| |
Greenspan's
recent tinkering with the prime rate has caused some muttering
about government interference with our nation's financial institutions,
and whether this affects banks' ability to do business in the
rapidly changing global economy. This makes a lot of average
people nervous, concerned about Big Brother moving in on our savings.
Few realize it, however, but governments and banks have been uneasy
closet bedfellows from the beginning.
Since
ancient times, progressive economic development was expressed either
through the risky journeys of merchant caravans, or of the settled
craft guilds and vendors of established communities. The traveling
merchants took large risks, but with shrewd business practices and
with a goodly force of armed guards to fight off bandits, they could
usually assure themselves a profit. The interaction between the
land and sea caravans, and the businessmen of the cities, was the
engine driving the world economy for a very long time.
With
the Crusades, however, that all changed. Many Crusaders were driven
off to loot the Holy Land because of behavior in their homelands
unsavory even by the standards of medieval times, which was not
a period that extolled the value of human rights. Large roving
bands of these trained fighting men flowed back and forth across
Europe in response to the papal call, either joining the fight,
returning from battle, or just taking advantage of the chaos like
armored vultures.
This
made normal commerce almost impossible for the caravan masters.
Cross-country commerce came dangerously close to a halt. Many of
the merchant class, deprived of their normal means of livelihood,
were forced to turn to money lending to survive. This was perilous
to them on many levels: usury--the lending of money at interest--was
forbidden by the Vatican as a sin. In fact, the Pope went so far
as to brand it a heresy in the 14th century.
This
of course made the moneylenders fair game to local nobility. But,
due to the incredible amounts of money to be made, kings and princes
would usually look the other way in exchange for the lion's share
of the profits.
This
early example of government fingers in the banking industry's pie
was entirely one sided: the lender took all the risk of being stiffed.
The king was guaranteed an income that could never slacken without
the risk of royal displeasure (displeasure I'm sure no lender at
that time would willingly incur). The relationship was also totally
secret, as no king wanted to admit he was profiting from heresy.
The king could disavow the lenders, and throw them to the papal
wolves if the Vatican made a fuss. Also, the king could (and often
did) curry favor with the local populace by ordering the lenders
to forgive all debts. Interestingly, however, when the Pope attempted
to have European moneylenders forgive all the debts of Crusaders
to reward their service to God, many kings refused to do so, insisting
that "their" lenders collect all moneys owed before the Crusaders
could leave on their travels. Moneylenders at that time had no recourse
or protection from the king's whimsical self-interest, but he was
their only shield against religious persecution. Religious persecution,
I might add, for no more than doing business in the only way available
to many of them under the circumstances. At that time, most moneylenders
were Jewish, because their religion did not forbid it, and because
Jews were forbidden most trades in medieval Christian Europe.
While
the parallels are not exact between modern and medieval banking,
they do exist. The banks, while not subject to the unbridled government
predation they suffered in yesteryears, are in thrall to government
regulation. Everything from customer account information disclosure,
to interest rates, to transaction protocols, is all defined by the
government. While technically separate from government--and in
the private sector--the banks are beholden to the government for
almost every action they perform and every decision they make.
In many
ways, the banking industry is a front man for the government. The
lending institutions control the flow of cash for construction,
for venture capital, for all the infrastructure development and
economic growth that keeps the engine of capitalism roaring along.
And the government's hand is on the throttle--we are subject to
their interference at any time.
One
idea being bandied about lately is the "forgiveness" of third-world
debts to stimulate economic growth in those struggling nations.
This may or may not be the right or the intelligent thing to do.
But the forces pushing for this are the same interests that would
profit from the increased third-world purchasing power that would
result. It's interesting that, in many countries, these "loans"
were predominantly siphoned off by despotic elites that are not
being required to reimburse the money, either to their home countries
or to the original lenders. It's also interesting that first-world
investors, shareholders, and taxpayers like you and me would pay
for "forgiveness" of the loan. We may or may not profit from the
opening of these markets, but we would certainly pay the price of
admission to find out.
The
world is growing steadily smaller and more accessible. The financial
institutions we entrust our money to are increasingly becoming tools
to implement government economic policy; economic policy that seems
to reflect the shortsighted desires for profit evinced by the largest
contributors to the last election campaign. Perhaps it's time to
investigate new and alternative methods of investing our money,
methods that put our savings beyond the reach of all but the most
determined efforts of Big Government. After all, not much in this
world can resist a first-world nation's military & law enforcement
arms, but even now, government is about accountability. Most government
manipulations count on being clandestine, discrete and deniable.
So, if you put your money even slightly out of reach (say, into
an offshore bank or Swiss numbered account) you should still be
able to purchase relative safety for the foreseeable future.
Remember,
privacy can still be bought. For a price.
Copyright
© 2001 Michael Hansen. All Rights Reserved.
Michael Hansen is a regular contributor to *spark-online.
comment?
discuss this article on our
discussion
board
|
