Last week, an Irish court sentenced three prominent banksters for their roles in the 2008 financial crisis. Judge Martin Nolan, who pronounced judgment, said that the bansksters had committed “a very serious crime.” He continued, “The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all hope or trust in institutions.”*
A number have criticized the judge’s sentence for its mildness in light of the catastrophic damage that the banks have done to the economy. Irish taxpayers have bailed out the banks five times since 2011, while it has been estimated that it will take up to 15 years, if ever, to recover.
While Irish banksters and the political class who have enabled them are certainly deserving jail time and much worse, whether they or other banksters who have committed similar crimes are punished will not prevent a reoccurrence of further economic crisis, undo the harm done to the Irish economy, nor will it pull Ireland or the rest of the Western world out of its economic malaise.
The seminal cause of the economic crisis of 2008 and almost every one preceding it has been the fraudulent expansion of the money supply by the banking system through the practice of fractional reserve banking. Until this economy wrecking and social destructive scheme, along with the central banks that oversee and protect the nefarious practice, are abolished, the economic crisis will continue and deepen no matter how many banksters are jailed.
Simply put: fractional-reserve banking, for those who do not know, which includes 99.9% of the financial press, is the practice by which banks keep only a fraction of their deposits on hand and “invest” or loan out the rest at interest. Of course, if any other warehouse or storage facility engaged in such a practice it would be rightly considered fraud.
The process is augmented by central banks, which expand the money supply through the deposits that individual banks keep with them. In fact, the main purpose for the creation of central banking in the first place was to enable individual banks to engage in this fraudulent undertaking which leads to all sorts of monetary mischief.
The beautiful part of outlawing fractional reserve banking is that it requires no creation of regulatory agencies, commissions, or convoluted legislation. All that is needed is a simple universal prohibition of the nefarious practice applicable at all times and all places: any bank or financial intermediary which engages in fractional reserve banking or similar practices will be condemned and prosecuted with its perpetrators punished up to and including torture and death!
The judicial system is culpable too in this process. Courts that actually prosecute banksters are not trying to get to the root of the problem, but are merely saving face with the public by doling out prison time or uttering harsh rebukes at the banksters. Of course, as an arm of the state, the courts have a vested interest in not seeking the truth, since doing so would expose the actual method upon which nation-states obtain a good deal of their power. Fines, jail time (usually reduced or suspended) to placate the angry populace is as far as the judicial system will typically go.
Naturally, a financial order devoid of fractional reserve banking would, as Providence had intended, consist of gold and silver, where paper currency and notes would most likely be of limited if any use. The only significant hanky-panky which would occur with metallic money would be the old ploy of “coin clipping” which, although deplorable, was limited as compared to the inflations that have taken place under a pure paper, fiat standard. To keep coin debasement in check, however, the same punitive measures should prevail as with those who engage in fractional reserve banking.
Punishing banksters for their monetary transgressions years after their dastardly deeds have taken place is comparable to buying fire insurance after a house has burned down. If the Irish and the rest of the world’s populations want to eliminate the monetary chaos and the declining living standards which have ensued over the past half dozen years or so, they need to look at the ultimate cause of the crisis – eliminate fractional reserve banking and the central banks which condone and engage in the practice.
*Tyler Durden, “Ireland Jails 3 Top Bankers Over 2008 Collapse . . . Instead of Bailing Them Out.” Zero Hedge. 30 July 2016.
Antonius Aquinas@AntoniusAquinas
Antonius Aquinas 
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Seriously? So if I shot your family dead but am caught by the police only ten years later, would you whistle the same tune about me?
Banksters stole trillions of dollars, enriching themselves by billions in the process. The question should not be “Should we be jailing these bankers” but instead “Why are any of the bankers even allowed to live after this?”
Go peddle you Goldman Sach propaganda elsewhere.
I’m with Expat. This would be an entirely different story if the working class woke up one day, en masse, and decided to stop paying their usurious mortgages, thereby leading crooked, thieving banks to the edge of a financial cliff and sending global real property markets into the abyss. The only reason banks were bailed out was because of their blackmailing tactics, essentially saying, “Save us or we’re taking everyone and everything down with us.” Of course, they would have ignited a capital market explosion which would have been far more immediate than the agony through which the world has suffered for the past eight years. The more hilarious thought is that governments, putting their citizens on the hook, apparently still believe – even in the wake of exponentiating their debts at the risk of widespread and far-reaching political upset – the banks will save them. They deserve one another.
In the meantime, positing banksters shouldn’t be punished years after their theft and collusion brought down the global economy is, effectively, a statement regarding the health thereof. It seems I’m reading the banks shouldn’t be held responsible because, after all, the economy has recovered. I don’t know what sugarland you occupy, but there’s nothing healthy happening in the U.S. and even less so in Europe. If Ireland really had its act together, it would go after the politicians with whom those banksters colluded. Wait, that’s probably asking too much, as governments think banks will save them, most people are of the belief government will step in to save them when the next crisis hits. The thing that virtually everyone forgets, however, is that collapse is a process. And the glaringly frightening crisis-process begun in 2008 is ongoing.
I get what you’re saying, but am in agreement with the others. Without being held accountable bankers are free to continue as they have accepting that regulatory fines are just part of doing business. I hope and believe that if they were held accountable then we would see a dramatic reduction in their nefarious activities. But hey I realise it may just be a pipe dream of mine.
If someone breaks the law, they should pay the price. However, you are correctly pointing out the real problem, the lack of personal financial accountability. The fastest way to achieve that? Double liability for banks and all corporations, so shareholders, officers and directors are PERSONALLY liable for the actions of the banks. THAT will temper their behavior.