Main Issue of Paper
The issue here is Usury, created by banking system by financing debt bearded with interest payments leading to economic injustice in the society making the small cluster of rich population richer and large group of poor population further poorer. There is simple explanation to Usury “Usury is making money from lending money; it is making money from nothing. This is exactly what is happening today on a colossal scale” (“Heretical”).
This system is designed to transfer common wealth of people to the banks and the banking system. The financial sector plays the role of an intermediary between consumer and producer and makes money without giving or taking anything. Banking sector used to be 2% of the United States economy by 1870 and it increased to 5% by 1890. By 2010, this number stood at 9% of the GDP of United Stated economy (“Huffingtonpost”). It places the financial system at risk via its derivatives and skims trillions from the economy with giving nothing in other direction.
I agree with the author and I believe the solution he suggested to solve the economic problems of our society. In my view we need to bring forward the Chicago Plan of 1930s brought forward by economist of 1930 to solve the faults of the economic system. University of Chicago’s Henry Simons became the most aggressive supporter in this idea’s initial publication and Irving Fischer of Yale University wrote a paper to support this plan. Chicago Plan required the separation of monetary and credit functions in the banking sector.
According to the Chicago Plan, two transformations are to be preceded for separating banking sector’s monetary and credit functions. Firstly, deposits have to be backed in full with government issued money and secondly, restricting banks to create new deposits for financing new bank credits. Any credit financing will be done from borrowing from reserved earnings in government issued money’s form or by from available government issued money from non-banks (“thetriangle”).
Reasons for Opinion
There are 6 advantages which will result from the implementation of Chicago Plan’s reforms, these are namely; smooth business cycles, eliminating of bank runs, huge fall in public debt-levels, replacement of debt via debt free government issued money, long term output gains of 10 % and Inflation rate becoming zero without using any harms requiring monetary policy’s conduct (“thetriangle”).
My theory also represents Utilitarianism.
Conclusion
All great thinkers have warned against the practice of Usury. The economic recessions or financial meltdown we witness today are just more comprehensive and sophisticated versions of history. To overcome the hardships of this not so modern act of banking system we need to separate the credit and monetary functions and act under Utilitarianism theory of Philosophy. We need to work for the greater good of the society not for the good of few.
Works Cited
“A $HORT HISTOR¥ OF £ANKING”. http://www.heretical.com/miscellx/usury.html. heretical.com. Web. 2013
2013
Driver, J. “The History of Utilitarianism”. http://plato.stanford.edu/entries/utilitarianism-history/. plato.stanford.edu. 27 Mar. 2009. Web. 2 Dec. 2013
“The Chicago Plan—an alternative?”. http://thetriangle.org/2012/10/05/the-chicago-plan-an-alternative/. thetriangle.org. 5 Oct. 2012. Web. 2 Dec 2013
Helminski, K. “Sacred Economics vs. Financial Tyranny”. http://www.huffingtonpost.com/kabir-helminski/sacred-economics-vs-finan_b_4304870.html?utm_hp_ref=religion. huffingtonpost.com. 26 Nov 2013. Web. 2 Dec.
