Of course, banks are going to "discriminate" as to whom they lend because they are accepting the risk of default & thereby ensure principal + interest to the depositors; it offers an additional layer of safety for the depositors, as opposed to depositors going around looking for borrowers & directly taking on the risk of default.
Not to mention, even if depositors were to lend directly to borrowers, they'll still be "discriminatory" in their practices as to whom they lend, they are not going to lend to every Tom, Dick & Harry that wants a loan! When depositors deposit with banks, this "screening process" for eligible borrowers is simply "outsourced" to the banks because they are the ones taking the direct risk in that case.
Note the part I put in bold. I am not attacking the discrimination process for credit, in itself , wherein "
they are the ones taking the direct risk. Under a truly free market:
a) no funding would be provided via a compulsory tax on all savers and other currency holders
b) risks would not be collectivized and shared, with everyone jointly, severally and ultimately liable for future failures
c) rewards would only go to parties that took risks that succeeded in generating profits
What I am illustrating, not attacking, is how that discriminatory process works in the context of the theft, collectivization and
en masse dilution of the currency itself, which fuels the system as it is now artificially constructed, and which should never have taken place.
KEYNES' PROBLEM: Savers aren't spending enough fast enough, or are not putting their own funds to productive use.
KEYNES-SPAWNED SOLUTION (in effect): Perpetually and continuously seize an
exponentially increasing portion of funds from all savers. Put those funds into a collectivized pool that is to made available to commercial lending institutions, which can then use their discretion as to who are the most productive (credit-worthy) to which to lend these stolen funds.
Macroeconomics considers everything that occurs after the fact, skipping over the fact that the entire system is founded on outright theft from all currency holders from its inception -- and all to solve a temporary theoretical phenomenon that is labeled "a problem in need of a statist solution".
The
only time the discrimination process is governed and undistorted by free market principles is when it happens on their own behalf, or on behalf of those
who knowingly and willingly put their own money at risk. As it stands now, credit discrimination by banks is only the process by which prospective winners and losers are chosen in the
Redistribution of Stolen Funds, from which the banks alone can earn profits from something that
neither they nor their depositors created or produced.
The solution is not to take away the credit discrimination process -- the mere thought of which would be moronic, and would only exacerbate problems. I only bring the process up to show that wealth is being outright stolen indiscriminately from savers, but then redistributed with extreme prejudice to only the most credit worthy. Losers: savers - Winners: banks by default for the profits, and anyone-with-great-credit in terms of first whacks at new currency before it loses further value as a result of being brought into existence.
This is not only a Stolen Wealth Redistribution process, where funds are seized (by force, and without permission) from one sector of the economy, and loaned out to another. Because the process is deliberately inflationary (price inflation, with upward pressure on general price levels), it in turn creates an artificial
need (not demand) for more currency for everyone. I say
need, and not
demand, because the
need for more currency on everyone's part occurs without regard to the ABILITY to acquire more, whereas
demand, in the economic sense, assumes both the willingness
and ability to acquire more. And since that
need on the parts of those who are not credit worthy can never be fulfilled with new money -- this brings us full circle to the discriminatory mechanism in place, at lending institutions -- the spigots and distribution channels for all new money, where all distortions begin to play out.
Can you imagine a legislative proposal that reads, in essence:
All savers and other currency holders will be taxed perpetually, at an exponential rate, for the purpose of ensuring that:
a) a steady flow of funds are made available for commercial banks to lend, and that
b) the solvency of commercial lending institutions (of substantial enough size to affect the public interest) is assured, and
c) to ensure a steady flow of funds to the state which borrows on its own "good faith and credit"
If you proposed it like this, without describing the mechanism by which the tax would be collected, what do you think everyone's response would be? And yet that is
precisely what we have in place now.
All currency holders, worldwide, are taxed, without being considered parties of interest, for the privilege of
subsidizing lending institutions. That's the lending, or supply side spigots and channels, of newly counterfeited currency. On the borrowing, or demand side, these are divided into public/state (warfare and welfare) siphons, as well as private commercial interest siphons, all of which have privileged access to all the newly counterfeited currency.
The state created a Fed system that steals from savers and redistributes their wealth to only the most credit-worthy. The state has extreme incentive to have such a system in place, because the state itself is always first in line in terms of its own credit-worthiness. The Fed it created would never say no. This is a counterfeit source of funds from which the state itself may also now borrow, through an hidden tax that occurs automatically, deliberately and exponentially, and requires no political representation. Out of all the currency holders taxed to supply new currency, however,
only American taxpayers are taxed, once again (this time directly), to pay TWICE for the state's participation in the counterfeit borrowing (deficit spending) process; first their currency is taxed when it is diluted, and then they are taxed directly to service loans created from stolen funds as principle and/or interest payments become due.
Anyways, the reason I pointed out that "there's always demand for money" is to point out that therefore, it's the supply that dictates the returns & incentives for saving/lending.
So, in an inflationary environment, where there's greater supply of credit & lower or negative REAL interest, it disincentivizes savers/depositors from depositting with banks (& look for non-bank investments) while a deflationary environment, where there's limited supply of credit & higher REAL interest, it incentivizes more savers/depositors to deposit more with banks.
I'll be creating a separate thread that deals with FRB illusions, as I think I have it pretty much distilled down to where it really zigs and zags, and why, specifically, it is fraudulent for reasons that should be glaringly apparent, but are rarely considered. There is a
de facto legal tender-like aspect to commercial lending institutions that I will go into, and my arguments will include reasons why NO so-called "reserves" should even be required of
any lending institution under a truly free market in currency. But that's for another thread.
The point is that system exists to support the government-borrowing & we live in majority-rule system so if the majority could change things if they want to but they clearly don't want to or we'd probably see Ron Paul in charge.
, who says that stuff like "there's low demand", no, there's always demand, the question is whether the supply is high enough to offer low enough prices so that buyers can buy more!
