First of all we need what is called a Tobin Tax, which is a tiny tax on every trade that is made in the markets of stocks and derivatives. Secondly, we need to find a way to somehow deal with the use of high frequency trading programs, operated by companies like Goldman Sachs, which allow their traders to jump in ahead of the big trades that are coming in and thereby cheat other traders who lack this powerful advantage. Why hasn't Congress acted on this yet? Why hasn't our president commented on the need for such legislation? The terrible truth, which few people want to face, is that companies like Goldman Sachs have long ago bought every politician who might object to the practice.
In Germany it doesn't require congressional approval to pass laws to stop this sort of thing. Example: Chancellor Angela Merkel recently banned what is called "naked short selling" which is selling something (a stock, bond or other equity) that you don't really own, in the course of a complex operation in which profits are illegally taken at the expense of other traders -- often with the additional goal of manipulating markets to achieve a certain effect. Such operations are technically illegal in the US as well as in Europe, but regulation in the US is so lax that the law is never enforced. It is simply something that is tolerated.
Chancellor Merkel also banned naked credit default swaps, which refers to another way that markets have been fraudulently manipulated . . and continue to be manipulated here in the US, due to the fact that our Congress and president do not wish to bite the hand that feeds them.
Explanatory note: Credit default swaps (CDSs) are a form of insurance that protects the buyer of a bond from the possibility that the bond might go into default. But then markets developed, around these CDSs, and eventually these CDSs were bought and sold by speculators who didn't even own the bond that was being insured, and this is what is known as a 'naked' credit default swap. The problem was that such speculation and gambling, with derivatives like these, produces lots of market volatility and eventually comes to occupy ever more money and time that could have been put to real productive use elsewhere in the economy. And for that reason Merkel banned it. Meanwhile, in the US, it is allowed to continue at the expense of, and at risk to, the rest of the US economy. (In the US, such derivatives trading now constitutes a multi-trillion dollar market, which means that it is becoming a huge drag on the economy as a whole.)
One solution to this problem
Everyone thinks we need to have a system of private banks in order to have credit and loans. But that's not true. Instead we need to set up our own system of publicly owned banks, which as a matter of well-proven fact would be perfectly able to issue credit and loans just as well as privately owned banks now do. The difference is that the gargantuan profits that are currently being skimmed off by the banksters would then, with the publicly owned banks, become capital that can be used to the benefit of society as a whole.
Naturally our politically powerful banksters will do everything in their power to stop any such movement, so it is a victory that will not come without major struggle. Such a movement will have to begin at the state or local level since the US Congress is already bought and paid for by the banksters and their partners in crime. Our federal government has been going ever further into indebtedness (to private banks) for the better part of 200 years and there is very little chance that it will ever be able to take the initiative to break the grip of the banksters who have been so profitably bleeding it (and us) for all these many years.
Unlike the federal government,
states are required to balance their budgets; they can't forever go
further into debt. Therefore the
pressure is much more palpable to find some way to avoid chronic
indebtedness to private banks. And quite
luckily for the rest of the states in the US,
there is one state that has already shown us the way, and that is North Dakota which has
had a statewide, state-run bank
for nearly a century. In fact there are
now five states in the US
with bills pending in preparation for state-owned banks.
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