Profit making isn't a bad thing - its only bad when the extracting of profit isn't aligned with interests of society.
Banks do serve a useful purpose - dont get me wrong. But i think lately, the value a bank is adding to society is somewhat deminishing, compared to the burden they weight. A bank makes its profit by "taking on risk" of loaning capital to someone who doesn't have it, and extracting the surplus generated by the capital (ala, as interest on the loan).
This is ok, as long as the capital is used to generate "real" wealth - that is, production of goods and services. I feel that at times, a lot of loans are not used to generate product and services, but to "gamble" (ala, stock market?, buying and selling as a middle man ?). The process a bank goes thru to loan money creates extra currency, and this extra currency, imho, is what causes inflation. In fact, so much of economic activity is now tied to bank loans, that a failing bank means collapsing a corner of a table.
But i have no solution - as long as the illusion of stability is maintained, the system works. When it breaks, its chaos, but so far, all chaos has been prevented by either bailing out, or some other form of tax payer funded activity. Meaning, some people/organizations are using this as an opportunity to profit as a parasite of this system.
If you look at the proposals for moving bank ownership to governments, that's precisely the point. Instead of profit for profit's sake, they expect such banks to profit specifically for the local geography's sake.
I'm not much of an advocate for this solution because, frankly, I don't understand it well enough. Insofar as I do understand it, I feel that it's worth supporting it, or at least being more widely considered. My lit review of reasons not to do it turned up no convincing objections (and I've asked different groups for help several times over the past 5 years).
Banks do serve a useful purpose - dont get me wrong. But i think lately, the value a bank is adding to society is somewhat deminishing, compared to the burden they weight. A bank makes its profit by "taking on risk" of loaning capital to someone who doesn't have it, and extracting the surplus generated by the capital (ala, as interest on the loan).
This is ok, as long as the capital is used to generate "real" wealth - that is, production of goods and services. I feel that at times, a lot of loans are not used to generate product and services, but to "gamble" (ala, stock market?, buying and selling as a middle man ?). The process a bank goes thru to loan money creates extra currency, and this extra currency, imho, is what causes inflation. In fact, so much of economic activity is now tied to bank loans, that a failing bank means collapsing a corner of a table.
But i have no solution - as long as the illusion of stability is maintained, the system works. When it breaks, its chaos, but so far, all chaos has been prevented by either bailing out, or some other form of tax payer funded activity. Meaning, some people/organizations are using this as an opportunity to profit as a parasite of this system.