Let's be clear: It's the Banks

Gold-Stater comment: Let's be clear: It's the banks.

There is one central problem with our economy: it's the banks.

Yeah, sure, we have 75 trillion of unfunded liabilities; that's a problem. Okay so neither the Republicans nor the Democrats, nor the Tea Party want to have a grown up discussion about Social Security, Medicaire and Medicaid which comprise this 75 trillion dollar hole. Yeah, sure, we're now engaged in three pointless wars that have already cost over 3 trillion dollars - most of which is hidden in off-budget sham accounting practices. Okay, our whole national conversation right now is focused on the 10 percent of the 14 trillion dollar budget that is termed domestic discretionary spending - which all but assures nothing will be done about the real problems.

But even if all that were solved tomorrow - even then - the real problem that nobody wants to even begin to discuss is centered at the heart of our capitalist system: the Banks.

So what is this problem? I'm glad you asked. It's this: the Banks are supposed to be responsible for the EFFICIENT ALLOCATION OF CAPITAL. That is their purpose. They get FREE MONEY from the government. Their whole job is to figure how to lend this money in a responsible manner so that the economy can grow. If they do their job they make a spread between the FREE money, and the interest they charge on the loans. It's easy work. Anybody with a basic college education should be able to do it. And for that they used to make a decent but modest wage commensurate with this easy job.

But then something horrible happened. The banks became jealous of the outsized earnings of their friends at the Investment Banks. So they lobbied (read paid) the government to get the rules changed so that they could take this FREE MONEY and gamble it in the risk markets. And since they're gambling such huge positions, when they lose it threatens the entire economy - so when they lose the bad bets are taken onto the Fed's balance sheet and charged off to the taxpayer. But when they win they keep their winnings. Nice work if you can get it.

The Investment banks decided to join the party: They might as well become regular Banks too and get the FREE MONEY so they could gamble it too, risk free.

Now the purpose of the banks is to suck productive capital out of the market and into their own pocket. It is the absolute reverse of what their role should be. And the more they gamble, the more debt is being created. Because when the Government creates money to give to the banks they do this by issuing DEBT to the banks, which the banks sell to the FED. So the system is flooded with unproductive cash/debt, that the banks are compulsively gambling. As long as this is the case, no fix to any of the other problems in the economy will make any difference.

And nobody is even discussing this problem. So how can it be fixed? That's right. So protect yourself and purchase insurance against this insidious and growing problem. Buy the one asset the banks can't suck right out of the economy. Buy gold.