LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek.com to Launch New Website
By: GoldSeek.com

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA

 
Search

GoldSeek Web

 
Banking In the Coming Decade

By: Larry LaBorde


-- Posted Wednesday, 4 August 2010 | Digg This ArticleDigg It! | | Source: GoldSeek.com

Banking in the United States is undergoing a change.  Out of over 8,000 banks in this country the top 4 (Morgan-Chase, Citi, Bank of American and Wells Fargo) control 55% of all banking assets.  The top 100 banks control over 75%.  The FDIC’s watch list of troubled banks is now over 700 and growing every quarter.  If the big four had to mark all their assets to market it is doubtful they would survive as viable banks.  The government has deemed them too big to fail.  They are insolvent but can not be shut down.  They are the walking dead or zombie banks.  I suppose it is hoped that they can plod along until the economy recovers and the non-performing assets begin to perform again.  Or maybe the plan is for their more profitable divisions such as the credit card sector to make enough profit over the coming years to cover the losses as they slowly allow the dead bodies to float to the surface.  Of course feeding them a steady diet of failed banks (after removing all the bad loans) helps as well.

 

One of the great strengths of our country has always been our small local banks.  These banks loaned funds within the community and then reinvested the profits within the community as well.  For years banks were not even allowed to operate outside of their county and certainly not outside of their state.  In the last few decades these regulations disappeared and most of our local banks disappeared along with them.  How many locally owned banks were in your community 20 years ago?  How many are locally owned now?  Commercial banks hold a privileged position in society as the actual creation of money takes place in commercial banks with our fractional reserve banking system.  As a result banking regulations have always been strict and commercial banks had been kept relatively small and LOCAL.  

 

Years ago it was very common for small local banks to make small consumer loans to known customers for a short duration at reasonable rates.  Signature loans were made by the bank to local people based on their reputation in the community.  With the wrong type of banking regulation these small short-term loans require too much paperwork to be profitable.  As a result pawn shops, payday loan companies charging 600+% and credit card loans from national banks charging 30+% are the only options available to many consumers. 

 

Depositors knew their bankers and bankers knew their borrowers in the past.  The people running the big four banks would make Mr. Potter (from It’s a Wonderful Life) seem like a kindly old grandfather.  Today small banks are disappearing and large banks are getting even larger.  This trend cannot be healthy for the country.  If it were not for credit unions many cities would not have any locally owned banks.

 

So what do we do?  In an effort to goose the economy the Federal Reserve has kept interest rates artificially low.  This has forced savers into the stock market to become unsuspecting investors/speculators in search of a fair return on their funds.  The results have been predictable.  These low rates also discourage savings and promote consumerism.  Our capitalist system depends on the accumulation of capital to increase productivity and therefore increase wealth.  If a ditch digger uses a shovel his income will be limited.  If he can accumulate capital and buy a backhoe he has the opportunity to greatly increase his productivity and wealth.  Without the accumulation of capital this can never happen.  Savers are the people who make capitalism work at its very basic level.  Without them we are doomed for 3rd world status.

 

Credit unions are one answer.  Family banks are another.  Throughout the ages a family patriarch has loaned private capital to other family members.   As the government becomes weaker and government guarantees mean less and less the family unit will become more important.  Usury has a dirty connotation among some and the very definition of usury is controversial.  Some consider charging interest in any amount usury while others consider the charging of “excessive” interest usury.  If you are in the first camp you can overcome your aversion by taking an equity stake in your family member’s business enterprise and holding a first mortgage on the company assets.  Of course the patriarch has to review the business plan and take the emotion out of the decision to loan/invest or not.  A good deal for both parties will allow the patriarch to gain a fair return on his investment and will also allow the family member to pay a fair rate for investment capital.  A family bank will only work when a deal is looked at from a strict business perspective.  Proper documents must be drawn up and filed to protect both parties.

 

However, when there are no investment opportunities at the moment the best decision is to do nothing.  Park your funds where they will be safe until a nice slow fat pitch comes right over the plate.  Park your funds in gold and silver outside of the traditional banking system.  An interest rate of ½% guaranteed by the FDIC, which is broke, in a currency that is poised for a round of hefty inflation is not much of a deal these days.  Gold and silver are in primary bull markets with years of upside still ahead.  After all, gold and silver are the original money with 5,000 years of history.  Nothing else even comes close.

 

Worried about storage issues?  Ask us and maybe we can help.

 

Larry LaBorde,

 

Larry, sells precious metals at the Silver Trading Company, LLC.  Visit us at www.silvertrading.net.


-- Posted Wednesday, 4 August 2010 | Digg This Article | Source: GoldSeek.com


Contact Larry LaBorde Llabord@aol.com

Owner of Silver Trading Company:
Silver Trading Company is committed to providing silver and gold at the most reasonable price directly to our customers. We strive to do this by keeping our overhead low and our volume high.



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.