More on Banking

As much as I tend to hate on banks, I feel like I should occasionally say, "Banking is a necessity in our (indeed in any successful) economy."

We need banks and banking. What we do not need is a financial industry with so much clout and, one could argue, collusion that it becomes the massive GDP machine that it is. The large number of banks combined with the relatively do-little approach to earning money that they operate on should mean that profits are razor thin.

The basic principle is: take money from one person/group, lend it to another, charge interest on the loan, get profit in the form of interest. This is such an easy way to make money that the field should be packed...and it is! Now, I'll grant that figuring out how much to keep vs. lend out and the need to determine whether a borrower is worthy of credit are somewhat more complex, but by this point in time those calculations have been done over and over (not that they are spot on, see the financial crisis), and any new entrant banker can just take the safest approach to start.

The fact that there are many banking options out there and that banking is very profitable are at odds, and the resolution of these two things is that banks are evil...despite the fact that they are necessary and, in fact, good for the economy as a whole.