A bank is a business, not a church. It is a very old kind of business and like most old things, it is a very simple business.
There are two rules and two way of making money.
The rules are, first, don’t put all your eggs in one basket (aka don’t bet the farm). Second, know when to stop putting good money after bad.
The first way of making money is to charge more for lending the money out than you pay for taking it in. The second is to charge fees for anything you can get away with, like, say, talking to customers or moving their money around.
That is all there is to it.
Banks have traditionally also played the markets with their own and your money. That is not banking, that is gambling. They are good at it, they have way more money and expertise than any one else and they wrap it up so that it doesn’t look like gambling but that’s what it is.
They like to dress up like churches (high ceilings, lots of marble, reverence required etc.) but they are gambling dens. Also, like churches they have a fine line in twisted words. You lending them money is called depositing. The reverse is called borrowing. You or your money are called a liability but a loan is an asset.
If any business owes more than it can pay back, it is bust. Someone comes in, breaks up the bits, sells them off for what can be got, adds it up and divides it amongst the debtors. If there is anything left over the shareholders get that. Everyone has a good cry.
If someone else thinks there is still a demand for whatever it was the other guys were doing (badly), they are welcome to try and do it better.
With our style of banking the only specialised thing that the bank does is move the money around, ie run the clearing system. This is just a bunch of computers and some databases. There will be bidders for that bit. There will be some bids for the bank branches.
Hey presto! Access to a clearing system and a few branches and you’ve got yourself a brand new bank. No bad debts, no bad history. Let’s roll!! It’s even easier than changing a Government. We can do that, too!
Yes, we can.
Change you can believe in.