Posted Jun 27, 2013 by Martin Armstrong
QUESTION: Why do banks seem to always fail?
ANSWER: The business model is inherently flawed. They borrow short-term on demand and lend long-term. They take your demand deposits in your checking account and lend for mortgages out 30 years or speculate with your money like M.F. Global who Obama protected proving my point – Democrats & Republicans are the same. They make noize on the social issues only – but when it comes to money, they smile with their hand out for crumbs from the bankers.
There is ALWAYS a bank failure because the business model is simply unsound. The way to correct the problem is simple. Long-term lending must be matched ONLY with term deposits – never demand deposits. I have advised banks as well as been on the board of a bank. So I have been there, seen it all, and understand it clearly.
The real problem is that the bankers sell the government debt and threaten them that if they do not bail them out every time they lose money, government goes down. Total blackmail. That has to STOP. Only when bankers are separated from that function will we see the banks become legitimate institutions. Restore Glass-Steagall, which Robert Rubin and Goldman Sachs worked so hard to repeal, and we will start to secure the financial sector again. But these guys have really destroyed Western society. Their bailouts have led to massive debt increases, deflation on an unprecedented scale, which is why gold continues to go down, and government implodes raising taxes and hunting everyone down for a spare dime. The bankers are the reason for bail-ins and everything you expected for retirement is gone.
The bankers have also been the reason for opening the door to the greatest risk in economic history. The full escalation of the national debt was not because of SOCIALISM to create programs for the poor, but bailout for the bankers after the leverage and they blew themselves up EVERY time! These people are dangerous to society for they are undermining everything and ensuring you will have no pension of future.