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8. Bank Interests Inflate Global Prices by 35 to 40 Percent

A stunning 35 to 40 percent of everything we buy goes to interest. As Ellen Brown reported, “That helps explain how wealth is systematically transferred from Main Street to Wall Street.” In her report, Brown cited the work of Margrit Kennedy, PhD, whose research in Germany documents interest charges ranging from 12 percent for garbage collection, to 38 percent for drinking water, and 77 percent for rent in public housing.  Kennedy found that the bottom 80 percent pay the hidden interest charges that the top 10 percent collect, making interest a strongly regressive tax that the poor pay to the rich.

Drawing on Kennedy’s data, Brown estimated that if we had a financial system that returned the interest collected from the public directly to the public, 35 percent could be lopped off the price of everything we buy.  To this end, she has advocated direct reimbursement. According to Brown, “We could do it by turning the banks into public utilities and their profits into public assets. Profits would return to the public, either reducing taxes or increasing the availability of public services and infrastructure.”

Censored Story #8

Bank Interests Inflate Global Prices by 35 to 40 Percent

Ellen Brown, “It’s the Interest, Stupid! Why Bankers Rule the World,” Global Research, November 8, 2012, http://www.globalresearch.ca/its-the-interest-stupid-why-bankers-rule-the-world/5311030. Originally posted at Web of Debt, November 8, 2012, http://webofdebt.wordpress.com/2012/11/08/its-the-interest-stupid-why-bankers-rule-the-world/.

Student Researcher: Cooper Reynolds (Sonoma State University)

Faculty Evaluator: Peter Phillips (Sonoma State University)

 

  • Paul D Pruitt October 1, 2013

    Great idea! Make all banks credit unions!

  • Chris Thomas December 20, 2013

    Interest will always produce a transfer of wealth from the poor to the rich. You are charged money for not having money, and the easiest way to make money is simply to have money. This is why interest (Usury) was forbidden for religious reasons, in favor of the preferential option of the poor.

    The article suggests a reasonable solution, but not one that would likely be put into practice. The problem is that capitalism is an economic, not a social system. The government begrudgingly implements social policies, but usually does so inefficiently and occasionally damages society outright.

    Perhaps a solution would be to continue to use capitalism as a means of allocating scarce/luxury resources, while having a society whose primary goal was to provide for basic human needs such as food and shelter? A wealth gap wouldn’t be as much of a problem if people didn’t need to spend all their time just trying to survive.

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