It is not that bankers are bad people. Well, perhaps they are a little, although everybody has to make a living I suppose. But there is an overwhelming case that banks are bad.That was why lending was called usury. There was also apparently a line somewhere about: 'forgive us our debts as we forgive the debts of others', although this was, for reasons not entirely clear, changed to 'forgive us our trespasses' in later versions. Maybe bankers were involved in the rewrite.
Some of this quintessential wickedness has been exposed in the royal commission into the banks, which has at least alerted most Australians to the folly of thinking that bankers ever operate in the interests of their customers. But the problem goes much deeper than a few crooked operatives and it will not be fixed by changing the corporate 'culture' (whatever that means exactly). The fundamental evil is the arithmetic of compound interest.
Interest on debt rises exponentially, while economic activity is linear. That means that sooner or later those in a weaker position are unable to pay. This familiar pattern is now being played out globally. In effect, we are seeing the first world-wide crisis of usury. Global debt is $US260 trillion dollars, or 320 per cent of GDP, a level it has never reached before and proportionally about twice what it was in the 1980s. The only reason it is not failing spectacularly is that interest rates are being kept extremely low, at least for now.
The physicist Albert Einstein, apparently a bit of a whiz with numbers, described compound interest as the eighth wonder of the world. 'He who understands it, earns it ... he who doesn't ... pays it,' the great man observed, apparently thinking he had uncovered another universal principle of nature.
What Einstein should have said is that it is the source of much of the evil of the world. For thousands of years it has been the means by which elite few have exploited, impoverished and enslaved the many. The Great Depression, for example, was not the result of the 1928 stock market crash, but the behaviour of the banks.
The economic historian Michael Hudson has shown that forgiving debts has been critical to maintaining a civilised society for thousands of years, as far back as the Mesopotamians. Unless the ruling class is able to strongarm the banking class into forgiving debts, there is an inevitable impoverishment