Wednesday, November 30, 2011

The function of banks in modern society, and why they're not the root cause of our problems

Short and simple: because banks make a great deal of their money through financing business. Banks function as intermediaries rather than things in themselves. To find out where the real cause are you have to look at what they're intermediaries for. The home loan scandal was sort of an offshoot of this. Businesses take out loans from banks to get started and to expand. The approval or non-approval of new business financing by banks directly effects the way the economy expands. Home loans are a way for them to make money off of consumers, because unlike businesses consumers can be persuaded to take out loans they don't need.

Banks are also heavily invested in the stock market.

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