'Withdrawal Tax': How to Stick It to the Big Banks That Got Bailed Out, and Make Money While You're at It. Pass It On!

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The Huffington Post has come up with a nice little protest movement. Let’s pull our money out of the bailed-out banks and put it in local banks that lend to locals. Who are the locals? People just like us.

This makes sense economically. If you ever want a loan, get it from your own banker. If it’s a local bank, you will be treated well.

The FDIC insures all accounts up to $250,000. Your money is as safe in a local bank as a bailed-out mega-bank.

The folks at Huffington are on the Left. But we can all agree when we see insider bailouts like the ones in September and October 2008.

They have produced a video. This video is biased, mean-spirited, and simplistic; I love it! The more of these low-budget YouTube videos on the Big Bank bailout, the better.

https://youtube.com/watch?v=Icqrx0OimSs%26hl%3Den_US%26fs%3D1%26

The bankers are on the defensive. Let’s keep them there.

On the causes of America’s Great Depression, we should blame the Federal Reserve System in the late 1920s — not the early 1930s, contrary to Milton Friedman. On this point, read Prof. Roger Garrison’s review of Murray Rothbard’s book, America’s Great Depression. You can download the book for free.

The Huffington Post article is here. The authors — Mrs. Huffington and former Chief Economist of the Senate Banking Committee, Rob Johnson — have had enough.

They do not call this a bank run. They call it a withdrawal tax. I like that.

I agree with them on this point: the protest is neither Right wing nor Left wing.

The idea is simple: If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it’s meant to be. It’s neither Left nor Right — it’s populism at its best.

Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest.

It’s time for Americans to move their money out of these reckless behemoths. And you don’t have to worry, there is zero risk: deposit insurance is just as good at small banks — and unlike the big banks they don’t provide the toxic dividend of derivatives trading in a heads-they-win, tails-we-lose fashion.

Think of the message it will send to Wall Street — and to the White House. That we have had enough of the high-flying, no-limits-casino banking culture that continues to dominate Wall Street and Capitol Hill. That we won’t wait on Washington to act, because we know that Washington has, in fact, been a part of the problem from the start. We simply can’t count on Congress to fix things. We have to do it ourselves — and the big banks are the core of the problem. We need to return to the stable, reliable, people-oriented approach of America’s community banks. . . .

JP Morgan/Chase, Citi, Wells Fargo, and Bank of America may be “too big to fail” — but they are not too big to feel the impact of hundreds of thousands of people taking action to change a broken financial and political system. Let them gamble with their own money, not yours. Let’s turn big banks into smaller banks. We’ll all be better off — and safer — as a result.

Make it your New Year’s resolution to move your money. We can’t think of a better way to start 2010.

January 2, 2010

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

Copyright © 2010 Gary North

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