Category Archives: Banks

Trade, Taxes, and Banking; How to fix our tax and banking system

By Dylan Ratigan


We continue our special, three part series “Jobs Wanted.”  Yesterday we explained the trade component.  Today, taxes.

I want to get into how they can be used as leverage to influence spending and investments, and foster prosperity and jobs.

First, Washington needs to stop viewing the tax code as simply a way to raise money, and instead use taxes to create results.  The U.S. tax code should spur American investment and job creation, not prevent it like it currently does. It is simple economics — if you lower taxes on something, you see more of it.  The principle also works in reverse, and I have a great example of how taxes influence behavior — the cigarette tax.  Remember back in 2008, New York raised its cigarette tax by more than a dollar to $2.75.  The result – consumption fell and the state’s smoking rate dropped by 12%.  If the tax code can reduce smoking by 12%, by altering it we can also make investing in America grow by 12, 15, even 20%… who knows! That would add jobs by the millions!  We can reverse this flow of money by using the tax code to make investing in our own country more profitable than sending that cash and jobs overseas, or using it for financial speculation.

Of course, another issue with the tax code is corporate loopholes.  Every year you and I send a check to Washington to pay our taxes, while large corporations, like GE, don’t pay a dime!  Now, I’m not here to demonize big business — they’re simply taking advantage of tax loopholes set up by their friends in Congress.  And it’s all legal!  But we need to close the loopholes and shatter the practice of large corporations using money and power to gain favorable tax treatment.


This week we spoke about how fixing trade and the tax code would lead to jobs.  Today’s it’s all about banking.  The best way I can describe our banking sector right now is it’s like a leaf blower.

Follow me on this one — the system can either inject capital and spread it around through lending, which when done right creates jobs… Or it can suck all the money out.

Right now we’re stuck in that reverse position where banks are taking the money out of play.  We gave away the farm and got no changes in the way banks do business.

President Bush did whatever he needed to pass the problem on to Barack Obama…and President Obama doubled down on the Bush plan, leaving banking and Wall Street to go on as if nothing happened.  The President, Treasury Secretary Geithner and Fed Reserve Chairman Bernanke threw more of our cash at the big banks to keep them afloat by printing money they didn’t have.

But that’s like pouring water into a bucket with a hole in it! Because current banking, and for that matter, trade law, makes it more profitable for banks to engage in financial speculation, loan the money right back to our own government, or take it overseas than it does to focus on domestic lending.

In order to reverse the blower, we need to debate laws that encourage banks to lend, as opposed to speculate and extract…so that money is spread around to job creators who actually produce ideas and hire workers.

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Posted by on August 11, 2011 in Banks, Economy, Taxes


How to fix our banks

1. Inject transparency, primarily to bring almost $600 trillion of crooked insurance scams to the forefront. Force almost all swaps onto exchanges, not just the 20% as current proposed reform does. Secretary Geithner, Chairman Frank and Chairman Dodd are protecting the last of the Wall Street secret money-making schemes. They don’t want to force transparency on this market because it would disclose the fraud this massive bank scheme is — a taxpayer subsidized secret insurance market which sells cheap insurance to hedge funds, power and food and energy companies, and makes for huge profits at banks and insurance companies. Insurance and idle speculation in secret is a brilliant way for banks and other financial services companies to make money (who doesn’t want to collect insurance premiums every month for something you’ll never have to pay for?!) And a great way to make oil, food and electricity company CEOs richer as they pay less for their insurance. One problem — they are all surfing on the taxpayers back to the tune of $24 trillion at risk last I checked — and the U.S. government is the one letting them do it. Still. Now bigger than ever. 2. Demand capital to back Wall Street’s gambling. In Vegas, you need to have actual money to gamble. Your own money. It’s crazy, but true. Even today, in many cases more than ever, U.S. banks use America’s FDIC insured safe deposits to fund their own mad bonus-seeking speculation. Once the banks blow through that — they borrow from the biggest money printing house in the world, the U.S. Federal Reserve to do the same thing. This is truly insane. The banks and their traders keep the upside. You, the taxpayer, keep the downside. No one else in the world can pay themselves billions to take infinite risk with little or no money down, except a big bank CEO. And we thought they were good at their jobs making all that money, when all they did was rig the game using our government to do it. 3. Enact a tax-code to encourage long-term investment and discourage short-term profit. Fortunes should not be made in minutes but over years through the creation of value to society. As long as the easiest way for a man or woman to make money is to spend their day clicking for dollars, why would they bother doing all the work of investing in the long-term economic development of private business in America? Tax code in general should encourage investment, jobs, and innovation in America and discourage idle speculation as the easiest way for a college kid to get rich. There are sensible ways to use tax policy to encourage this that do not hamper liquidity. 4. Break up the Too Big To Fail banking institutions. Start with Goldman Sachs and J.P. Morgan. Right Now. How do you expect any other business to compete with the chosen few who are guaranteed profits? The more risk they take, the more they make. Why do you think they invented a fake $600 Trillion secret derivative market in the first place? Bigger bonuses baby. All upside. No downside. Thank you Uncle Sam. Thank you Secretary Geithner. – For more on this topic go to the expert: Dylan Ratigan. All of these ideas were proposed by him. I thought this article was good, but I claim no responsibility for it’s ideas.


Posted by on August 9, 2011 in Banks