A brief 200 word history of banking.

Several centuries ago, bankers thought up a trick, namely to accept deposits from customers and lend on relevant money, while telling depositors their money was 100% safe.

That of course is fraudulent: reason is that loaned out money is never totally safe. And indeed that fraud becomes blatantly obvious when the inevitable happens: banks fail, or the entire bank system looks like failing.

But the latter fraud brings bankers great riches, and as long as you’re rich, the establishment will see you as respectable. You can earn your millions from drug dealing, extortion, or a chain of brothels. It really doesn’t matter: long as you’ve got loads of dosh, the establishment (i.e. politicians, bank regulators, academic economists, the British royal family, the Church of England, etc) will see you as respectable. For example the going price for a seat in the UK House of Lords is about a million pounds.

So instead of clamping down on the above fraud, the establishment comes to the rescue of commercial banks and assists in the above fraud. That is, commercial banks are rescued, plus they are  protected via deposit insurance, the “too big to fail” subsidy, and so on.

“Generous” donations by bankers to politicians’ “election expenses” assist politicians to see sense in connection with the above matters.

Net result:  bankers laugh all the way to the bank, if you’ll excuse the pun.