For a guide to moneymaking look at this post last year (Nov 28). Prof Richard Werner, through an interview with Erich Gerbl exposes the legal mechanism by which bankers create credit. This gives them the key to high profits as they literally create the money that firms or individuals need to launch a new scheme, or that speculators want to be able to buy an asset low and sell high. The bankers can be in the game twice: 1) By charging interest on the money they lend, less a small amount to the resulting depositer of the new loan, and by 2) Joining in the speculation.
Thinking of a career choice? If you want a good one for purely making money, banking must be very high on your list. One trouble is, one only has to mention bankers in conversation with non-banking friends and all sorts of bad stories come out - so your true friends may become limited to finance and banking circles. Very few people really understand the banking credit creation mechanism. I suspect many people who enter a career in banking or finance do not understand it - perhaps many in the lower ranks never do? Certainly the vast majority of the general public do not. If we did there would be an outcry and credit creation would be taken into the control of the democratic process, just like the control of the issue of notes and coins is and just as every aspect of modern life is controlled for the public good.
Think where we would be without the regulation of medical training; without food purity standards; without engineering standards for bridges or vehicles. Why is banking so different? Wonder no more that financial crises proliferate and will do so into the future until a democratic hand grasps credit creation for the good of all.
Prof Werner made his own submission to the Basel 3 proposals for banking reform. Read it for a clear academic view on the supreme function of banks: credit creation. And watch out - probably quite in vain, alas! - for any changes to this vital process as the Basel 3 proposals gradually firm up.
posted by Charles Bazlinton