Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21
Last Chance to GET FREE Money Crypto Mining with Your Desktop PC - 2nd May 21
Will Powell Lull Gold Bulls to Sweet Sleep? - 2nd May 21
Stock Market Enough Consolidation Already! - 2nd May 21
Inflation or Deflation? (Not a silly question…) - 2nd May 21
What Are The Requirements For Applying For A Payday Loan Online? - 2nd May 21
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part1 - 1st May 21
INDIA COVID APOCALYPSE - 1st May 21
Are Technicals Pointing to New Gold Price Rally? - 1st May 21
US Dollar Index: Subtle Changes, Remarkable Outcomes - 1st May 21
Stock Market Correction Time Window - 30th Apr 21
Stock Market "Fastest Jump Since 2007": How Leveraged Investors are Courting "Doom" - 30th Apr 21
Three Reasons Why Waiting for "Cheaper Silver" Doesn't Make Cents - 30th Apr 21
Want To Invest In US Real Estate Market But Don’t Have The Down Payment? - 30th Apr 21
King Zuckerberg Tech Companies to Set up their own Governments! - 29th Apr 21
Silver Price Enters Acceleration Phase - 29th Apr 21
Financial Stocks Sector Appears Ready To Run Higher - 29th Apr 21
Stock Market Leverage Reaches New All-Time Highs As The Excess Phase Rally Continues - 29th Apr 21
Get Ready for the Fourth U.S. Central Bank - 29th Apr 21
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? - 29th Apr 21
AI Tech Stocks Lead the Bull Market Charge - 28th Apr 21
AMD Ryzen Overclocking Guide - 5900x, 5950x, 5600x PPT, TDC, EDC, How to Best Settings Beyond PBO - 28th Apr 21
Stocks Bear Market / Crash Indicator - 28th Apr 21
No Upsetting the Apple Cart in Stocks or Gold - 28th Apr 21
Is The Covaids Insanity Actually Getting Worse? - 28th Apr 21
Dogecoin to the Moon! The Signs are Everywhere, but few will Heed them - 28th Apr 21
SPX Indicators Flashing Stock Market Caution - 28th Apr 21
Gold Prices – Don’t Get Too Excited - 28th Apr 21
6 Challenges Contract Managers Face When Handling Contractual Agreements - 28th Apr 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Time To Eliminate Your Wall Street Tax?

Politics / Market Regulation Mar 20, 2018 - 07:19 AM GMT

By: Rudy_Avizius

Politics

As we get older, and hopefully wiser, we generally start to become more discerning on how we view the world and the problems we face. Many of us who seek to make the world a better place try to look at the problems, analyze them, and do what we can to correct them. However, because there are so many different problems facing us, this approach often overwhelms us and can instill a sense of hopelessness in our ability to create positive change.


Looking more deeply into this situation, we discover that many of these difficulties are SYMPTOMS of much deeper problems, and that attempts to address these SYMPTOMS are not an effective or efficient way to bring about the changes we desire. One can compare this to having abdominal pains and visiting a doctor who offers you pain killers without investigating the underlying cause of the pains being experienced. If the pain is the result of a cancer or an ulcer, then the pain is only a SYMPTOM, not a ROOT CAUSE. Treating the SYMPTOM in this case is not an effective or efficient way to address the problem. It may bring about temporary relief, but ignores the ROOT CAUSE.

A similar situation exists when we look at the wide range of issues we face as a society. Some of the issues include homelessness, lack of medical care, unemployment, high debt loads, widening wealth gap, declining schools, infrastructure neglect, fraying safety net, increasing government fees and tolls, etc. Trying to address each one of these issues individually becomes an overwhelming task. These issues are not ROOT CAUSES, but SYMPTOMS.

If we take time to ponder and analyze each of these issues looking for a common thread, one can determine that they are all the result of money, more specifically the lack of money. This process starts getting us closer to the ROOT CAUSES.

So how is it that as a society we can work so hard and still experience this lack of money?

Consider this…. If you have a given amount of money in your possession or control, all of that money is available to you to spend. Once you give some of that money to someone else, it is no longer available to you and is now available to others. While this concept may seem to be quite elementary, this is the basis of where much of the problem lies. If one applies the same principle to a larger group such as a family, a community, a county, state and even nation, the result is still the same. Once money leaves the group, it is no longer available to that group. Understanding this brings us another step closer to the ROOT CAUSES.

Most homeowners can relate to this. Let’s suppose that you have taken out a mortgage for $100,000. By the time you have completed paying off your mortgage, it will probably have cost you well over $200,000. The cost of the interest payments exceeds the original cost of the home. These interest payments are money that you and your family no longer have to spend on your needs.

The same principle applies when a school district, municipality, county or other entity wishes to do a repair, a capital improvement or infrastructure project. The costs of these projects can easily double or even triple due to the interest charges. It almost seems insane, but we pay more to the financiers of these projects than to those who provided the materials and labor for the project. This does not even include the fees imposed by the bank on the borrowers. Now we are approaching the ROOT CAUSES.

In California, the long awaited new Bay Bridge span was recently completed at a cost of $6.4 billion, which was 4 times over the initial projected costs. What most Californians don’t realize is that the total cost of the bridge will eclipse $13 billion when interest payments are considered over the life of the loans or bonds. So when we talk of projects costs doubling or tripling, it is not hyperbole.

So exactly where does all this interest and fee money go when it leaves the community?

It flows to the big Wall Street banks, enriching them, while impoverishing the community. This is the “Wall Street Tax” that effectively doubles or triples the cost of every project across every community in the nation. It is YOU, the taxpayer who pays this tax. Once the money leaves the community, it can no longer circulate locally and is no longer available to the community, exactly as described in an earlier paragraph. This is a ROOT CAUSE of why so many communities are struggling. To add insult to injury, these big Wall Street financiers are not even using their own money, they use other people’s money so they can skim the interest payments to line their own pockets. We have all seen how Wall Street has prospered since the 2008 crisis, while Main Street has been left to languish.

So why do school districts, municipalities, counties and states (we’ll just refer to them as “communities” from this point on) use these big Wall Street financiers to fund their projects? It is because the costs of these projects usually exceed the ability of small local community banks to finance them. Additionally, because of capital requirements, the deposits of these communities can not be handled by the smaller local banks leaving only the big banks capable of handling such large deposits and transactions.

This means that even the deposits of these communities which can include tax revenues, payrolls, and pension funds, are deposited with the large banks and therefore also shipped out the community,. These funds are then “invested” by Wall Street anywhere in the world where they can obtain the highest return. These funds are not being used to invest in local needs. This is another ROOT CAUSE for why Main Street has been struggling, while Wall Street has been thriving.

With the current banking system we have witnessed the largest concentration of wealth in human history, while the vast majority of people have experienced stagnant wages, declining wealth, and recurring recessions.

Maybe it is time to engage in some “out of the box” creative thinking? Wouldn’t it be wiser for communities to be able to obtain local funding at reduced interest rates where any interest payments would remain in the community and get recycled? Any good businessman would tell you that it is sound business to eliminate any middleman in a business transaction. Wall Street is nothing more than a middleman between funding and community needs, and if the Wall Street middleman was eliminated, more money would remain in our communities. How could this be done?

There is another way to finance public projects and it is already happening across the world and in the state of North Dakota. North Dakota has its own public bank, the Bank of North Dakota. This bank has been in existence for a century and provides communities and businesses with low cost loans. Some examples of this: A new business in North Dakota can get a 1% loan for 5 years, student loans are available at below market rates with no bank fees, no town or county in ND has or needs a “rainy day” fund, they instead have the Bank of ND where they can obtain low interest loans should an emergency arise.

The Bank of ND does not compete with community banks, but rather partners with them. There is a correlation between this partnering and the fact that North Dakota has the largest number of community banks per capita of all states in the nation. Additionally, the Bank of ND has only one office and no branches, no tellers, and no ATMs that compete with community banks.

This partnering with local community banks means that the Bank of ND does not lend directly to small local businesses, but relies instead on the local community banks to originate those loans. The public state bank can provide funding beyond the deposit base of a small community bank allowing the community bank to finance projects it could not have financed without the partnership. If a local bank had a $5 million limit, and a business wanted $10 million for a new showroom, the bank would have to say no to the loan, forcing the business to go to a Wells Fargo, Citi, JP Morgan Chase or other large Wall Street bank. This results in the loss of business for the community bank. With the public state bank, the community bank could partner on the loan, raising its loan ceiling, retain the money in the community, and provide the services needed.

One very important issue that needs to be raised is that of the safety of the loans being made. It is important to be sure that bank loans are made to people and entities that are truly credit worthy. In North Dakota there is a double check on this process. Any loan that a community bank requests a partnership with would require approval by both the community bank and the state bank officers, since both would be providing the funds. This results in a lower default rate as two sets of eyes are examining and approving the loan.

There are those who may say that a state public bank could be at risk of failure and may need to be bailed out by the taxpayers. This was an issue that created much anger during the 2008 crisis. However, the Bank of ND was properly managed and did not need a bail out and in fact returned a profit of millions that year and every year since then to the state treasury. Politicians on BOTH sides of the aisle in the North Dakota Legislature love and support their state bank! How common is that?

The proper management of the Bank of ND can be attributed to the fact that the officers of the bank receive appropriate salaries (far less than their Wall Street counterparts) and have no bonuses and therefore no incentives to take on excessive risk. The private Wall Street bankers are pressured by their shareholders to return high profits, which often leads to excessive risk taking rather focusing on the economic growth of the state and nation. Some of these investments could possibly be for things the community would not support or would even work against the best interests of their community. The public bank is required by its owners, which would be the people, to invest wisely to promote the economic vitality of the community.

The prosperity created by keeping deposits locally and recycling the fee and interest money locally, would create new jobs, new businesses, fund “wish list” projects, and as a result would raise tax revenue. As more businesses thrive, the tax base and ratables would became larger, which could possibly contribute to tax cuts.

A public bank is not limited to only states. Municipalities and counties could also form their own. There are public banks being considered in New Jersey, Philadelphia, Santa Fe, Vermont, California, Seattle, Los Angeles, Oakland, San Francisco and other places. These public banks have the ability to transform how communities obtain funding. It will keep deposit and interest money circulating locally and out of the hands of Wall Street, thus enabling our local communities to thrive.

I would encourage readers to do their own research and discover how a public bank can tip the balance towards Main Street, rather than Wall Street, and help their small community banks at the same time. A good place to start is with the Public Banking Institute. Perhaps this is a good time to eliminate the Wall Street Tax that you are paying.

On Thursday April 6, 2017 two world-renowned economic thinkers, Michael Hudson and Ellen Brown, came to Franklin & Marshall College in Lancaster, PA to discuss how a public banking option can affect governmental effectiveness. This discussion was moderated by Walt McRee, the chair of the Public Banking Institute. This discussion which was open to the public focused on the key differences between government’s unquestioned reliance on private capital markets and how an entirely new, more productive arrangement could be devised. Kudos to Franklin & Marshall College for providing their students and community with such a high caliber seminar. The following video is that discussion.

By Rudy Avizius

https://endtheillusion.wordpress.com/

Rudy Avizius is a former educator and school administrator. He has been following the economic situation and the subsequent collapse for a decade now. He is concerned that the current economic, social, and environmental course we are on is not sustainable, and the time for real change is running out.

© 2018 Copyright Rudy Avizius - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in