Cryptocurrency

British Politician Says: Banks Are Broke

During a European Parliament meeting in 2013, the British politician Godfrey William Bloom explained that banks are broke.

During a European Parliament meeting in 2013, the British politician Godfrey William Bloom explained that banks are broke. All the major banks are broke since they lend money they do not have, which is not possible with decentralised digital currencies. Cryptocurrency is an example of digital currencies.

Banks are broke

Bloom argued that central banks ability to print and distribute an endless amount of money has led to a heavily manipulated system. The system we use today goes under the name “Fractional reserve banking”, and Bloom says:

“It is my opinion that you do not understand the concept of banking. All the banks are broke. Bank Santander, Deutsche Bank, Royal Bank of Scotland, they’re all broke. Why are they broke? It isn’t an act of god. They’re broke because we have a system called fractional reserve banking. Which means, the banks lend money they don’t have. It’s a criminal scandal, and it’s been going on for too long.”

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The system in itself is not healthy, but it also leads to a moral, political hazard. If any regular man or woman printed money like the banks are doing, they would go to prison. Central banks do it all the time. Bloom states:

“To add to that problem, you have moral hazard. A very significant moral hazard from the political sphere. Most of the problems start in politics and central banks, which are part of the same political system. We have counterfeiting, sometimes called quantitative easing, but counterfeiting by any other name, the artificial printing of money, which if any regular person did, they would be in prison for a very long time. Governments do it all the time. Central banks repress the number of interest rates, so we do not have the real cost of money.”

Is cryptocurrencies the solution to banks?

SWIFT removed many Iranian banks, including the country’s central bank, from its system on Monday. SWIFT has come under pressure from the US to do so. Treasury Secretary Steven Mnuchin said that the move is “the right decision to protect the integrity of the international financial system.”

Professor Steve Keen, an economist at Kingston University, said that the USA is a big bully. He argues that the country should not have the power to exclude countries from international payments. The SWIFT ban should be a wakeup call for other nations and argued that an alternative payment system is needed.

“The sooner the rest of the world develops an alternative payments system – possibly working through SWIFT, but using a basket of currencies as the basis for a supra-national unit of exchange – the better.”

Cryptocurrencies could be the solution, and the CEO of Ripple aims to take over the SWIFT banking network. Brad Garlinghouse stated that Swift is not keeping up with the evolution of technology and Garlinghouse said that many of Swift’s customers are looking at blockchain solutions for their businesses.

“The technologies that banks use today that Swift developed decades ago hasn’t evolved or kept up with the market,” Garlinghouse said in an interview with Bloomberg TV on the sidelines of an event in Singapore. “Swift said not that long ago they didn’t see blockchain as a solution to correspondent banking. We’ve got well over 100 of their customers saying they disagree.”

Image Source: “Flickr”

Ledger Nano S - The secure hardware wallet