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...And The Good News: Banks Will Be Obsolete Within 10 Years
Submitted by Simon Black via Sovereign Man blog,
Every few centuries or so, an amazing new technology comes along that fundamentally changes human civilization.
There are so many other examples throughout history. The Agricultural Revolution. The Industrial Revolution. The invention of the printing press.
The printing press was a particularly interesting parallel for what’s happening today.
Before the printing press, people were living in the dark. Their information was heavily controlled, and they were forced to rely on the ‘authorities’ for personal, financial, educational, and spiritual guidance.
The printing press changed everything. It was an extraordinarily powerful social technology that spawned entire political revolutions and the rapid advance of human education.
In Europe, the number of printed books went from millions to literally billions.
Suddenly information became extremely difficult for governments to control. Ideas became unconstrained. Antiquated political regimes were brought down. And intellectual achievement flourished.
We are now in the early stages of a brand new transformation brought about by yet another technological advancement—the Digital Revolution.
And it’s changing everything, from how we do business to how we meet and engage with one another.
Most importantly, the Digital Revolution has created the ability to bring together literally millions of people and spread ideas quickly and efficiently. Information cannot be controlled.
This has the power to make entire industries obsolete. And banking is one shining example.
‘Modern’ banking is still based on the same system that has been in existence for at least a century.
Yeah, sure, they all have websites now. But this doesn’t make them high-tech.
At their cores, banks are still 19th-century fractional reserve institutions that take in money from depositors, make irresponsible loans and investments, keep razor thin margins of safety, and beg for bailouts when the system breaks down.
And along the way they find every opportunity to screw consumers.
Moreover, commercial banks have de facto control over entire economies.
They nominate representatives to serve on the boards of central banks, who in turn establish interest rate policies and give free loans right back to the commercial banks with money that they’ve conjured out of thin air.
The system is incestuous and obscene. But now things have changed.
Today, every possible function of a bank, from savings to loans to money transfers, can now be done faster, cheaper, and more efficiently by new technology, courtesy of the Digital Revolution.
Websites like Transferwise or Azimo make it possible to send money across the world at negligible cost.
Social media sites provide the opportunity for people to exchange currency with one another without the need of an absurdly-priced money broker.
You can also obtain a loan or investment capital online from crowdfunding sites now, whether its for your startup company or mortgage for your home.
And you can even move your savings out of the banking system altogether—whether to new digital currency platforms, or something ancient and traditional like precious metals.
All of this technology already exists—it’s just a question of how quickly it will be adopted.
Unsurprisingly, millennials are leading the charge.
According to a report by (ironically) Goldman Sachs, 33% of millennials surveyed said they don’t expect to need a bank in five years, and 50% are counting on tech startups to entirely overhaul banks.
And I expect that in 10 years’ time, the technology and adoption will have progressed to the point that today’s banks will be entirely obsolete.
Thomas Jefferson once wrote that “. . . power should be taken from the banks and restored to the people, to whom it properly belongs.”
It took two centuries. But now it’s actually starting to happen.
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Zerohedge is now recyclying my commentary of 2 years.
okay
The cartel control of the global monetary system is the single thing that allows oligarchs to do what they do. If we can get rid of their international banks and conduct our affairs outside of their wire transfer and accounting systems, they are finished and a new age in history will begin.
On the other hand:
"Unsurprisingly, millennials are leading the charge."
People under 35 are "leading the charge" because they have been excluded from the old monetary system due to lack of what used to be called jobs. If you have no property or other 'investments', you have no need of fraudulent money changing 'services'. The attempt to create a global valuation scam by inflating the money supply is failing because people are being excluded on purpose. This is what will drive change once enough people are past the breaking point and are not swayed by arguments about the morality of debt.
If this is a plan to turn serfs into peasants and create a global feudal system, it's a stupid one.
You are going to endup with two groups of people.
The old (45-80) year olds, who are being bribed to stay in the old monetary model.
and
The new (20~45) year olds who "get it" and no longer have anything to lose by doing something different and abandoning the old paradigm.
The bankers have quite literally pushed so many people off the cliff, that there is no one left for them to steal from . . . so they are going to extremes . . . controlling governments and trying to put in place a more brutal method/police state of sorts in order to continue extracting blood from a stone.
Rome isn't burning, its already burnt down, whats left is an echo, and echos die down.
Since the US is a democracy(haha) lets put everything congress votes for up on the internet for people to vote for and MAKE POLITICIANS EXTINCT.
Lets just put it this way, if you could pay your mortgage and taxes with bitcoin.
The entire model of a central bank would go extinct.
A currency that regulates itself based on real supply and demand and based on encryption that can not be cracked is the future.
As tech evolves so will currency, until the entire idea of a centralized system of debt slavery becomes some kind of barbaric relic of the past.
central banking, banking, and the industry of high finance is going to disappear. . . . and give way to an equitable system based on innovation,creativity and productivity, a society where everyone can actually make money doing what they are good at and what they enjoy and be profitable doing it locally.
After the next round of bank failures {resulting in further consolidations}, there will be only a few of the mega banks standing. It's all about monopoly. And while the way banking is done will change, you can bet your ass that the banks will still be in control. Anyone who thinks otherwise is either a moron or being naive.
“. . . power should be taken from the banks and restored to the people, to whom it properly belongs.”
That power. while taken from the banks. will not go back to the people. The digital money controllers will have a tighter lock on public behavior, taxes, fees and control than ever before.......
Sorry, Simon, Thomas Jefferson never said that...
I think people should actually look up other peoples quotes that they give rather than just assuming they made them :)
http://www.monticello.org/site/jefferson/private-banks-quotation
The real function of banks is to finance the wars and standing armies of governments, and to assist in the expropriation of any person who might accumulate enough wealth to become a threat to their rule. Good luck crowdsourcing the shitshow in "Ukraine," for example.
Anything a human teacher can do is easily done by a computer nowadays as well. Government schools exist these days mostly as glorified daycare centres and busywork schemes for women too ugly, stupid or disturbed to have any chance on the marriage market.
Teachers, with few exceptions, are a class of parasites who simply refuse to give up their privileges. So, to put it mildly, are bankers. Nothing short of the abolition of fractional-reserve banking will change that.
If you can't DO, Teach; if you can't teach,GET PAID BY THE GOVERNMENT (WORK doesn't come into it)
......... or something ancient and traditional like precious metals."
Oh dear, lost me there.
It is exactly the digital revolution that has made so easy the creation of ledger money by banks, the sort that has most completely enslaved us and that bankers can control at the mere stroke of a pen. They can effect secular inflation and short-term periods of deflation in order to make people jobless in the short term and steal the fruits of their labor in the long term. They demand back from us all of the money in existence (that they themsleves have created, courtesy of the "digital revolution") plus interest, and back themselves with incestuous central banks who buy their assets and in return give the coin of the realm.
Although some digital currencies have arisen online, few of them are any significant challenge to the banking system and some (i. e. Bitcoin) have been co-opted by the bankers, the criminal underworld, and the like. Furthermore, because many of their prominent users are believers in gold most of the currencies have finite supply and are thus highly deflationary and volatile, and are based on features like "mining" which bear no relevance to any actual economic activity.
A properly run digital currency would be a sovereign money system in which all users would be given a certain amount of money by the operating institution each year in order to deal with increasing economic activity, savings, etc while still ensuring a price level that is stable (0% inflation) over the long term. In order to make the money supply more adaptive to economic activity, this system could be modified with the following form of mutual credit. Money would be created in the account of a buyer of goods upon purchase in the amount agreed, but this creation would be at a uniform negative rate of interest in order to make saving possible. Work would have to be done and the money for goods and services repaid through compensation, but there would be no unbreakable cycle of indebtedness.
A properly run digital currency would be a sovereign money system in which all users would be given a certain amount of money by the operating institution each year in order to deal with increasing economic activity, savings, etc while still ensuring a price level that is stable (0% inflation) over the long term.
So that's how you think money (a promise to complete a trade) should be created? just given away in return for no promise to deliver anything in return? A-frigging-mazing!!!!
Money would be created in the account of a buyer of goods upon purchase in the amount agreed, but this creation would be at a uniform negative rate of interest in order to make saving possible. Work would have to be done and the money for goods and services repaid through compensation, but there would be no unbreakable cycle of indebtedness.
How totally clueless!!! Money of any properly managed Medium of Exchange (MOE) is created by traders making trading promises and getting them certified. These certificates then circulate in the marketplace as the most valued object in simple barter trades. It is a "promise to complete a trade". This is obvious from examining trade:
Trade is a 3 step process: (1) Negotiation; (2) Promise to deliver; (3) Delivery. In simple barter, steps (2) and (3) happen simultaneously on-the-spot. Money allows (2) and (3) to happen over time and space. Because it is created by traders making trading promises, the supply and demand for money is always in perfect balance. It's the nature of all trades.
When the trader delivers on his promise, he returns money equal to what he created and it is extinguished. If he fails to do that, he DEFAULTs. These DEFAULTs must be immediately reclaimed by an equal amount of INTEREST collections, thus "guaranteeing" zero INFLATION all the time, everywhere by the relation: INFLATION = DEFAULT - INTEREST = zero.
There is no "unbreakable cycle of indebtedness". Those who can't deliver on their promises don't get their promises accepted by their trading partners in the first place. The INTEREST load assessed to their class of "deadbeatness" makes their trading proposal unworkable at the due diligence stage. It's the same as people who are bad insurance risks ... if they can get insurance at all, they pay exorbitant premiums.
Savings and capital have no role whatever in the proper management of any MOE. It looks like your indoctrination is total.
This sounds good, you could make a board game based on this. In my youth we modified a game of Mononpoly to include 2 extra entities: a live banker and a live tax collector. The banker lent money at interest and on terms, the taxman levied taxes according to the prevailing tax code of the time.
Guess who won, always?
I doubt that we'll witness the banks' demise any time soon for the simple reason that they finance the deficit budgeting that every Western Government uses to buy off voters.
They are obsolete to me now. Bitcoin last price $255.61
At their cores, banks are still 19th-century fractional reserve institutions that take in money from depositors, make irresponsible loans and investments, keep razor thin margins of safety, and beg for bailouts when the system breaks down.
How can you not mention their really "big" advantage ... 10x leverage, protected from competition by law. And they still fail!!!
If banks go the way of the dodo bird, does capitalism go too?
Definition of Capitalism: Two Years
Take $1M, create a bank, make 4% spread, enjoy 10x leverage for 40% yield which doubles in 2 years. Pull back your original $1M letting the other $1M double every two years for ever after.
Look mom, I'm a capitalist!
i've been thinking for some time now that TD is Simon Black. Nothing else makes much sense.
Even a broken clock is right twice a day. This article correctly realizes that we can have a perfectly properly managed Medium of Exchange now that we have the tools to support it. The myth that bankers must be involved can now be exposed as the false premise that it is ... without question.
Unfortunately, the indoctrination that traders must be blessed by capitalists to make trading promises is an absoloutely false premise. The indoctrination that savers must deposit with capitalists before capitalists offer this important support to traders is also pure rubbish.
The last piece of rubbish is that inflation should be 2% to assure growth. Absolute nonsense. Inflation should be "guaranteed" zero to protect the trait that money be a perfect store of value over all time everywhere.
Money is "a promise to complete a trade".
A capitalist is "two years".
doubtful, highly doubtful. wishful thinking at best.
"Most importantly, the Digital Revolution has created the ability to bring together literally millions of people and spread ideas quickly and efficiently. Information cannot be controlled."
Man, that's some funny shit right there.
Regulated Banks exist because of silly People who think that these adjunts to Central Banks in providing liquidity to the system , etc should be protected to the point where their Sr Management is gaming the system.
At Best these fumblers should be paid no more than Civil Servants.
Very confused article.
If you are going to move money electronically, you need to have an account with some entity that records your credits. You can't stuff physical currency into your computer to effect the transaction.
So, on what basis is your depository entity not a bank except in name?
Of course once some of those entities fail and take depositors' funds with them, there will be a public outcry to regulate them or at least provide deposit insurance, and politicians will comply because there are votes in it.
Apparently Simon Black believes there is no expertise required for credit assessment when making loans, or that individuals providing funds for lending don't actually care whether they get their money back or not.
It is certainly the case that if government bails out institutions that make bad loans then those institutions won't be very careful in their credit assessment. However, historically in most of the world governments have not bailed out incompetent banks. The fact the US now does it with TBTF crony businesses does not constitute the definition of banks.
Crowdfunding is essentially a form of political/philosophical donations that, if you are very lucky, will give a return. It is not a mechanism for providing working capital to a startup plumber or corner shop or motor mechanic.
Banks are obsolete now, they just don't know it yet.
I only trust digital currencies run by The Federal Reserve Bank.
Nonsense written by a man who has no idea what he is talking about.
The Money should go directly to people from government.
Because people own the nation and its government.