Sunday, February 17, 2013

Bankers and the Truth About Power

Power is not given, it's taken.

Carl Menger, founder of the Austrian School of Economics (which, for the record, I don't really care for because of the sanctimony some have for this and it completely turned me off), wrote that fractional reserve banking only started when bankers (generally goldsmiths), realized that not all depositors withdraw (demand payment) at the same time. Thus an opportunity arose: goldsmiths that normally stored gold and silver could make extra income by giving out interest bearing loans, because receipts, such as ones given out by the Bank of Amsterdam, were not always redeemed at the same time. More or less, fractional reserve banking, the heart and soul of contemporary banking, was born. Goldsmiths realized the advantage that they had as being storage points of bullion for holders and saw the opportunity of how they could earn more money doing it. An advantage was realized, the opportunity was seized, and power was gained.

The Bank of Amsterdam had similarities to the current United States Treasury and the Federal Reserve: they stored currency, gave out loans, conducted a lot of business with no transparency, and all currencies and monies were backed by government. The Bank of Amsterdam was no stranger to be opportunistic -- it charged storage fees, became a source of revenue for the city, but as it allowed too many accounts to be overdrawn, it crumbled under insolvency in the aftermath of its lending practices becoming public knowledge towards the end of the 18th century, finally closing after nearly 2 centuries in operation in 1819.


The Federal Reserve and United States Treasury hasn't suffered the same fate because the functionality has been effectively split. However, the Reserve is effectively shrouded and secrecy and aside from establishing the federal funds rate ("interest rate"), economic analysis, setting inflation goals, and basically being the psychological economic base of the United States -- their methodology and reasoning leaves much to speculation. What is truly known and what doesn't need any speculation is this -- the Bank of Amsterdam, the Federal Reserve, and the United States Treasury, ran by human beings, are not above what human beings are going to do anyways -- to take advantage of a given situation and seize any opportunities that will be provided.

I'm no conspiracy theorist, and I'm not going to speculate on theories. However, I will say that banking enterprises and corporate coalitions achieved the position that they are in because of being effective at seizing the opportunities given to them. The crowning achievement of the banker influence on day to day operations of the United States government is not anything you've see in the past few years: it was when John Pierpont Morgan, along with the Rothschild banking dynasty, personally bailed out the U.S. Treasury during the Panic of 1893. Combine that with William McKinley's victory over the populist William Jennings Bryan in the election of 1896, and it is no surprise that the aforementioned enterprise and coalitions have reached the pedestal that they sit on.

Taking advantage and seizing opportunities is not a villainous concept: it's something that each of us do every single day on just about anything -- no matter how morally reputable, ambiguous, or reprehensible it may be. As much as we are willing to respect the rights of others based upon a given moral and ethical benchmark, we are willing to violate same the rights of others on that same benchmark, if we feel that we can emotionally, physically, or mentally have the means justified by the end outcomes. However, at it's bottom line, rights are not facts, but widely accepted and valued opinions that haven't been or ever will be shielded from differing opinions.

We do it every single day. I always found it funny that a lot of people romanticize where they stand right now, especially on the class ladder, lamenting how these big banking enterprises and corporations are opportunistic and always get their way, when in reality, they're ran by people, just as we are people (no, they are not boogeymen that emerged from a black hole) that do what is natural: they look at themselves, see their advantages, see the opportunities that can be had with those said advantages, and take them. As I said, we do it every day, whether it is kids trying to get something out of their parents, students cheating on a test, successfully getting someone to join your cause, petitions, a man trying to get laid, you name it -- it's the same thing much of a time albeit a different medium. However, collective action takes an equal and more effective reaction. You saw that in the 2012 Presidential Election.

Wealth is not necessarily power. Wealth is the accumulation of resources deemed valuable by others and coveted by them as well. Power, however, is the ability to be in a leveraged position with those said resources and use that position effectively to, once again, seize opportunities and take advantage of a given situation. Hence why power is not given, it's taken. The United States Constitution can provide expressed powers to Congress, reserved powers to States and the People, and implied powers out of Alexander Hamilton's vision, but if the given advantage is not realized and opportunities are not seized upon, then the words are worthless -- might as well not even have it.

The truth about power -- along with these vaunted and vilified (and many times, rightfully so) banking enterprises and corporations -- is that they seize opportunities presented to them with the advantages that they have. There's a reason why that Chase and Bank of America can charge $3 to $4 dollar ATM fees and still be the most widely used banks in the country; there's a reason why Chase, Bank of America, HSBC, amongst others can be subject to millions and millions of dollars in legal fines and fees and still be in business doing the same thing as before; there's a reason why Goldman Sachs is the U.S. Treasury Secretary Factory; there's a reason why countries defend human rights causes as fast as they violate them; there's a reason why global derivatives and other financial institutions have been backed for years by one of the most damning instances of banking collusion in history that shows that LIBOR is a banking cartel of the grandest stage. 


If you're interested in curbing the power of banks and corporations, you must do the exact same thing that they are doing -- using the advantage that you have (in being the consumer, the constituent, the taxpayer, the everyday working person, or however you want to romanticize yourself to be in your socioeconomic and sociopolitical position) and seizing the opportunities that are given by your advantageous position. The key thing is -- your eyes have to be open to it. 

Their eyes are, why don't you open yours? 

Remember, power is not given -- it's taken.

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