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Serfs sucked dry in the kingdom of banks

  • 18 April 2016


Three finance-related events are currently gaining great attention in the media. One is the so-called Panama Papers, the exposé of tax avoidance on a scale that is absolutely breathtaking.

Another is the proposal by the Labor opposition to have a royal commission into the banks. And a third is the furore over the unaffordability of homes and the debate over negative gearing.

On the surface they would seem to be quite separate issues. But there is a common element. Banks. All three issues demonstrate yet again that banks are, if not the most malign organisations on the planet, then certainly among the most dangerous.

The role of banks in the tax avoidance case is less obvious, but it is there. The law firm in Panama, Mossack Fonseca, has said in its defence that it does not know who the real clients are. It protested that it only deals with banks or accounting firms, which have specialised in creating a class of wealthy people who can avoid many of their financial obligations to the country in which they are citizens.

Such a reckless approach to social obligations is consistent with the logic of banking. Its only aim is to make money, and the only purpose of clients is to provide an income that can service interest or pay fees. Given free reign, banks will turn entire societies into little more than interest paying vehicles.

In Australia it can be seen with household debt, which is running at over 120 per cent of GDP. It is why houses are out of reach for many young Australians.

As economist Michael Hudson outlines in his book Killing the Host, banks, unleashed by the nonsense idea of financial deregulation, have 'sought to control democracies by shifting tax policy and bank regulation out of the hand of elected representatives to nominees from the world's financial centres'. It has been a world-wide power grab that has created a new form of serfdom. 

Instead of funding productive activity, which represents only about 15 per cent of bank lending, they have reinforced rent-yielding privileges for real estate, resources and monopolies.


"American and European authorities decided to save the banks at all cost. The strategy was not only immoral, it was, in the end, impractical. The game is now up."


The banking disaster has been especially pronounced in poorer countries. John Perkins, in his book Confessions of an Economic Hit Man, points out that over the past three decades,