Morally our western banking system is corrupt, some people say charging interest is corrupt that it exploits the masses and the poor, that it is making money without doing any work or labour.

Compound interest is the greatest evil in our world, under our capitalist system 99% of people will be in debt and 1% will be mega rich, not good.

Apparently charging interest is against Muslims moral code of ethics, its against Christian faith, the laws of usury, isnt that why the Jews were expelled from England by Edward 1st [the Jews would not charge each other interest but apparently would charge interest to non Jews].

Look at the latest rogue trader in the news seemingly he lost a lot of money yet you dont hear of rogue traders being jailed when they dont play by the rules and make lots of money.
The French rogue trader claimed when he was making millions and millions nobody said a dickie bird, it was only when he lost a lot of money.

The world is swimming in debt there is more and more debt being created every day, people buying houses, cars and spending on their credit cards, this is new debt money that never existed before, as i was told recently, most people that are lucky enough to have a job in the west tend to do meaningless jobs that dont produce anything, they do these meaningless jobs to pay off their debt money that never existed in the first place.

Will this capitalist system last ?, if it doesnt last how much longer will it last for ?
Compound interest is the worst kind of usury, it has been condemned by the Romans onwards, the great religions condem it, yet somewhere along the line it has become part of life for most of the world and the world is now swimming in debt because of it.

There was a Yale professor on the box the other day, he said its not a case of will capitalism last but what system will replace it, it seems like it may be game over for the capitalists.

All economic and political systems will eventually collapse due to human greed.

True, i basically only post on a few sites, and i put this up on a political one a week a go, i think that Yank professor saw it and ran with it.

I think you are right 'All economic and political systems will eventually collapse due to human greed' , this one is starring people in the face, more and more debt being created every day, it wont last at this rate.

It's because they exist for the benefit of a few to the detriment of many so eventually will all fail.

I'm not so sure about the greed bit: historically it is not that relevant in a general sense.

Yes, the masses may well revolt in the end, but there again the system may well be on its last legs at that stage anyway.

What is this opening post – “A Critique of Banking and Capitalism” written by Trampie aged 8 ¾?? It’s so naïve that it beggars belief.

I can agree that capitalism has many flaws. I can agree that the banks are hypocritical in only disciplining their traders when they make losses and turning a blind eye when they ignore their limits but make a profit. We can agree that the banks have behaved immorally and anti-socially when they have brought about a financial crisis but are still paying grotesque bonuses.

However to jump from the weaknesses of the recent and current banking situation to an outright condemnation of capitalism is childish. The main problem has been poor regulation. What is needed is stronger regulation and more importantly prison sentences for senior executives who contravene the rules.

Capitalism for all its faults has been the most successful economic system. During the 20th century when an alternative system of communism was tried, it produced even more unsatisfactory results than capitalism. For example during this period, the average worker under communism has generally been far worse off than their counterparts working in capitalist countries. If you want the end of capitalism you must be able to suggest something better.

Capitalism has generated real wealth. The problems of capitalism stem from various human weaknesses which would remain present whatever economic system was in place. At a micro level kibbutz type organisations may work, but only on a very small scale and are not the overall answer.

As for your arguments concerning interest you really need to think what the alternative would be. Any other than the most basic peasant like economies need credit for the system to work. High exploitative rates of interest should be condemned but even though I don’t like bankers any more than you do, they often offer the best rates of interest available.

It’s over 450 years since usury meant the charging of interest. For centuries now it has meant unreasonably high rates of interest not simply charging any interest and 99.9% of people would condemn that.

To expect anyone to loan their money free of charge is rather naïve surely? In fact no one makes people borrow money from the banks and other financial institutions. Are you saying that in your ideal world no one should be able to borrow in order to buy their own home? I wouldn’t dispute your statement that we are now swimming in debt, but while the banks are partly responsible, a dumb government and those who borrowed are also responsible. If we didn’t have a society where the sense of entitlement has got out of hand, the demand for credit would not have got out of hand. To conclude as you have done that compound interest is the worst evil in the world today is “barking”.

Your point that interest is not charged in Islamic societies is totally misguided. I’ve lived in several Islamic countries and although there is no interest in name, most banks have various financial arrangements with borrowers, which results in the financial institutions getting a return on their money.

Certain areas of capitalism need reform but until a better system is formulated, it’s the best that we’ve got. Emotional arguments against the current financial system are less useful than suggestions about the measures needed to improve it.

The banking system is not the cause of the gross inequalities in our society today, which are more down to factors such as inherited wealth, varying personal abilities, criminality, etc etc. which should be dealt with by taxation policies, laws etc.

Compound interest is the greatest good in the world - if you are a beneficiary.

If people are able to save (and in this instance I'm talking long-term saving via investment rather than pitiful bank interest), the compounding effect on your money is one of the key ways to grow your future savings pile. Of course, few have the discipline to park money away regularly and reinvestment dividends etc., but if the investment world could better educate the consumer (massive conflict of interest), people's financial futures wouldn't be so murky.

Take your humble baker Greggs for example. It's raised its dividend for 26 consecutive years. Buy a few shares in that and keep the money tucked away, and compound interest works magic for you.

As for capitalism being finished, the Russian economist Nikolai Kondratieff studied capitalism & business cycles in the early 20th Century, and the newly-empowered Bolsheviks were expecting him to produce a work showing the Communist way was right. He concluded that the capitalist economy continually regenerates itself after periods of crisis.

For which he was sent to the gulags and ultimately shot!

Striker - he's Welsh, bless his cotton socks.

I think you have confused Communism, with Socialism.

Naive, you are the naive one, i read in one of the English broadsheets the other day referring to investers, the only investments they should be making is buying a gun, gold and beans [i assume tins of baked beans but i dont know], no doubt it was tongue in cheek but it gives an indication of where we are and where we seem to be heading, as regards childish, there is nothing childish in saying 'compound interest is the greatest evil in the world', evil because previous civilisations plus some of the great religions have frowned upon charging interest, my understanding is Muslim banks charge a fee, not compound interest, compound interest is not just charging a fee on the capital lent out but charging interest on the interest as well, whats with all this comparing capitalism with communism, i dont advocate communism its even worse than capitalism, a form of socialism fine but definately not communism.

For you to say that my take on compound interest is 'barking', is it ?, this current system is creating more and more paper debt everyday, as i was told recently 'we dont produce anything and live meaningless lives doing meaningless jobs just to payback money that never really existed in the first place', go figure.

So pray tell o wise one - what kind of jobs do you consider worthwhile?

I love the way some people make out that "compound interest" is some kind of con or a fiddle to increase people's debt etc.

Why would anybody commercially lend anybody any money without charging interest, especially in a world of inflation. "Here have £1000, wait a few years and pay me back the same amount when it is next to worthless"

The whole concept is perfectly correct. If something rises in price by 10% each year due to inflation then after two years a £1 will be £1.21 therefore if you are borrowing a pound then you should owe £1.21. Basic maths.

(for the 'mathematically challenged: 10% of £1 is 10p therefore after 1 year it is £1.10. 10% of that is 11p so the new total is £1.21. The "compound" is the interest in year two on year one's interest, in this case 10% of 10% of £1, which is 1p).

Without greed and capatalism the world would sit on its collective arse and nothing would get done.

If you are talking to me ? then jobs that contribute to society, jobs that are just shuffling paper working out how much interest on the interest somebody owes or whether to bet a bank customers money on red or black are perhaps not the most productive of jobs towards helping society at large.

Thought as much. Jobs helping others good. Jobs making money bad.

Those b'stards like Branson, Jobs, Gates et al sit/sat on their arses all day. I bet they paid on interest on their debts when they needed money.

"The love of money is a root of all kinds of evil"...apparently comes from the bible, perhaps you are onto something there.

Example please, oh wise one.

There are loads of jobs that contribute to society i wouldnt like to put one above another, healthcare workers and people producing useful goods all spring to mind but they do say the most important job in the world is parenting, these are just some examples im sure you can think of some of your own.

Healthcare / people producing useful goods? Do you mean those nasty multinational companies producing new drugs?

Where do you think they get the money to invest into research for new drugs? - which can cost millions before they are in a position to sell them to the market and get money in. Maybe they need to borrow the money which will involve paying compound interest...

And who is going to provide the money to build shiny new hospitals? Ah! That'll be a loan. Nope the government say that is too expensive so lets build them under a PFI which will be cheaper (a whole new thread...)

...and so it came to pass that the Ovine one summoned Groomyd.

No i wasnt thinking of pharmaceutical companies actually, i was thinking of nurses for healthcare workers and people that make fridges as i had just been out the kitchen to make a cuppa and get a snack .

Productive Labour has a few definitions, but nothing like Trampie's.

In essence it was the production of a tangible product, as opposed to something which ceases to exist when it is consumed. For example a concert is not productive, but a CD is; making a car is, being a servant isn't. For obvious reasons like food being deemed unproductive and therefore a tad daft the definition evolved into something more akin to returning sufficient cash for the service\good to continue being produced ie self perpetuating. The people paying to see and hear the band (ignoring drinks etc) will generate the funds to pay for the band, and the hall etc. As for farming, the farmer would plant x seeds, sell y products and be able to keep x seeds back, ie reproducing costs or more than paying for itself.

Unproductive Labour would be an army, and it could well be medical services and even teaching, which is one of the reasons why these are considered Public Goods.....

'we dont produce anything and live meaningless lives doing meaningless jobs just to payback money that never really existed in the first place', was something i was told on a Welsh rugby site, well it wouldnt be an English football site would it , it seemed to fit in with my gripe and opening post about compound interest, in the early days people put things up as collatoral to borrow, like sheep and goats etc, so it could be said that the world had a worth [all the gold, oil, cattle etc], once lenders started lending without any collatoral the path towards where we are today was started.

At one time there was a 'gold standard' where paper money was tied to gold, today the limit on credit is endless and debt has no limit it just keeps on growing.

My point is not political it is an observation that charging compound interest is causing the world to swim in debt.

I read an example of banking on the net the other day from memory it went something like this, that a new bank opens up in the States and somebody puts $1000 in it, this is real money, actual physical money you can touch, under banking laws banks can lend 90% of what they take in, so the bank lends a customer $900, this customer wants the money to pay his accountant money he owes him, then the accountant goes to the same bank and opens up an account and puts the 900 bucks in, the bank then lends out 90% of the $900 which is $810 to another customer and so on, at the end of the cycle, the bank has $10,000 on deposit yet physically it only has the original $1,000 of real money, if everybody wanted to take their money out of that bank they couldnt because the bank only has a fraction of the money, factor in the interest given to savers and the interest charged to borrowers and bank overheads and borrowers that are unable to pay off their loan and its a mess, banking is all smoke and mirrors, how accurate the figures are i dont know in this example, its something i recently saw on the net but i have always known if everybody wanted to take their own money out of a bank at the same time they wouldnt be able to as the bank would not have nowhere near enough money [and i dont just mean in the branch either].

I hope banks dont fail, it would be a disaster, if governments printed money in that circumstance to give to people what happens then ?, a loaf of bread could cost a £100 i dont know, the situation is serious, banks accross the world are failing it makes you wonder will things get better, lets hope so.
Remember recently that American general in Afghanistan telling his troops i dont know if you will be paid at the end of the month.

A rating agency has downgraded the credit rating of many UK financial firms today including Lloyds TSB, RBS, Nationwide and Santander UK, they recon that the government was less likely to support firms that got into trouble.

But there is nothing wrong is there ?

Never mind, if Wales beat Ireland tomorrow all will be well in the world for a few hours, if you are Welsh that is.

Trampie - it's called the fractional reserve system and it is generally known about. Gold bullion is much the same hence why you have the distinction between owning "physical" gold and a paper claim on it.

Fractional reserves work on confidence......

Oh thats what they call it, is it, the 'fractional reserve system', i have heard it called the 'smoke and mirrors system' myself, it works on confidence does it thats good but without confidence it doesnt work, oh well.

Invest in land i say and become a subsistence farmer ready for when the balloon go's up.

Even 'real money' isn't real. Look at your notes, they say 'I promise to pay the bearer.....'.

They are just IOUs from the Bank of England and you are a dirty money lender....

For some reason I thought the phrase had disappeared from them.