In support of strong bank regulation

Many people were justifiably outraged that large private corporations, that happen to be banks, were propped up with government bailouts.  That outrage, however, is misdirected when the blame is ascribed to the federal government.  The fault lies with capitalism, or rather, with free market banking.

For at least the last 5,000 years, if not longer, most economies have been based on some form of money.  Money is not wealth; money is an abstraction of wealth.  The fact is that wealth, real wealth, rots.  Corn is wealth.  Oil is wealth.  Meat is wealth.  They all rot.  Money does not rot.  But in order to be useful, money must flow.  The accumulation of money is not the accumulation of wealth.  The accumulation of real wealth would be pointless because it rots.  Likewise, from a global economic perspective as opposed to a personal greed perspective, the accumulation of money is pointless because if the money does not flow, the real wealth does not get to where it can be used before it rots.  The steps that governments, institutions, secret societies, and even enlightened capitalists take to ensure the appropriate flux of money is called "monetary policy".  The point of monetary policy is to keep money flowing at the proper rate to keep the wealth from rotting.

In the US and other capitalist countries, the instrument of monetary policy is the banking industry, that is, banks, large and small, consumer and investment, local and global.  The Federal Reserve Bank, an arm of the US government that formulates monetary policy injects more or less money into the private banking system, and the money flows.  Or it doesn't.

Banks are owned and run by people who are not, unless of course they are, interested in monetary policy.  They are interested in becoming rich.  Because it would be impractical for them to accumulate wheat or cattle, and because they likely confuse money with wealth, they believe that becoming rich means accumulating money.  To all appearances, they're right.  So what happens is that the banks, whose only real benefit to society, the reason we allow them to exist, is to be a mechanism to facilitate the flow of money, become instead a money sink.  Rather than circulate, the money that is injected into the economy by the Fed, the source, is pooled in the banks (the sink).  Not only is this untenable from a fluid mechanical view, it is in contradiction to the interests of society.  If banks behave like this, there is no reason we should allow them to exist.  Before you cry "commie", recall that we don't allow a lot of businesses to exist.  Businesses that are not in the general interest, think brothels, casinos, cock-fights, are not permitted to operate.

Rather than outlaw banks (that's actually called communism), I propose that they be required to behave.  They should be required by law, that is, regulation, to manage the flow of money in the public interest.  Just like utilities, which are also private companies and quite profitable ones, are required to manage the flow of electricity in the public interest, banks should be regulated strenuously and closely so that the money they siphon off from "the flow" is commensurate with both the service they provide to society and the continuity of the proper current of money (i.e., currency).