Open Letter to the Banks
Jamie Dimon, JP Morgan Chase
Brian T. Moynihan, Bank of America
Michael Corbat, Citigroup
Gentlemen:
On Friday, I attended a digital money summit at the Consumer Electronics Show. I am writing to you to warn you about the disruption that is about to occur in banking. There are many startups (and larger companies too) that are gunning for you. Perhaps you have watched what Uber has done to the taxi business? Well, these guys are planning the same thing for the banking business.
Banks used to allow even a child with a $10 deposit to spread his risk across a large portfolio of loans. At the same time, banks made it possible for a corporate borrower to raise $10,000,000 from a large group of depositors. In short, the banking business is investment aggregation and risk management.
That business cannot be disrupted. The bigger it gets, the more difficult to displace. It’s like eBay, all the depositors come to the bank because that’s where they can earn interest. All the borrowers come, because that’s where they can get the money they need. The bigger the bank gets, at least in a free market under the gold standard, the safer it is for depositors.
Today, however, you are quite vulnerable to disruption. That’s because you are not really in the banking business any more.
Over three decades, you have worked with the Federal Reserve to eliminate interest. The end result is that you now offer depositors a return-free risk. Depositors cannot earn interest in a bank account (yes, I know that in the US the yield is technically not zero yet, but it’s getting there). However, a growing number are aware of the risks. For example, you have incalculable exposure to derivatives. You own sovereign debt which the world now knows is not risk-free. In fact, you have a large staff and churn through a lot of activity in order to deliver scant yield to your depositors.
I can tell you what I observed in the digital money program. People, especially Millennials, now think of banking in terms of features like ATMs, payment clearing, fraud prevention, and point of sale solutions. However, these are just add-on services, not the core of banking. You have abandoned that core, and only the add-ons remain.
Startups can take these businesses. They have lower costs. They are more focused. They have hip new brands, untainted by the financial crisis and the bailouts. They have developed an array of new technologies. And, of course, they are less regulated (before you think to lobby to impose more regulation on them, think about that taint to your brand).
You’re in a tight spot. After decades of smoking the drug known as falling interest, you’re now dependent on it. The thought of a return to a 5% yield on the 10-year Treasury is not pleasant. Nevertheless, I urge you to think about it. The alternative is to let the fintech disruptors carve up your retail business.
Sincerely,
Keith Weiner, PhD
The Gold Standard Institute
(14 votes)
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Here's my signature,
FUCK YOU!
Eventually the dimwits at the top of all Banks and major Corporations will understand why they should hold gold bullion and silver as insurance.If you buy Government paper debt and give money to politicians,you deserve to have your head handed to ya. ( please note that expression from a non - Wahhabiist )
and.......it's gone!
This is better...
Dear Banks,
Be advised... We know who you are, what you are, and where you are.
Expect us.
With Extreme Prejudice,
???
Double entry, Sorry.
Dear Keith,
We have been investing in the development an application of digital currencies since the invention of the internet. We are already well positioned. In addition, we OWN most governments in the world today, so future legislation will go in our favor. These governments also control the power grids and the internet itself. The NSA is also recording ALL transactions.
Remember, when fraud is the status quo, possession is the law.
Hugs,
Bankers and financiers of the earth.
"The best way to rob a bank is to own one" [William K. Black]
https://www.youtube.com/watch?v=-JBYPcgtnGE
The machine is busy building an unescapeable vortex.
It's going to define you, you are not going to define it.
It's going to own so much of the real world that you either play by it's rules or you won't play. That's the game, it's always been the game and it continues to march forward using every nugget of technology as a brick to brick us all up into this.
When it's done IT will be the reason we exist.
That's it's goal, always has been, always will be.
Seriously for a second I don't want to be harsh on the guy because he means well it's an attempt however naive to rage against the machine and I salute that.
However, let's get real here.
The machine has thousands of years of experience at this. It makes the universal rules by which we all play.
It's a little more fundamental than just Ubering them out of existence.
They OWN THE RULEMAKERS so if you try and UBER them they will make UBER illegal.
They have antenna out and they can tell when they are in any danger and they have LEGIONS of people who squash real danger at any time it crops up.
The real thing they have is a strangle hold on the powers that be they BUY them.
They BUY them with money they create out of thin air.
It's a wee bit hard to compete with that model when their model is definitive of the monetary universe as God is definitive of the real universe.
God sets the laws of gravity, the FED et al set the laws of money.
See how this works?
They have known for a generation or more that retail banking is not a money maker that's why they DON'T CARE, the real money maker has been and is always the ability to create money out of thin air.
As long as they have that they don't care what you do.
Every generation needs its dreamers. The fractional infinitesimal few, who succeed in say, forcing gay marriage down the public's throat, making Bruce Jenner a cause celebre, no matter he represents a prick of a pinpoint on a National gigantic lottery heat map.
So too do the faux-disruptors.
The international central banking cartel is god. Whatever their hits and misses, no matter how large or small, the ability to print money that is used as a medium of exchange is impossible to compete with. Digital currency is but flea fart in a high wind.
Luckily, they don't care. They don't understand innovation, especially - not Bitcoin. They think they can just buy the competition and regulate to death all the rest. But bitcoin is not a competiton. It's not a company. It's digital money without a company. Can't buy it or corrupt it. The more they do - the more traction it will get. IN the end - banks that adopt it first will get advantage over those who don't. So, the game is over. One day they will wake up and read in the news that some big bank in other country already defected and adopted some bitcoin technology. And then they will rush to play catch up.
One day they will adopt bitcoin yes.
They will just co-opt it and make a rule that it's only legal if they create it.
If you use no approved bitcoin they will just turn you out and turn off your cyber profile and make you a complete financial leper.
You can't beat this that way.
No, even in Iran and China they can't turn off internet. They can't make it illegal. They can try and fail. But as I explained - that won't work and since there are countries that won't do it - the innovation will happen there, and while there's a motivation for the banking system as a whole to fight it - every individual bank has motivation to defect. The prisoner dilemma. Thise who will adopt - will be bale to reduce costs, increase efficiency and be able to provide more transparency and thus gain more trust.
And how exactly would you make bitcoin transactions illegal? Would you make illegal to send an email? You can't do it even in Iran. It takes to be North Koreya to achieve this.
Almost sounds like a pitch for Bitcoin or Apple Pay; both are tied to the USD, the global currency of death.
Dirt on BitCoin http://plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=274
Scratching my head in wonder about that letter. How about China begins gold trade settlement or the Saudi's depeg from the dollar and sell oil in all major currencies; that should boost the Treasury market for a short time and the send the USD soaring till it vanishes.
It won't be easy but I'm all for disruption. Break the banking oligopoly like Uber did the taxi-medallions.
They will just buy the viable startups.
Dear Goldbug,,
Laughter is the best pick-me-up when you get up several hours before markets open. Beats the pants off coffee.
You really think we haven't had hundreds of years experience putting the competition out of business? We hold the purse strings of most governments for just that reason.
The whiz kids have two choices. Sell their toys to us for a fraction of fair value. Or the regulators shut them down. All in a day's work.
Trust us, we're on it. Go back to playing with your coins, there's a good boy. Don't tempt us to take those away too.
Love (whatever that is),
Wall Street
Niall,
In your mind the situation seems hopeless. Perhaps that is because you are living in the same paradigm as the bankers.
What if younger generations abandon that paradigm. What if younger generations say f... it. I don't care about a house, a car, clothes are clothes and they move from the consumerism mindset they have seen their parents embrace. What if they say f... the markets, as they have seen their parents lose more money than they made. What if the younger generations say screw banks, what have they done for me but squander the future.
Wouldn't that make a difference? If it is indeed a Ponzi scheme and no new players join doesn't the Ponzi Scheme unravel?
Many commenters here have a mission. They pretend they are comics, economists, and philosophers. They pretend to be forward thinkers.
I have no agenda but to think with an open mind. The writer of this article is doing just that. He is letting them know they are killing the very system that has made them rich. Nothing lasts forever, not even the almighty FED. By failing to check themselves every so often, by failing to draw the line once in awhile and say slow down, the system that brought them to power will fail. It is coming.
This same younger generation that LIVES their LIVES through their PHONES?
Yeah they're going to be so free.
NOT!
The free printing press has much more printing left in it; until the BRIICS nations put a halt to it at some point in the future; maybe by the end of 2016 and certainly no later than 2017. Expect much disruption home and abroad in the meantime.
Bahahahahah.
They'd probably say, "take it we only do that stuff to maintain illusions that we care."
"But we have one thing your snot nosed kids don't have that's the FED and the ability to print money you ignorant bitch!"
Yeah I'm not thinking that one scared anyone.
Bahahahahah.
If i thought they would read an Open letter.. I think i would say things a Bit harsher...
Banzai is the best I have ever seen writing open letters to Jamie....Tweets too.
Keith...nice try.
Problem is, these bastards DON'T CARE.
"Problem is, these bastards DON'T NEED TO CARE."
Banks are no longer retail businesses. They are arms of the mix of WS and Government.
Retail has gone with the Middle Class.
Dear Mr. Weiner,
Have you no idea the banks are a Ponzi scheme? Do you not know that today the banks DO NOT hold YOUR checking account "money" in trust but that a "depositor" is an unsecured creditor? Do you not know this has been so at least as long as "interest" has been paid on checking accounts? Do you not know that FEDERAL RESERVE NOTES are NOT "dollars" in the lawful sense? I'm sorry but your letter reaks of ignorance and you should not be lecturing other people from such a position.
Federal Reserve Notes are "dollars" in the lawful, legal tender, sense.
What is not "dollars" in the lawful or legal tender sense, is the credit generated by the Fed and the banks.
Did you know that there is no law anywhere that grants to the Fed or the banks the power to create money? Did you know that there is no law anywhere that designates or acknowledges the credit they do create as being a money, a currency or even a medium of exchange? Did you know that all "deposit accounts" are fictions, that they are all "credited accounts", ledger account entries denoting the amount of legal tender money the banks owe to (stole from) their "depositors"? Did you know that "electronic or digital dollars" are figments of our imaginations, they are not real, they do not exist, that when you use your debit card, you're not "spending digits", you're actually accessing the bank's line of credit and not anything contained in a fictional deposit account? Did you know that the Fed, in collusion with the U.S.G., has defrauded the people of this nation and the world out of trillions of dollars and property by passing off the credit it generates as being "our money"?
Just some things to think about, or not......
Nope. Only coins are by and for the people and the FED pays full face value for every nickel. Not that any currency coin or paper amount to much more than a few percent of the fake credit piling up.
Nope. The Fed does not pay for U.S. coin. The FRN legal tender is our money, it replaced the gold they stole, which was the money. Every credited bank account represents legal tender owed to us by the banks.
I don't think you have it quite right. A FRN is a note, similar to the old style credit note that a person could generate by taking out a loan. Those notes in a simple sense could be discounted between loan managers and banks. An FRN that has "one dollar" written on it is a note stating that one dollar has been borrowed by the Federal Reserve. What IS legal is that the note is legal tender for all debts, public and private. The one dollar note is equivalent to one dollar's worth of money -- although that is implied and not stated anywhere on the paper note.
RabbitChow, what a colorful imagination you have, did you make that story up all on your own or did you have help?
Bless your heart, have a nice day.
In 1933, Congress changed the law so that all U.S. coins and currency (including Federal Reserve notes), regardless of when issued, constitutes "legal tender" for all purposes. Federal and state courts since then have repeatedly held that Federal Reserve notes are also "lawful money." Milam v. U.S., 524 F.2d 629 (9th Cir. 1974), is typical of the federal and state court cases holding that Federal Reserve notes are "lawful money." In Milam, the United States Court of Appeals for the Ninth Circuit reviewed a judgment denying relief to an individual who sought to redeem a $50 Federal Reserve Bank Note in "lawful money." The United States tendered Milam $50 in Federal Reserve notes, but Milam refused the notes, asserting that "lawful money" must be gold or silver. The Ninth Circuit, noting that this matter had been put to rest by the U.S. Supreme Court nearly a century before in the Legal Tender Cases (Juilliard v. Greenman), 110 U.S. 421 (1884), rejected this assertion as frivolous and affirmed the judgment.
A FRN is NOT a "dollar". "Dollars" can only be issued by the US Treasury. A FRN is a promissory note - ie "non-specific debt" issued by a private bank (the FR), and traded ("bought and sold" in the economy by virtue of barter transactions by the general public.)
If the FR closed its doors and rolled up the sidewalks in front of their buildings tomorrow, the FRNs in your pocket or "credited" as deposits in your bank accounts would be worthless since your deposits are NOT dollars - but rather these worthless pieces of paper cumulatively representing the total debt of the FR.
nofluer, you're talking out your ass.
If the writer of the article had a modicum of understanding about banks maybe the letter wouldn't sound so stupid. ZH: why do you let clowns like this write an article? For every good article on this site there are 10 garbage ones, like this. This blog is supposed to be a financial website, get a bank analyst to write something, not a blabbering jackass. Thank you.
Relative freedom from censorship is a strength of ZH.
“I disapprove of what you say, but I will defend to the death your right to say it.” – Voltaire.
I figgered some jewish whiner with them fancy letters behind his name would know what he was talkin' about fer sure. Now, you got me all disallusioned and confused.
Retail banking business has been dead for ages. This 'letter' is going straight into the trash pile. Lenders to banks (sometimes called 'depositors') earn very generous interest relative to returns in other asset classes, and the risk taken.
Bought a silly frn 10. item at the local Target today using a brand new chipped debit card issued by a local "bank". Not nearly as convenient as swiping but I was amused when the smiling millinial face behind the "cash" register asked if I wanted the purchase price to be placed on the card while pushing buttons to allow for several sequential decision options to run their course and log "pertinent" transactional logistical evidence to be recorded for posterity. I said no, I wanted it to be taken out of my account.
Perceptions of currency have certainly changed and I'm not at all convinced it's for the better.
jmf
I don't have a "cash card." I have "credit cards". If my "credit cards" have an unauthorized option to pay "cash" I refuse to use it - I "charge" all transactions for the simple reason that if I pay off the "credit card" every month, that means I get to "use" the issuer's money interest free for the time between the "charge" and when my "payment" gets credited... so using a "credit card" is essentially an interest free "loan." I like using the bank's money for free. (No - it's not a card that they charge an annual "fee" on - I wouldn't have such a card.)
If they don't have the "credit" option, I can still (for now anyway) write them a check, which is again, using the bank's money interest free... but since the bank doesn't pay interest on checking account deposits, they are doing the same thing to me that I'm doing to them. So it's all good. The key is to make sure that you don't keep TOO much in the checking account.
It's even better when you get a CC that gives you 21 months interest free.
Banks are just ledgers now.
Very easy to disrupt with bitcoin.
I had a former employee go to work for JPM in the 90's, he was a computer programmer/IT guy. he went to work on digital currencies back when Netscape was still a startup. I am sure the banks are already well positioned.
We all would be if we had access to all the money we wanted for free... (QE and ZIRP).
An open letter to Keith Weiner
Eat your vegetables and get some exercise.
Fuki
What! No Wells?