The Digger's view from the Palace
The Diggers were radicals of the English Revolution of the 1640s. From their encampment on St. George’s Hill, they sent their demand for freedom, equality, land and education across the country.
Today Digger gazes out from his perch on our famous landmark, and brings you a unique take on today’s world.
How banks rip you off, protected and encouraged by the government and unreported by the media - a step-by-step guide
RIP OFF # 1 – FRACTIONAL RESERVE BANKING
1. You decide to take out a loan of £100,000 to buy a home.
2. The bank does not take this money from its reserves as you might expect. Instead it creates the money out of thin air by simply writing a ledger entry on a computer.
3. The bank charges you 5% interest on the £100,000 loan. After 25 years the total amount you have repaid comes to £338,635. That is, the bank has earned £238,635 profit just for performing a simple book-keeping trick.
This scenario is standard banking procedure. A bank is allowed to lend approximately 10 times its total deposits by creating new money out of thin air. That is why Northern Rock collapsed when everybody tried to get their money out. If banks were owned by the public, then at least these profits would be owned by the public too.
RIP OFF # 2 – INCOME TAX & NATIONAL DEBT
1. The Government needs lots of money, for invading another country for example. It prints pieces of paper called Treasury Bonds and offers them to the banks.
2. In exchange the banks create new money (legally, from thin air) equivalent to the value of the Treasury Bonds and loans the money to the Government.
3. The taxpayer pays the money back to the banks with interest through income tax collected by the Government.
The money that is owed to the banks is called the National Debt and is almost impossible to pay off. Thus our children and grandchildren would be paying for Iraq, Afghanistan, bank bailouts, MPs expenses, etc for years to come. Just the interest payable in 2009 will be £35 billion. Again, if the banks were nationalised then all that interest would belong to the public and could be used to fund hospitals and schools, etc.
RIP OFF # 3 – BAILOUT TIME
1. Despite the outrages outlined in RIP OFF#1 and RIP OFF#2, the banks just can’t get enough. They embark on a series of high risk gambles with their depositors’ money, including purchasing debts owed to other banks and corporations.
2. When the gambles don’t pay off and the banks have lost all their customers’ deposits, they demand that the taxpayer should pay back the customers instead.
3. The government agrees to this and then needs to write more Treasury Bonds and borrow more newly-created money from the banks, to be paid back by the taxpayer with interest.
4. As the banks are international, they are free to take their bailouts wherever they want in the world to do whatever they want with. They are not required to keep the money for investment in the UK, despite the fact that it has been stolen from the British taxpayer.
Thus we have seen Fred Goodwin spearhead an organisation that has taken customers’ money, gamble with it and lose it, yet during his last year at RBS he paid himself £4.2 million. He left his position as head of RBS just as the UK taxpayer was forced to pay for the money he lost. On top of that the taxpayer has to fund Fred Goodwin to the tune of £700,000 per year to pay for his pension. We pay a genuinely useful person, a nurse for instance, less than £5,000 per year as a pension. Fred Goodwin is just one example of a clique of people at the head of banking and global finance. This clique appears to operate by rules that do not apply to the rest of us.
Tell the Digger what you think, about the banks or any other subject.
