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Bucking the Banks > Letters

Web Letter

Americans For Reform should revisit the recent credit card bill and work to change it to eliminate usury from the financial system. Change should focus on the fact that our current system has from 1980 gradually transitioned from an economy that emphasizes growth by means of equity ownership to an economy based on debt and debt securitization. It turns debt into cash for the lenders, while the borrowers sell off their future. In the debt-based economy, guaranteed returns are double digit, sky high, with leveraged returns in triple digits.

The crux of the matter is this, Why would anybody want to take a risk anymore and invest in equity when they can get a high double digit return through investing in debt?Bernie Madoff was offering consistent returns of about 12 percent per year and collected $57 billion in his Ponzi scheme. There was no problem with interesting investors with a consistent 12 percent return, because that would be a great performance for a stock-based portfolio and it is a hard to achieve on a regular basis.

An economy based on usury is great for corporatism but bad for democracy. It will gradually halt the growth of new wealth by dampening the desire for stock ownership, undermine investment banking and push for ever higher interest rates. The new paradigm will be to shun good credit because marginal credit yields higher profits. It is ironic that the full might of the government is used to guarantee collections in this private system.

Corporations and their few owners sit at the top of the huge US financial pyramid and decide who are the winners and losers. It resembles the current healthcare system in that respect and cries for a public banking option as well.

William J. Hague

Hoboken, NJ

Jun 27 2009 - 7:09am