by turning the banks into public utilities and their profits into public assets.  Profits would return to the public, either reducing taxes or increasing the availability of public services and infrastructure.

Next Page  1  |  2

 

Must Read 9   Well Said 8   Valuable 6  
View Ratings | Rate It

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Follow Me on Twitter

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

It's the Derivatives, Stupid! Why Fannie, Freddie and AIG Had to Be Bailed Out

Mysterious Prison Buses in the Desert

LANDMARK DECISION PROMISES MASSIVE RELIEF FOR HOMEOWNERS AND TROUBLE FOR BANKS

Libya: All About Oil, or All About Central Banking?

Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking

"Oops, We Meant $7 TRILLION!" What Hank and Ben Are Up to and How They Plan to Pay for It All