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Banks Are Obsolete: The Entire Parasitic Sector Can Be Eliminated

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

What else can we do with the $1.25 trillion we'll save by eliminating these obsolete financial middleman parasites? A lot.

Technology has leapfrogged the banking sector, rendering it as obsolete as buggy whips. So why are we devoting 9% of our economy to an obsolete parasite? Financial sector profits now total a staggering 4.5% of GDP (gross domestic product), while the expenses generated by financial churning account for another 4.5% of the economy.

chart courtesy of Market Daily Briefing

Software and existing non-Wall Street/too-big-to-fail institutions could replace the entire Wall Street/banking sector and drop costs to .5% of GDP, saving us 8+% of our GDP ($1.25 trillion) that is currently siphoned off by parasitic middlemen. The banking sector is Exhibit A in the Middleman-Skimming Economy (February 11, 2014).

The pull of habit and propaganda is so strong that most people haven't even recognized that software and the Web can replace the entire financial/banking sector for a fraction of the cost of the current parasitic system, a system that (as we all know) has captured the regulatory and governance machinery of the central state, making a mockery of democracy.

The benefits of eliminating the financial/banking sector are immense and far-reaching.

What exactly do banks do? Banks perform these basic functions:

1. They hold depositors' money.

2. They act as a clearing house for payments, transferring funds from payor to payee.

3. They issue loans on a fractional reserve basis, i.e. a few dollars in cash deposits supports $100 in loans.

4. They originate and trade derivatives, run high-speed trading desks, operate various money-laundering and embezzlement schemes, influence elected officials with lobbying and campaign contributions and subvert both free market capitalism and democracy at every turn.

This entire parasitic middleman sector could be replaced with automated digital clearing houses and crowdfunded or non-bank loans. Why do we need banks to pay bills online? We don't; any clearing house could charge a small fee for the transaction.

Why do we need banks when loans can be crowdfunded? If we can invest money in start-ups via Kickstarter, Indiegogo, RocketHub, AngelList, etc., why can't we own a piece of someone's auto loan or home mortgage?

The web and software now enable the elimination of the entire middleman skimming operation of banking. Those with capital can invest that capital directly in loans that the investors choose. Risk is distributed throughout the system, and the process of verifying credit scores, income, valuations, assets, and so on--the building blocks of risk assessment and a market for debt and cash--can also be automated.

The entire notion that 100 savers put their money in a bank which then buys a mortgage with their savings and sells it as a security that supports a pyramid of derivatives is obsolete. Each saver can directly own (and sell on a transparent market) a piece of a mortgage, auto loan, business loan, etc. There is no need for a middleman banking sector at all--no skim, no concentration of risk, no opportunities for selling derivatives to unwary investors. All that goes away with the banking sector.

But what about holding deposits? We already have two institutions that could serve this role: credit unions and the post office. If those holding depositors' cash do not issue loans, they have no source of income to defray operating expenses. The solution is obvious: charge fees for holding deposits and payor-payee transactions.

If the fee structures are transparent, those who charge too much will disappear as customers go elsewhere. That's the purpose of transparent competition in an open marketplace.

Many other advanced nations have long combined postal and simple banking services: France and Japan come to mind. Here we have a postal service that is struggling to fund its operations in the era of email, and here we have millions of people who prefer to (or have to) do simple banking in person. There is no technical or administrative reason that the post office could not operate as it does in Japan, as a place to deposit funds (including auto-deposit of Social Security checks), take out cash, etc.

US Post Office Could Rack Up Billions By Offering Money Services--NPR (via Joel M.)

Please note that what I am suggesting is a transparent open market for these services provided by a range of enterprises and institutions. Assemble a marketplace of local credit unions, the post office, enterprises that handle payor-payee transactions such as Dwolla and PayPal, and you have a wide spectrum of choices to suit every need.

As for business loans: you can get small-business loans on PayPal right now. It's called Working Capital, and the borrower is given the total amount due right up front.

As for the commercial paper market: there is no technical reason why a transparent exchange couldn't enable borrowers and owners of capital to set short-term loan rates via transparent bidding with automated software.

The obsolescence of banking includes the Federal Reserve--the ultimate middleman skimming operation. But what about providing liquidity in credit panics? Well, to start with, once the banking sector is gone then the concentrations of risk and the obscuring of risk that go hand in hand with banking also disappear-- the forces that generate panics will have been dispersed. Those forces will have vanished along with the middleman financial sector that created all the risks, speculative excesses and panics. If there were a liquidity crisis, the Treasury could create and lend whatever funds were needed.

But what about manipulating interest rates and other forms of financial repression? Interest rates would be set by millions of borrowers and owners of capital in transparent transactions.

What about all those great investing services offered by big banks and Wall Street? As many have observed, automated index funds outperform 99% of fund managers over 10 year time frames. So Wall Street is also obsolete.

Once we get rid of these obsolete middleman parasites--Wall Street, the banking sector and the Federal Reserve--we have a delightful question to answer: what else can we do with the $1.25 trillion we'll save every year by eliminating these obsolete financial middleman parasites? A lot.


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Thu, 02/20/2014 - 13:13 | 4457869 Soul Glow
Soul Glow's picture

Eliminate the middle man, buy silver.

Thu, 02/20/2014 - 13:18 | 4457903 fijisailor
fijisailor's picture

If you need to relocate in a hurry silver is a bit heavy.  Gold is a better option in that case.

Thu, 02/20/2014 - 13:26 | 4457956 Divided States ...
Divided States of America's picture

Wow, that means there will be a lot of unemployed Jews out on the street if that happens.

Thu, 02/20/2014 - 13:33 | 4457993 doomandbloom
doomandbloom's picture

Banks create jobs /s

Thu, 02/20/2014 - 13:48 | 4458098 LawsofPhysics
LawsofPhysics's picture

Yes, can I interest you in a financial "product" of mass destruction?

Thu, 02/20/2014 - 13:57 | 4458166 redpill
redpill's picture

Pfft this would be like bankers committing suicide with a nail gun.

Thu, 02/20/2014 - 14:04 | 4458209 economics9698
economics9698's picture

The cock roach class would migrate to other food sources, like the federal government, which is already roach infested. 

Thu, 02/20/2014 - 14:37 | 4458475 max2205
max2205's picture

I want whatever Charles is smoking

Thu, 02/20/2014 - 15:04 | 4458631 jbvtme
jbvtme's picture

A Glasgow smile (also known as a Glasgow, Chelsea, or Cheshire grin) is a wound caused by making small cuts on the corners of a victim's mouth, then beating or stabbing him or her until the muscles in the face contract, causing the cuts to extend up the cheeks to the victim's ears. This leaves a scar in the shape of a smile, hence the name.

Thu, 02/20/2014 - 15:16 | 4458652 jbvtme
jbvtme's picture

with respect to CHS, this is strictly a transitional strategy

Thu, 02/20/2014 - 15:58 | 4458909 balolalo
balolalo's picture

"Banks Are Obsolete" - they always have been.   Even Jesus hated the money changers. 

Thu, 02/20/2014 - 16:54 | 4459153 Tall Tom
Tall Tom's picture

Jesus hated nobody. Jesus hates the sin. Jesus loves the sinner.


Jesus sat down and ate with the prostitutes and the Tax Collectors. The Self Righteous Scribes and Pharisees attempted to slander Jesus for that.


I do not know where you get your idea of the Jewish Carpenter's attitude toward man. The Disciples were Jewish. Even the Apostle Paul was a Jew who persecuted Christians. He was a Tent Maker.


Peter was a Fisherman.


Even Jesus supported earning Interest from Bankers. All you have to do is read the Parable of the Talents.


The master chastised the wicked servant because he had hid the Talent in the Ground. The Master said at least you could have given it to a Banker and earned INTEREST.


Where do you get your ideas about Jesus??? Certainly you did not get them from the Gospels.


(The synagouge is not supposed to be a profit driven machine. That was corrupt. That is what He was irritated with. They were in the Temple.)

Thu, 02/20/2014 - 17:07 | 4459211 fonestar
fonestar's picture

Satoshi is eliminating the cockroaches right before your eyes!



Fri, 02/21/2014 - 21:10 | 4463856 mister33
mister33's picture

"O People! Just as you regard this month, this day, and this city as sacred, so regard the life and property of every[one] as a sacred trust. Return the goods entrusted to you to their rightful owners. Treat others justly so that no one would be unjust to you. Remember that you will indeed meet your Lord, and that He will indeed question you about your deeds. GOD AS FORBIDDEN YOU TO TAKE INTEREST/USURY (RIBA), THEREFORE ALL INTEREST OBLIGATION SHALL HENCEFORTH BE WAIVED. Your capital, however, is yours to keep. You will neither inflict nor suffer inequity. IT HAS BEEN ORDAINED BY GOD THAT ALL USURY IS FORBIDDEN. To start with I give up the usury that is due to my relations." - Muhammad's Last Sermon

"In you are people who ACCEPT BRIBES TO SHED BLOOD; YOU TAKE INTEREST AND MAKE A PROFIT FROM THE POOR. You extort unjust gain from your neighbors. And you have forgotten me, declares the Sovereign Lord." -Ezekiel 22:12

"Lord, who may dwell in your sacred tent? Who may live on your holy mountain? The one whose walk is blameless, who does what is righteous, who speaks the truth from their heart, whose tongue utters no slander, who does no wrong to a neighbor, and casts no slur on others, who despises a vile person, but honors those who fear the Lord, who keeps an oath even when it hurts, and does not change their mind, WHO LENDS MONEY TO THE POOR WITHOUT INTEREST, who does not accept a bribe against the innocent. Whoever does these things will never be shaken." -A psalm of David, Psalms 15, 1-5

Thu, 02/20/2014 - 14:17 | 4458293 holgerdanske
holgerdanske's picture

Yes, shooting eight EIGHT times. Guess the seven were for interest due.?


Whatever, it would be so nice without banking! and I don't really care, except I know there is an unholy alliance between the state and the banks. The one rats on the citizen, and the other sucks the blood. That is enough that the state will protect and shield the banking sector.

So the solution is to get rid of the bank AND the state, and return the state to what it should be. A popular supported entity to further the common good, like build roads, sanitation, run the civil administration and maintain law and order.

IOW to be a service to the people, and not a master.

So, where do we start, to rid ourselves of these parasites??


Thu, 02/20/2014 - 14:42 | 4458502 optimator
optimator's picture

Evidently he wasn't a marksman.

Thu, 02/20/2014 - 13:59 | 4458180 BTCTalks
BTCTalks's picture

Disappointed with the lack of Bitcoin acknowledgement.  It seems to fit perfectly with the narrative.

Thu, 02/20/2014 - 13:52 | 4458132 optimator
optimator's picture

Unemployed?  Why they could simply find a job doing, er, something akin to real work.  Construction, farmining, there must be something they could do that doesn't involve money changing.

Thu, 02/20/2014 - 13:55 | 4458154 Divided States ...
Divided States of America's picture

Dude, most Jews only work in industries where they can maximize payout and minimize effort. Have you ever seen a Jewish construction worker or farmer?? I haven't.

Thu, 02/20/2014 - 14:15 | 4458267 Pseudo Anonym
Pseudo Anonym's picture

i have

...ever seen a Jewish construction worker or farmer??

many.  those are the schmucks like me - getting ripped off by the criminals running central banks and governments.  but what is astonishing, is that they (the jews i know) have no idea, nor do they care, that they are getting ripped off, same as goyim, by their own tribe.

Thu, 02/20/2014 - 19:28 | 4459764 Rafferty
Rafferty's picture

This is true, there are lots of hard-working honest Jews out there.  But that doesn't gainsay that the whole financial criminal racket is largely -   not exclusively - but largey run by and for Jews.

Thu, 02/20/2014 - 14:40 | 4458406 holgerdanske
holgerdanske's picture

Yes, there is, and many actually do!

The problem is, almost anything can be turned into modern banking. Which is largely gambling! plus the mundane non exciting stuff like lending money etc.

The problem is when the banking starts in farming, we will all go hungry one moment, only to have food thrown away the next, while being preached to that this is the "free market".

Free market, my ass.! It is only free to the guys being allowed to gamble and play with other peoples money, only to be bailed out when things go sour.


Thu, 02/20/2014 - 13:31 | 4457960 flacon
flacon's picture

> "silver is a bit heavy
The more silver is worth, the "lighter" (less cumbersome)  it becomes. Imagine if one silver ounce was worth the same as one gold ounce. They would weigh the same and be worth the same. What I am saying is that the "heaviness" (or cumbersomeness)  of silver depends on the gold:silver ratio. 

Thu, 02/20/2014 - 13:33 | 4457997 mayhem_korner
mayhem_korner's picture



If you can imagine the gold:silver ratio going to 1:1, I'd like to get some of what you are ingesting.

Thu, 02/20/2014 - 13:44 | 4458067 oddjob
oddjob's picture

The above ground ratio of Silver to Gold is about 1 to 5.

Thu, 02/20/2014 - 15:02 | 4458622 ChanceIs
ChanceIs's picture

Steven Leeb - often submitting op-eds to King World News - has mentioned a gold;silver ratio at 1:1.  I like Steve.  I think that he is a bright man.  I think he does drugs.  I put a "10th order" filter on what he says.  Maybe a 1:10 ratio is what we will see.  But.....if we are trading pricewise against the physics/natural supply at 1:60 we might drop down to 1:10.  That would be a "six bagger."  What is not to like???

Now if you listen to the likes of Jim Sinclair and buy into $10K gold, then we would see an eight bagger there.  Coupled onto the six bagger for silver, we would have a 48 bagger.  If you want to get in the back of the Choom Wagon with Leeb, then we have a 480 bagger.

The sanest (think emotional stability/wise) head in that crowd - no disrespect to Jim Sinclair - seems to me o be James Turk.  He instructs to think of the PMs as only a wealth preservation mechanism.  This is almost a spiritual stance.  Having said that, I will take the stance of "holding ground" with Turk but recognize a potential 10 bagger upside.

Stack that silver baby.

OBTW: Via Trayvon, we were reminded that paranoia can come with weed.  I don't smoke weed - never have.  But I don't need to do that to feel paranoid about Uncle Sugar coming for me with the...what was it....MyIRA/forced Treasury buying.  Not after seeing Poland and Greece/Crete.  Face it.  The IMF is the US, and the US didn't object to that confiscation.

Thu, 02/20/2014 - 17:54 | 4459388 irishlink
irishlink's picture

Mike Moloney . Jim Sinclair. Jim Rorgers. etc have been banging this gold drum for ever so long. Maybe our children will benefit. But I always wonder and worry that the elite have some sneaky solution up their sleeve that will undermine all these gold bugs. Any ideas?

Thu, 02/20/2014 - 23:19 | 4460638 ChanceIs
ChanceIs's picture

What you say about Moloney et al is quite true.  (You forgot Marc Faber.)  I bought into this 4-5 years ago, and have been sore in the purse for it.  It made sense then, and at all times since then.  The ChairSatan has been at his presses.

I am convinced that the physical gold is flowing to the east.  There is a plethora of paper shorts.  Have I heard 100:1 in terms of paper gold vice real gold available for delivery?  What if the Chinese in addition to purchasing and taking deliver of massive amounts of physical, bought say - two of every ten naked short contracts and then sttod for delivery?  (They wouldn't know if they were naked shorts - it doesn't matter.)  The paper price would have to go to the moon and/or the exchange would close and some arbitrary settlement price would be forced upon the futures participants.  There could be nothing left but a physical market based purely on fundamentals - supply/demand.

The elites can't print gold.  They can't pull an FDR because it is a global market.  The safest might be "junk silver" coins.  It has already been declared legal tender.  The government would have a real hard time undoing that.

I don't know enough about bitcoins. 

Thu, 02/20/2014 - 14:23 | 4458298 holgerdanske
holgerdanske's picture

weigh the same??? I think it is back to school for you. This instant!;-) For the same volume, gold is almost twice as heavy as silver. IOW the gold coin will take half the space of a similar weight silver coin. This is one of the reasons gold is the superior store of wealth.

Thu, 02/20/2014 - 13:19 | 4457904 zerozulu
zerozulu's picture

Hang them all.

Thu, 02/20/2014 - 13:39 | 4458020 BLOTTO
BLOTTO's picture

The banking system is the smaller bubble within the larger. We, the masses, need to bust the largest bubble 1st.


Nothing changes until you get rid of the Queen's Empire, the Vatican, Rothschilds, and Rockefellers and any of the other ancient ruling royal bloodlines...

We need to cut off the 'beasts head' once and for all.

THEN we can talk about what we are going to do...otherwise, they'll just do it for us all over again.


'Nothing new under the sun'...'Same as it ever was'...'Meet the new boss; same as the old boss'...etc...etc...

Thu, 02/20/2014 - 14:13 | 4458261 nasdaq99
nasdaq99's picture

i can't believe anybody in their right mind would put the post office in charge of anything..........


the post office needs to be shut down immediatley and save us $25b/year minimum if we just wind it down gently.

Thu, 02/20/2014 - 19:30 | 4459773 Rafferty
Rafferty's picture

That's because it's a place where otherwise unemployable blacks are given sinecures.

Thu, 02/20/2014 - 15:12 | 4458682 doctor10
doctor10's picture

Hmmm-it would appear the principle bottleneck to all progress can be found in DC

Thu, 02/20/2014 - 15:15 | 4458694 sgt_doom
sgt_doom's picture

What exactly do banks do?

Oh, wow, you're missing the most important stuff:  they (along with their oil company subsidiaries) own ALL the financial exchanges and ALL the clearinghouses, which allows them (utilizing HFT) to completely rig not simply the individual markets, but in such a manner that the markets work off of one another to the optimal degree, plus the top banks and their top hedge funds, have turned the public stock retail market into a "dark pool" by the internalization business, furthering their command and control of the marketplace.

There ain't no such thing as a free market!


Thu, 02/20/2014 - 13:13 | 4457873 madbraz
madbraz's picture

If only all the idiots that have money "deposited" at JP Morgan Chase would grow half a braincell and close their accounts...that would be a good day

Thu, 02/20/2014 - 13:46 | 4458079 Divided States ...
Divided States of America's picture

honestly it wont take that much to crush JPM...if the bank is levered 33 to 1, all it will take is over 3% of deposits taken out to crap it...I dont have an account with JPM but honestly, anyone that doesnt close their JPM account is like constantly having Jamie's cock in your mouth while he pats your head and say "Thats why I am richer than you".

Thu, 02/20/2014 - 13:14 | 4457880 Duc888
Duc888's picture



I agree.


Not a symbiotic relationship at all.  Purely parasitic at this point and basically holding mankind hostage.


It's all about the skim, scams, two or more sets of books, obfuscation, lying, extortion and murder.  Same as it always was.

Thu, 02/20/2014 - 13:16 | 4457890 LawsofPhysics
LawsofPhysics's picture

Why? Simple, because the moneychangers bought the government!!

Thu, 02/20/2014 - 13:24 | 4457946 RSloane
RSloane's picture

Exactly, Laws. This article is wishful thinking regardless of how poignant it is. Banks/bankers are major contributors to political campaigns. Recently Obama referred to J. Dimon as "the bankers' banker' and thinks other bankers should emulate him. I'm happy with my little credit union.

Thu, 02/20/2014 - 13:46 | 4458081 grekko
grekko's picture

Is that Dimon, or Damien?

Thu, 02/20/2014 - 13:57 | 4458141 LMAOLORI
LMAOLORI's picture



Its jamie Demon

Thu, 02/20/2014 - 14:37 | 4458465 BLOTTO
BLOTTO's picture lets go even further. Who exactly is the 'money changers'? Who owns them?


Its like peeling layers off of 200lb onion and at its core, we find the root (evil) of it all.



Thu, 02/20/2014 - 13:34 | 4458004 madbraz
madbraz's picture

I'd go a step further...the mastermind of the bankster mafia, Robert Rubin, created Barry O when he was still a senator.

Thu, 02/20/2014 - 13:53 | 4458082 BLOTTO
BLOTTO's picture

Imo, we are ruled by ancient occult royal bloodlines from the very beginning, that have throughout the generations passed along its secrets within its tiny group to destort truth and knowledge from the masses while at the same time - enslaving us.


It all starts at the top of the Mother of All Family Trees...that where the rub is at (and truth is really distorted/mainpulated/omitted). And this is also where it probably starts to get really fuckin trippy and the truth of it all would make us puke and shit at the same time.


'Their is something behind the throne more powerful then the King'

Thu, 02/20/2014 - 19:33 | 4459779 Rafferty
Rafferty's picture

"the mastermind of the bankster mafia, Robert Rubin"



Thu, 02/20/2014 - 13:46 | 4458077 Dollarmedes
Dollarmedes's picture

The same thing was said about entrenched interests in the past. In the long run (and sometimes the short run!), the superior technology won because it was simply more efficient.

Gains from efficiency, especially if large, are too important to ignore. All you need is one locality adopting the new technology to illustrate the flaws in the old technology. And with states still largely independent of the federal government in many respects, we have at least 50 different laboratories.


Think of fracking as an example. There are all sorts of vested interests that oppose it, but it has worked miracles for the economy of North Dakota...that is easily provable. Now, even "blue" states like California and New York that are violently opposed to it are being forced to consider allowing it. That is a direct result of the inefficiency of the old model vis-a-vis government, and the piles of money they stand to gain from allowing fracking.


In the end, NY and CA will adopt fracking whether they wish to or not because it will be the only way to keep their ridiculously inefficient governments afloat.


Thu, 02/20/2014 - 14:04 | 4458211 Dollarmedes
Dollarmedes's picture

Another example: steam-powered ferries.

There was an entrenched interest of mule-pulled barges that used to ply the rivers of the east/northeast US. They fought the introduction of steam-powered ships, and people that couldn't imagine another way of business denigrated efforts ("Fulton's Folly").

In the end, steam ships were much faster.

That by itself would've justified their adoption, but the situation was even better (or worse, for the entrenched interests): faster shipping times enabled other technologies. Now, ice blocks could be transported over long distances before they could melt. That was a business in itself, as ice from the northeast could be shipped to the southeast for refrigeration in homes and indoor climate control (evaporative "swamp" coolers). But the ability to ship ice enabled another industry: long-distance shipping of produce.

Citrus from Florida could be moved to northeast markets. California produce could be shipped overland via refrigerated railcars (a logical extension of the steam ships).


The synergy of these technologies was so much more efficient than the previous system, that in hindsight people couldn't imagine it ever being any other way!


I wonder what synergies could be achieved from eliminating the parasite financial sector.

Thu, 02/20/2014 - 15:10 | 4458668 donsluck
donsluck's picture

They already frack in CA (where I live). What we are trying to do is require publication of the chemicals used. We have no idea what they are injecting into the ground water.

Thu, 02/20/2014 - 15:43 | 4458840 Dollarmedes
Dollarmedes's picture

Just as I predicted!!!!

Thu, 02/20/2014 - 13:17 | 4457898 Ghostdog
Ghostdog's picture

Eliminate Penis Pumps and Walll Street is finished

Thu, 02/20/2014 - 13:18 | 4457901 ebworthen
ebworthen's picture

"... what else can we do with the $1.25 trillion we'll save every year by eliminating these obsolete financial middleman parasites?"

Give decent people jobs doing something useful that builds the society rather than tearing it down.

Thu, 02/20/2014 - 13:23 | 4457932 Spastica Rex
Spastica Rex's picture

How 'bout some new pyramids?

That was just a joke.

/I still refuse to use a sarcasm "tag."

Thu, 02/20/2014 - 15:06 | 4458647 cro_maat
cro_maat's picture

Spastica Rex - Feeling like an obsolete bankster?

I suggest you get Facebook / Twitter / Instagram accounts immediately and bone up on the latest eAcronyms. / sarc

Thu, 02/20/2014 - 15:12 | 4458681 donsluck
donsluck's picture

ebworthen, we won't "do" anything with the 1.25 trillion. It will be another form of deflation.

Thu, 02/20/2014 - 13:19 | 4457905 centerline
centerline's picture

Finance is like a jet engine... really complicated.  Just ask JD.  So, pull those dirty little fingers back.  You wouldn't want to get it caught a turbine or something.  Bad things might happen.

Thu, 02/20/2014 - 14:19 | 4458307 Kayman
Kayman's picture

Finance complicated ? No.  Opaque ? Yes.

Thu, 02/20/2014 - 13:20 | 4457911 Save_America1st
Save_America1st's picture

Sweet!  Back to stackin' the shiny phyzz, bitchez!!!

and there are still about 250,000 more banksters who need to commit "suicide" or put their heads in the guillotine...then the rest of us can all sleep a little better at night.

If only the politicians and lawyers (same scum/different title?) would follow that example...

Thu, 02/20/2014 - 13:21 | 4457918 Spastica Rex
Spastica Rex's picture

Good idea! Best one!

Thu, 02/20/2014 - 13:22 | 4457924 Pseudo Anonym
Pseudo Anonym's picture

not possible:

....get rid of these obsolete middleman parasites--Wall Street, the banking sector and the Federal Reserve--

that would be anti-semitic

Thu, 02/20/2014 - 13:24 | 4457926 viahj
viahj's picture

"Why do we need banks when loans can be crowdfunded? If we can invest money in start-ups via Kickstarter, Indiegogo, RocketHub, AngelList, etc., why can't we own a piece of someone's auto loan or home mortgage?"

OK, 50 peeps crowdsource a $40k auto loan @ 5%.   that's a rather very small yield per investor with high risk. 

how about we just reinstate Glass-Stegall for a start? 

Thu, 02/20/2014 - 13:31 | 4457982 Spastica Rex
Spastica Rex's picture

Maybe the whole idea of debt+growth=profit needs some rethinking.

Thu, 02/20/2014 - 15:38 | 4458795 tickhound
tickhound's picture

Irony is that if people around here truly understood the implications of what you said, they'd be against it. The economic growth model is unwittingly supported here... Hence the "solutions" often presented are policies on how to better "achieve growth." They upvoted your rethinking of "debt." Growth and profit was lost on 'em due to your trickery. But that's getting easier and easier to do around here... daily.

Thu, 02/20/2014 - 16:13 | 4458976 Spastica Rex
Spastica Rex's picture


Thu, 02/20/2014 - 18:41 | 4459562 Urban Redneck
Urban Redneck's picture

CHS can crowd-fund $9,000,000,000 per day, or shove his stupid idea back up his ass.

Right now, No Banks = No BTUs (sorry, truth hurts, and saying the Sun revolves around the Earth doesn't make it so)

Even the Libyans figured out that one right quick.

And if you want replace the oil trade with green weenies, then start adding zeros to what the crowd has to cough up... or get ready for the mother of Zombie Apocalypses.

Thu, 02/20/2014 - 13:22 | 4457928 LordAarioc
LordAarioc's picture

I still rememeber going to WaMU and they were closed for two days and I couldnt pull any money out. Bank Runs can happen. I know I was running for it.

Thu, 02/20/2014 - 13:56 | 4458163 Harry Dong
Harry Dong's picture

And that was me cheering you on...hated that bank.

Thu, 02/20/2014 - 13:24 | 4457947 fonzannoon
fonzannoon's picture

we don't need banks. everyone just needs a brokerage account with checkwriting. you keep a few grand in cash. any money that you need safe or for emergencies should be kept in spy. any money that you wish to take a little risk with should be placed in upro.

Thu, 02/20/2014 - 13:25 | 4457952 skwid vacuous
skwid vacuous's picture

Forgot to deduct how much the ropes and guillotines cost...

Thu, 02/20/2014 - 13:28 | 4457964 mayhem_korner
mayhem_korner's picture



Notwithstanding the merits of eliminating a parasitic industry, this mischaracterizes the actual "savings" that would result.  If $1.25T in fees are paid into the banking system, much of that goes to pay the banks' employees, who in turn consume goods & services with that income.  So eliminating that transfer payment would not generate macro "savings" as much as it would transfer those funds from the pockets of the eliminated bank employees to the pockets of those who use banking services. 

Not saying it's a bad thing, let's just be clear about the label it's given. 

Edit: BTW, one could argue that this thinking isn't that different that the narcissistic elite: eliminate unnecessary costs so that I can keep a larger piece of the pie for myself.

Thu, 02/20/2014 - 13:37 | 4458019 tomcat1762
tomcat1762's picture

Those people laid off by the banks can work at the post office or paypal or one of the dozens of new crowd funding companies that are sure to arise.  They won't be out of work, just working for a non-parasitical company.  And more savings means more money available for small business loans.

Thu, 02/20/2014 - 13:59 | 4458182 mayhem_korner
mayhem_korner's picture



Apparently the laws of economics are not something with which you are familiar.  Carry on.

Thu, 02/20/2014 - 14:35 | 4458350 silverserfer
silverserfer's picture

The interest gained off of free money paid by everybody when is the biggest parasitic charachteristic. 

If the money is going to be conjured up out of thin air it should be done directly by the US governmeent not the piece of shit FED.

at 0% interset a loan is assesed a fixed fee that doesnt involve the satanic compound interest formula. say 1-2% whatever spread out over the life of the loan. And if there is a default the fee(only) must be paid back and cannot be cleared in a bankrupcy.

Thu, 02/20/2014 - 13:28 | 4457968 HamRove
HamRove's picture

THIS ARTICLE should be front and center on CNBC TODAY!

Thu, 02/20/2014 - 13:31 | 4457981 Smegley Wanxalot
Smegley Wanxalot's picture

I hate banks as much as the next guy, but when it comes to replacing banks with the Post Office or Credit Union he is advocating replacing a dog turn with a donkey turd.  And as for crowd-funding, yeah, whatever - you'll still be fucked because the only funding will be for the IN-crowds, just like today.

You wanna advocate change, fine, but how about showing a fucking benefit.  Changing one set of dirty underwear for another is stupid.

Thu, 02/20/2014 - 13:32 | 4457987 Dollarmedes
Dollarmedes's picture

The financial sector; downsized due to "productivity gains." I like the sound of that.

Thu, 02/20/2014 - 13:34 | 4458005 Gaurden
Gaurden's picture

Whats the point of eliminating banks now that they own all the land, all the corporations and everything else of value including the government.

when your treating cancer you have to kill all the cells.


Thu, 02/20/2014 - 13:39 | 4458039 Spastica Rex
Spastica Rex's picture

You make a valid point. However, we own the aimless, compulsive consumption that requires the support of our financial, corporate, and government "friends."

What are we going to do?

Thu, 02/20/2014 - 18:56 | 4459637 tip e. canoe
tip e. canoe's picture

when your treating cancer you have to kill all the cells.

so says conventional wisdom, but what if that were not the case?

Thu, 02/20/2014 - 13:36 | 4458011 Al Capowned
Al Capowned's picture

I am sorry but how was this article without any mention of Cryto currencies

Thu, 02/20/2014 - 13:37 | 4458024 Ignatius
Ignatius's picture

4. They originate and trade derivatives, run high-speed trading desks, operate various money-laundering and embezzlement schemes, influence elected officials with lobbying and campaign contributions and subvert both free market capitalism and democracy at every turn.

In brief:  essential services.

Key element of the current power paradigm.

Thu, 02/20/2014 - 13:38 | 4458031 kellycriterion
kellycriterion's picture

Great Society, Vietnam War, unified budget, black budget, decoupling of the dollar from gold convertibility, creation of the petrodollar, wage and price controls, revenue sharing, all mercenary military, baseline budgeting, and btw the income tax wasn't indexed for inflation until the 80s.

You will note that in the time period referenced the bankers were foot dragging conservatives. Martin was brought to his knees and was replaced by the lackey Burns.

The deliberate misunderstanding of how OPM mafias work, relationship between central governments and banking cartels and how it has evolved over time is just another means of avoiding tackling the real problem.

Thu, 02/20/2014 - 13:46 | 4458078 SmittyinLA
SmittyinLA's picture

Eliminating  a 1.25 Trillion dollar a year parasite is easier said than done, you can buya whole lot ofgoon security for 1.25T

Thu, 02/20/2014 - 13:47 | 4458091 SmittyinLA
SmittyinLA's picture

We can send them all to the Ukraine to man the front lines in Kyiv, (with no air or nuke support, on their dime)

Thu, 02/20/2014 - 13:49 | 4458108 Spungo
Spungo's picture

It's not banks getting bigger. Banking was huge 100 years ago, but it was there to support other things such as a steel industry. We need banks to keep industry running. We shouldn't have banks just for the sake of having banks. 

Fri, 02/21/2014 - 06:05 | 4461174 hootowl
hootowl's picture

What industry?  Are you suggesting U.S. banks fund foreign manufacturers?

Thu, 02/20/2014 - 13:50 | 4458117 joego1
joego1's picture

Great idea. Now lets start the "Eliminate the Middle Man Democracy Party"

Thu, 02/20/2014 - 13:55 | 4458156 Yen Cross
Yen Cross's picture

    Banks aren't even banks anymore. They're casinos full of prop traders and speculators gambling with other peoples money.

Thu, 02/20/2014 - 14:02 | 4458199 ghostzapper
ghostzapper's picture

Another advertisement for building a new system on top of Bitcoin where the author is afraid to mention Bitcoin.  I suppose I can't blame him with all of these "suicides". 


For the record I agree.  I won't debate how fucked up the Post Office is and how many bad management decisions they have or have not made.  But right here and right now given the current circumstances why not make banking as boring as it should be and let them do it along with local credit unions.

Thu, 02/20/2014 - 14:04 | 4458214 Saratoga
Saratoga's picture

How about you skip mortgages and compound interest. Trust me.

Thu, 02/20/2014 - 14:05 | 4458222 ATG
ATG's picture

Speaking of bloodsucking parasites


100,000,000 out of work under 0 as welfare doubles

Thu, 02/20/2014 - 15:19 | 4458707 Save_America1st
Save_America1st's picture

The building of the Free Shit Army is tireless work. 

Marxists never quit until they're given a dose of lead poisoning

Thu, 02/20/2014 - 14:08 | 4458234 Godisanhftbot
Godisanhftbot's picture

 All you Bitiots......


 Know this......


 I revel in your pain.

Thu, 02/20/2014 - 14:10 | 4458248 CaptainSpaulding
CaptainSpaulding's picture

I showed this to my bank teller. She said no free coffee and donuts for you..   : (

Thu, 02/20/2014 - 14:18 | 4458249 seataka
seataka's picture




Thu, 02/20/2014 - 14:11 | 4458256 seataka
seataka's picture

In a SHTF scenario "Net worth" can equal what you can carry with you at a dead run, which determines one's personal gold to silver ratio.


Thu, 02/20/2014 - 14:15 | 4458272 eaglerock
eaglerock's picture

I realized banks were useless about 15 years ago when I walked into a car dealership after 6PM on a Friday, and got approved for a car loan right then and there over the internet. 

Thu, 02/20/2014 - 14:21 | 4458327 q99x2
q99x2's picture

The God of crypto-currency came and gave his only begotten son, BitCoin, so that everyone could be a money changer.

Although, something don't seem right with Maxcoin.

Thu, 02/20/2014 - 14:23 | 4458351 Golden Rule
Golden Rule's picture

1.25 trillion is peanuts compared to the money made through fraud, manipulations, inflation, deflation, recessions, depressions, wars and panics they manufacture.

The truth will set you free.

Thu, 02/20/2014 - 14:33 | 4458437 El Hosel
El Hosel's picture

Really?  1.25 Trillion sounds way low... We should be about due do for another banker to drop though.

Thu, 02/20/2014 - 14:34 | 4458450 Chaos_Theory
Chaos_Theory's picture

Don't forget Real Estate Agents and Land Title Companies.  They need to meet the sharp end of an axe too...

Thu, 02/20/2014 - 14:45 | 4458521 KidHorn
KidHorn's picture

I don't like banks, but I'm not thrilled with the idea of putting my money with the US Postal service either.

I don't think banks in of themselves are a problem. I think the problem is banks have turned into brokerage houses. This shouldn't be allowed.

Thu, 02/20/2014 - 14:47 | 4458531 the grateful un...
the grateful unemployed's picture

its how my father saved money in the 30's when nobody trusted wall street or the banks

Thu, 02/20/2014 - 14:45 | 4458526 the grateful un...
the grateful unemployed's picture

the notion of venture capital investment schemes is already proven to be a cover for all sorts of money laundering and political corruption. venture capital (pools) are the problem not the solution. the problem isn't the banks, GOLDMAN is not a bank, (even though it has FDIC) it has no retail business. let me be sceptical that i can just go over to Paypal and get an SB loan, and just how crowded does the merchantile economy have to get before its saturated. now that every former blue collar worker is an independent contractor, and everyone is trying to run their business from their home, is it possible there is over capacity in this area. there is nothing like massive deflation to drain the profit margins away from the middle man. here's a slightly different take, one which goes directly to the political system.

Thu, 02/20/2014 - 14:54 | 4458572 resaci
resaci's picture

State Banks for every State. Every city, county and township in every State pull CAFR funds out of Wall Street  Banks and put them into their own State Bank - no initial capital needed. WALL STREET WILL BE OBSOLETE! Check out Bank of North Dakota. 

The State of North Dakota does not have any funding issues at all. We in fact are dealing with the largest surplus we’ve ever had… We look around and we say, ‘Boy, that is unbelievable to see what is going on in the rest of the country and here we are completely countercyclical.’  -  Bank of North Dakota CEO Eric Hardmeyer in March 2009. 



Thu, 02/20/2014 - 14:55 | 4458588 KidHorn
KidHorn's picture

North Dakota is undergoing an energy boom right now and they have very few permanent residents. A lot of people paying taxes and not getting benefits. It won't continue. Let's see what they say in 5 years after their bubble has burst.

Thu, 02/20/2014 - 15:06 | 4458644 resaci
resaci's picture

2008 Wall Street CRASH... the quote is from 2009. Did you read it?

Thu, 02/20/2014 - 15:09 | 4458663 the grateful un...
the grateful unemployed's picture

in the end i prefer the local Credit Union, which by charter is prevented from making other than home and personal loans, engaging in derivatives or currency hedges. i am also reminded of what happened to a lot of savings and loands in the midwest during the 80's, (they were plundered by politicians, see The Franklin Coverup). the problem then was high interest rates banks were paying, and no one wanted to borrow money at those rates, so the banks met a liquidity problem, even while their reserves were soaring. i'm not sure how much of a rise in interest rates it would take to trigger the same result now, probably not as much.

Thu, 02/20/2014 - 14:59 | 4458611 RaceToTheBottom
RaceToTheBottom's picture

It's legal functions may be better done by others but it's role in criminal activities is valued by criminals. 

Are you proposing that we automate those as well?

Thu, 02/20/2014 - 15:04 | 4458636 venturen
venturen's picture

but who pay for your politican to run for office?

Thu, 02/20/2014 - 15:34 | 4458781 Carl Popper
Carl Popper's picture

The banking sector will become less relevant eventually. When hundreds of microsatellites can be launched into space to give free internet to everyone everywhere in the world, then people will bypass institutions and governments and deal with each other directly thru private means that are more efficient and cheaper

Thu, 02/20/2014 - 16:17 | 4458987 The Econ Ideal
The Econ Ideal's picture

Breaking a cartel means breaking bribed regulators and favorable regulations to the cartel/special interests. On the other hand, if most everyone starts doing business elsewhere, outside of the cartel, then the momentum can build and knock over or minimize existing cartels. The key issue though comes most always to property rights of creditors and investors (and producers), and whether these will be upheld, and how. 

Thu, 02/20/2014 - 18:49 | 4459602 Final Authority
Final Authority's picture

Up vote for recognizing the role of regulatory capture in "banking" or whatever you call it these days. It runs through all industries where .gov plays anything more then a very minor role but really gets going when you get close the the so called "money" supply.

Thu, 02/20/2014 - 18:05 | 4459418 withglee
withglee's picture

Why do we need banks when loans can be crowdfunded? If we can invest money in start-ups via Kickstarter, Indiegogo, RocketHub, AngelList, etc., why can't we own a piece of someone's auto loan or home mortgage?

You need to take one more step: Why do we need capital to back a trading promise ... especially, as you point out ... with enormous leverage through fractional reserve rules there is virtually no capital involved in the existing "capitalist" system.

When I buy a house I promise to pay for it in 360 equal payments. But that's not enough. I must find a "capitalist" to back me. I must then buy loan insurance to eliminate the capitalist's risk of my default. I then must buy casualty insurance to remove the risk to the collateral. I then must pay taxes to my city and county for the privilege of living there. And then I must pay back the capitalist in interest before I pay down the principle.

In the end, I buy the house three or four times.

I've never defaulted on a loan. I've never missed a payment. I've never had a casualty claim on a house I am buying. I don't use the services my city and county claim to be delivering.

Yet I must pay three or four times for people to honor my trading promise. And who honors it? The most dishonorable in our society ... the so-called capitalists.

Todd Marshall
Plantersville, TX

Thu, 02/20/2014 - 18:55 | 4459619 tip e. canoe
tip e. canoe's picture

i actually wonder often why more sellers who own their place free & clear don't offer financing to people like yourself.

take the interest nut, split the vig, and walk away with 20% cash and a guaranteed monthly income.

Thu, 02/20/2014 - 18:22 | 4459465 MagicMoney
MagicMoney's picture

Problem with banks is that it has a lot of third party risks. Original banks were full reserve banks. They were charged with holding despositor money. The reason why we have banks today they way they are is simply a interpretation of a term that became law. Some time back in England, many years old, I don't remember anymore what date it was, I forgot, the English court ruled that demand deposits are not soveriegn property of the despositor, but merely a obligation to redeem deposits. On top of that, the interpretation of the term is that demand deposits are a type of loan when it's not. Fractional reserve banking isn't really needed. There will be quite of bit of people who will disagree with this as they see such type of bank being beneficial to economic growth. I would think banks could muster up funds like anybody else, and not necessary for them to use demand deposits as hybrid loans/deposits. The convoluted nature of the banking today, and most of the world is really a matter of legal jargon that shaped the way banking is done.

Thu, 02/20/2014 - 21:32 | 4460195 kellycriterion
kellycriterion's picture

Speaking of obsolete, the nation state model that emerged in Europe a few short centuries ago was successful at pooling resources to deal with the scarcities that existed at the time. Those scarcities have evaporated. But the nation state a vehicle of corruption lives on.

Wealth creation and quality of life are mostly in the details. People are seduced by the visibility of big projects, big money, big power. Just think what could be done. Big corp do well in some areas but corps aren't analogous to societies. They are organizational models to accomplish specific tasks.

When it comes to selling grand snake oily schemes that contain intangible elements that can't be defined or measured or both, the political class can't help themselves. The public wants it, craves it, eventually demands it, and it's very very good for the politicians and bureaucrats.

Time for the ZeroHeroes to go back to pondering, how could this possibly be happening?

Thu, 02/20/2014 - 23:55 | 4460744 Schacht Mat
Schacht Mat's picture

Interesting article - I believe that this is China's end game, but not in any way that the West has embraced in a major way in over 500 years.  China is not only looking to eliminate the Western banking rackets, but money as well - at least for the purposes of international trade.  How - through the creation of electronic barter exchanges whose universal trading units are established on the basis of transactional value at the time of the exchange.  Other then depositing the UTU's there are no other banking type services available.  No loans - you have to trade into the exchanges before you can trade out.  Small differentials must be covered with precious metals (real, not paper) and must be cleared within 2 weeks.  As these exchanges are private, banks and other financial institutions cannot take part because they are not allowed in (as only entities that trade physical value can take part).  I fully expect that the Chinese gold horde will be used to underwrite these exchanges, and not their currency; after all, underwriting their currency will just create another toy for the West to play with (and eventually break).  Currencies should only be used within a country, and not have any foreign owners (other than incidental temporary ownership of small inconsequential amounts).  Anything international, between countries, should be done by barter.  We are still mired in our own paradigms, while China is creating a whole new way of transacting.  Stay tuned - international banking may prove to have a smaller future than most of us imagine.

Fri, 02/21/2014 - 13:10 | 4462257 Vin
Vin's picture

Good luck with that.  Before the banking families allowed that to happen, they'd bury us in a civil war.  You'd have to "liquidate" these families first.  Yeah, right.

Fri, 02/21/2014 - 13:32 | 4462338 TheRedScourge
TheRedScourge's picture

Bitcoin can also help replace this parasitic sector, but the anti-Bitcoin propaganda is strong here.

Do NOT follow this link or you will be banned from the site!