from Antonius Aquinas:
Last week, an Irish court sentenced three prominent banksters for their roles in the 2008 financial crisis. Judge Martin Nolan, who pronounced judgment, said that the bansksters had committed “a very serious crime.” He continued, “The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all hope or trust in institutions.”*
A number have criticized the judge’s sentence for its mildness in light of the catastrophic damage that the banks have done to the economy. Irish taxpayers have bailed out the banks five times since 2011, while it has been estimated that it will take up to 15 years, if ever, to recover.
While Irish banksters and the political class who have enabled them are certainly deserving jail time and much worse, whether they or other banksters who have committed similar crimes are punished will not prevent a reoccurrence of further economic crisis, undo the harm done to the Irish economy, nor will it pull Ireland or the rest of the Western world out of its economic malaise.
The seminal cause of the economic crisis of 2008 and almost every one preceding it has been the fraudulent expansion of the money supply by the banking system through the practice of fractional reserve banking. Until this economy wrecking and social destructive scheme, along with the central banks that oversee and protect the nefarious practice, are abolished, the economic crisis will continue and deepen no matter how many banksters are jailed.
Simply put: fractional-reserve banking, for those who do not know, which includes 99.9% of the financial press, is the practice by which banks keep only a fraction of their deposits on hand and “invest” or loan out the rest at interest. Of course, if any other warehouse or storage facility engaged in such a practice it would be rightly considered fraud.
The process is augmented by central banks, which expand the money supply through the deposits that individual banks keep with them. In fact, the main purpose for the creation of central banking in the first place was to enable individual banks to engage in this fraudulent undertaking which leads to all sorts of monetary mischief.
The beautiful part of outlawing fractional reserve banking is that it requires no creation of regulatory agencies, commissions, or convoluted legislation. All that is needed is a simple universal prohibition of the nefarious practice applicable at all times and all places: any bank or financial intermediary which engages in fractional reserve banking or similar practices will be condemned and prosecuted with its perpetrators punished up to and including torture and death!
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