Pericles, "There's no "Secret Banking business" that has "made us all debt slaves."

I disagree...the deregulation of banking and much of business. We can thank Keating for the deregulation of banking.

Not sure of your thought process here, MindlessCruelty

>>...the deregulation of banking and much of business...<<

How does it indicate the presence of "Secret Banking business"?

How does it make us "debt slaves"?

Deregulation has been generally beneficial to our economic growth. Is that what you are upset about?

Pericles, "secret banking business"...I'm sure there is, just as there are many secrets in all kinds of business. Whether any of their secrets have made us slaves, I don't know, but I believe the deregulation of banking has further enslaved us.

I'm sure you understand that credit is a false economy...we're spending money that has not been made yet.

Okay, it's impossible to keep this brief, though one only requires primary school maths to understand the economics, you also need to have a bit of an understanding of business in general, the stock markets, and in particular, the finance/banking/insurance industries. They're different businesses, but they function very similarly.

Prior to the deregulation of banking there was very little in the way of "variable interest" rates on mortgages. Mortgages were fixed interest for the term of the loan. You could plan your expenditure and use of credit, and as your income went up, you could either live better, or put more into your mortgage. Now that banking is deregulated, we have both fixed, but mostly, variable interest rates that since 1980 have fluctuated from around 8%, to a peak in 1991 of about 18.5%, possibly 19%. The only reason that they have come down to what they are currently, is because of the Sub Prime Loan fiasco, and the Global Financial Crisis is maintaining them at that current low level.

Ergo, how can you plan your incomes and outgoings when you don't know what the banks are going to do with your mortgage interest rates. I can borrow today at 7.5%, but there's nothing preventing them from returning to 18%. I am at the whim of the banks and their pressure to return profits to their share-holders.

Fiscal policy is based upon how much disposable income I'm allowed to have, and that is determined by my mortgage interest rates. When we are spending too much money on commodities, particularly foreign ones, they increase our interest rates, taking our money from us to give to a bank?!?
TBC…

Why not increase the excise on the commodity to slow down expenditure on it? Why do I have to donate my money to a bank, and not have the choice to buy something different, or save my money?

The Reserve Bank that represents all of the banks, is the advisor to the Federal Government, who in turn determines fiscal policy based upon advice given to them by the Reserve. We don’t elect economists as politicians. We elect lawyers, businessmen, unionists and schmucks.

How then, are we NOT slaves to the banks?

Even our governments are slaves to the banks...Gough Whitlam tried to borrow money from a private individual instead of the banks...this was known as the Kimlani Affair. Many believe that this had more to do with his dismissal than anything else, and I would be one of those people.

The second major thing that has happened since deregulation, is that banks and insurance companies are now listed on the Stock Exchange...most insurance companies were what were known as "mutual societies"...meaning that the profits were shared amongst the investors, which happens to be the policy-holders. Now they are able to list on the stock exchange, so they are pressured to show a return to their investors that are NOT policy-holders, hence the distribution of profits and the focus of those profits has shifted from policy-holder, to investors from shares.

This has happened with banks also, yet why would they NEED to list on the stock exchange when again, they are literally cash-rich? Both insurance companies and banks invested on the stock exchange, but now they are virtually all listed there as well. And we wonder why we get 4% interest from our deposits, pay double that in interest rates for our mortgages, and they show profits in the billions for their investors from the stock market, their share-holders.

TBC...

Prior to the deregulation of banking and finance, these things did not happen, making borrowed money far more predictable, whereas it has become far more volatile. Plus it has downgraded the depositor and the policyholder, for now the primary concern is the shareholder, and the policy-holder and depositor have become the market to the shareholder and the administrators of the banks.

Insurance companies, banks and finance companies should not be allowed to list on the stock market, for they create a conflict of interest between interested parties that do business with those institutions, and the shareholders, but the share-holders get favoured.

Traditionally, why did companies list on the stock exchange? They list to gain funds for expansion, usually to do with manufacturing or mining a resource. They do this instead of borrowing money from banks, and so instead of paying interest on loans to banks, they provide shares in the company to investors, the share-holders, and those shares then give a return, and hopefully, increase in value over time also. They also do this because they are not cash-rich...most of their assets are tied-up in property, buildings, staff, infrastructure within the company.

So then you must ask yourself this...why does an insurance company or bank which by definition are cash-rich, for they have a continuous stream of incoming monies from policy-holders, depositors and investors, doesn't manufacture anything and no R&D, require to list onto the stock market? An insurance company merely sells the concept of receiving money in the event of a mishap, written on a piece of paper. It only requires a place of business and staff. It buys nothing, makes nothing, and just has cash coming in, with a small percentage going out. A bank just holds your money or allows you to also invest in it. So why would they NEED to list when they HAVE money?

TBC...

The answer, is profits from increased access to monies to invest on the behalf of others (the stock market), and also, fund managers are paid a salary plus a bonus on the return of investment of the funds they manage, based upon a percentage of the size of the fund they are managing, and with the larger the fund, the larger the dollar value of that percentile...1% of $1,000 is a lot more than 1% of $100. But from hundreds of millions, overnight they went to billions, because now they have the monies of shareholders from the stock market to invest on the behalf of, as well as their conventional clients.

Finally, one could then argue that the Sub Prime Loan fiasco wouldn't have been anywhere near as dramatic and widespread as it is, if banking and finance was still regulated. For the reason that it is so widespread, is that all of these institutions are now listed on the stock markets, and so spread the bad money globally, and competed with each other over it. If they weren't listed on the stock markets, that might not have been able to develop as much as it did, and the banks wouldn't have been competing against each other over the bad money on behalf of shareholders, for that is what now drives them.

They used to be driven by good business practice from a conservative grounding, only lending money to those that could afford it. But the Sub Prime Loan fiasco is exactly the opposite...it was money lent to people who definitely couldn't afford it, and that loan then on-sold to another investor, and then to another. This was started by Wall Street, but the banks took it on, and here we are.

I’ve side-tracked a little, but it’s a bigger picture than the household budget.