The banking sector currently maintains a deplorable reputation. From one of the instigators of the financial collapse a few years ago to receiving a taxpayer bailout, United States-based financial institutions are viewed as sinister, evil and unethical. Whether or not this is true, many Americans believe it, which is why many of them still refuse to own a bank account.
Good for them. It’s their choice.
According to a survey conducted by the Federal Deposit Insurance Corporation (FDIC), 7.7 percent, or 16.7 million adults, did not have a bank account in 2013. What were some of the reasons this large number of consumers have refused to launch an account with any bank? Here are the reasons:
- Don’t have enough money (57.5 percent)
- Don’t trust banks (34.2 percent)
- Account fees are too high (30.8 percent)
- Privacy (26.4 percent)
- Credit, Banking or ID history problems (16.8 percent)
- Inconvenient hours and locations (6.8 percent)
Mother Jones listed this as another income inequality issue, considering that other countries have better records than the U.S., including Australia, Canada and the United Kingdom. The U.S. currently maintains a population of 325 million, including 230 million adults, this number if quite minuscule.
What’s befuddling is that these left-wing outlets deride banks and Wall Street so why would they want the general public to take out accounts from these supposed notorious institutions?
Also, if the publication wants to complain about something then it should complain about the FDIC, an agency of moral hazard that has become a key component to the destruction of the American banking system’s morality and the bankruptcy of consumer financial protections.
Here is what Murray N. Rothbard wrote in “Making Economic Sense”:
“The only reason the FDIC is still standing while the FSLIC and private insurance companies have collapsed, is because the people believe that, even though it technically doesn’t have the money, if push came to shove, the Federal Reserve would simply print the cash and give it to the FDIC. The FDIC in turn would give it to the banks, not even burdening the taxpayer as the government has done in the recent bailouts. After all, isn’t the FDIC backed by “full faith and credit” of the federal government, whatever that may mean?
“Yes, the FDIC could, in the last analysis, print all the cash and give it to the banks, under cover of some emergency decree or statute. But . . . there’s a hitch. If it does so, this means that all the trillion or so dollars of bank deposits would be turned into cash. The problem, however, is that if the cash is redeposited in the banks, their reserves would increase by that hypothetical trillion, and the banks could then multiply new money immediately by ten-to-twenty trillion, depending upon their reserve requirements. And that, of course, would be unbelievably inflationary, and would hurl us immediately into 1923 German-style hyper-inflation. And that is why no one in the Establishment wants to discuss this ultimate fail-safe solution. It is also why it would be far better to suffer a one-shot deflationary contraction of the fraudulent fractional-reserve banking system, and go back to a sound system of 100% reserves.”
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