“When five sound banks,” said the Hon. Mr. Landon, “must pay the loss of one rotten one, the drain on the five necessarily impairs their strength. One of them breaks under the strain and the remaining four are weakened by the added strain, and so on.” … The federal insurance scheme has worked up to now simply and solely because there have been very few bank failures. The next time we have a pestilence of them it will come to grief quickly enough, and if the good banks escape ruin along with the bad ones it will be only because the taxpayer foots the bill. …
What is to be done about crooked banks, nitwit banks, bad banks in general? The problem seems to be beyond the capacities of American legislators, for every solution they have arrived at in the past has turned out, in the light of experience to be no solution at all.”
H.L.Mencken, The Baltimore Evening Sun, June 22, 1936
One Response
It’s funny that the likes of H.L.Mencken is being re visited in 2008. We are witnessing history repeat itself, because of the Federal Reserve, fractional reserve lending, and the extension of excessive credit which created the boom – bust cycle. There is no such thing as a normal business cycle. This crisis, like ones from the 1920s and the 1930s, was manufactured by the private sector due to elected officials not understanding the nature of credit and the monetary supply. By creating a global crisis, a global solution can be proposed. Call it the Global Monetary Authority of the New World Order, call it whatever you want. This crisis was manufactured, not one aspect of it took place by accident.