Balancing Short-term Private Bank Priorities with Long-term National Public Bank Prosperity
The mindset of maximizing profits in private banking is inevitably a source of quick-sighted, short-term money-making schemes that increase the amount of money available and create all negative externalities of economic inequality.
A National Public Bank will serve as a long-term instrument to finance the essential needs of the general well-being and health of the U.S. population and also give capital in real-time to vital economic innovations, particularly those that limit the harm caused by the short-term focus of maximizing profits.
Biology-based economics proves the fact that all life on Earth practices economics. Organisms can exist in Earth's closed-loop circular economic system by sustaining homeostasis using a balanced economic equation.
The ingenuity of our current system of economics that relies on fictitious commodities, such as property rights and money, to real-world resources has inadvertently promoted excessive consumption and a wealth gap. This has led to the current imbalance in homeostasis, which is now threatening the planet and all living things on it. To counteract this economic imbalance, a financial source must be allocated to handle all the fundamental functionalities organisms need to maintain equilibrium with the environment.
The human organism, for instance, requires energy production, transportation of resources, reproduction adaptation (cellular programming or education), waste management, health services, communication, food, shelter, and self-defense systems. The cells within the human body receive unassailable access to these essential services, and should every individual American who works.
The conversation must evolve away from environmental advocacy, politics, and unions of unconcerned or concerned citizens, as well as other unfortunate strategies, and instead focus on the creation of a National Public Bank, which could A) connect money to the underlying force of human effort (or labor) and B) utilize it to boost the general welfare by supplying our most basic human needs. This will help to counteract the short-term inflation of human-driven economics that is degrading us in a manner that is slow enough that we are built to react at the moment and will not be capable of stopping it until it's too late.
The World of Private Bank Profit Maximization
Private Banking can only extract worth from the American People when there is enough money to invest in private investment through bonds, deposits, stocks, mutual funds, etc. The return on investment is only a tiny fraction of the amount Wall Street was able to get from the value of the other citizens around them; likely, the return you earned from your investment was just a tiny fraction of the amount Wall Street extracted from you and was a gesture of appreciation from the few of you who were made wealthy.
Here are a few typical examples of the profit maximization model:
Pressures on quarterly profit reporting
NYU Professor Tensie Whelan compares companies focusing on quarterly performance with teachers being judged based on how their students perform on standardized tests they regularly take. Teachers instruct them to be successful on the test. At the same time, companies strive to be successful in their quarterly profit reports.3
With quarterly reports, regulators are looking to limit insider trading because insiders have more information about what's happening inside the company and can take action even before shareholders are aware of changes within the company. Shareholders aren't investing in the company that it represents. Still, they are trying to make a profit when company figures appear favorable, and they want to get out before prices drop. If insiders sell their stock, they may not be convinced of the company's products or services. In both instances, the notion that companies are in business to provide value to people needs to be reflected. Warren Buffet has argued that reporting quarterly earnings places the focus on profits in the short term at the cost of long-term value; however, companies must decide whether to create value for their customers or make money by stealing value from markets.
While companies such as Amazon, Tesla, and Facebook struggled to get off the ground, they were selling a concept many investors believed in. Consequently, investors stuck with it. If you have funds to invest, they could trade it in for cash in the short-term or invest in long-term cash. Neither option is very noble; however, long-term investors are considering the product's benefits.
Wall Street quickly takes down anything falling in profits; companies are overturned if shareholders are not pleased. This attitude led to companies manipulating their stock price and giving shareholders bonuses in the form of dividends to shareholders.
Economist William Lazonick5 from the Academic-Industry Research Network doesn't favor the idea of a stock buyback. CEOs who averaged over $160 million between 2003 and 2012--generally adhered to the idea that maximizing shareholder value was their primary goal, even though investors who purchase outstanding shares of the company are only interested in the stock's price increases and not in any value-creation initiatives of the company. While CEOs and shareholders concentrate only on boosting prices for shares and maximizing shareholder value, taxpayers invest in the government to conduct all research and development in the private sector. In contrast, workers working hard hope CEOs will think about the value of their work, which can lead to sustainable job opportunities. Lazonick claims that workers and taxpayers take on all the risk. CEOs and shareholders who masterfully manage the narrative - reap all the benefits. Many academics aren't convinced that the U.S. is a serious competitor in modern technology when this profit maximization paradigm persists for a long time.
Stock-based pay, open-market buybacks, and maximizing shareholder value are just three cringe-worthy negative externalities from Wall Street's short-term thinking.
Rapid trading generates the most revenue.
High-frequency trading (HFT) is finance-related algorithmic trading with high speeds, high turnover rates, and high ratios of order-to-trade, which relies on high-frequency financial information and electronic trading tools.
Although there isn't a single definition of HFT, some of its primary features are extremely sophisticated algorithms, colocation, and very short-term investment timeframes in securities trading. [4][5][6][7The concept of HFT employs proprietary trading strategies that computers implement to move into positions and out in fractions of seconds. [8]
In 2016, HFT averagely initiated 10-40% of the trading volume in equity and 10% of the volume in commodities and foreign exchange. High-frequency traders move into and out of short-term positions with high rates and in high volumes, trying to earn only a fraction of a penny in profit from every trade. In addition, HFT firms consume only small quantities of capital, build up positions, or hold their portfolios for long periods. This means that HFT has a potential Sharpe ratio (a measure of the ratio of reward to risk) that is tens of times greater than buy-and-hold methods that are more traditional. High-frequency traders generally compete with other HFTs instead of long-term investors. HFT firms have the lowest margins and have huge volumes of trades, often up to millions.
According to estimates from the Tabb Group, a research firm, high-frequency traders made around $11 billion in profit last year.4
The total annual revenue of the industry is estimated to be $6.1 billion by 2021, which is a substantial drop from more than $22 billion in 2011.
Quick loan sales to other people are more popular than patience
A repurchase agreement, also known as repo, RP, or sale and purchase agreement, is a kind of short-term borrowing typically used in government securities. The dealer sells the security to investors, and, through an agreement between two parties, the buyer repurchases them after, usually the next day, at a slightly higher amount.
The repo market has become a significant source of funding for major financial institutions within the non-depository banking industry that has developed to compete with the depository banking industry in size. Large institutional investors like money market mutual funds provide funds to financial institutions like investment banks as a trade-off or in return for (or secured with) collateral, for example, treasury bonds and mortgage-backed securities held by financial institutions that are the borrowers. A $1 trillion worth of collateral is traded on the U.S. repo markets. [1][2]
In 2007 and 2008, a rout on the repo market in which funds for investment banks were inaccessible or at excessively high rates was a significant element of the subprime mortgage market crisis that caused the Great Recession. In September 2019, the U.S. Federal Reserve intervened as an investor to supply repo market funds as overnight lending rates increased due to a number of technical factors that restricted the amount of funds available.
When negotiated through the Federal Open Market Committee of the Federal Reserve in open market operations, Repurchase agreements are used to add reserves to the banking system, and after a certain period of time, withdraw reverse repos begin to draw reserves out and then replenish them. This tool is also employed to help stabilize interest rates, and the Federal Reserve has used it to adjust the federal funds rate to align with the rate of interest at which it is set. [16]
In a repurchase agreement, the Federal Reserve (Fed) buys U.S. Treasury securities, U.S. agency securities, or mortgage-backed securities from an intermediary dealer who promises to repurchase the securities within a period of between one and seven days. A reverse repo is the reverse. This is why the Fed describes these transactions from the counterparty's perspective and not from its perspective.
If the Federal Reserve is one of the parties that transact and the RP is"system repo" or "system repo," however, when they trade for a client (e.g., a foreign central bank), the term is"customer repo" or "customer repo." Before 2003, when the Fed was in place, the Fed did not use the term "reverse repo"--which it believed meant that it had borrowed money (counter to its charter)--but instead, it used the phrase "matched sale" instead.
Market allocation is based on short-term gains.
In the years leading up to and following the 2008 financial crisis that shook Wall Street, The 2008 financial crisis saw 449 of the 500 companies in the S&P 500 stock index spend their earnings on acquiring their shares on the market and paying dividends to investors.2 Corporate executives used 91 percent of their company's profits to increase their stock prices due to executives' bonuses being repaid out in stocks and options on stock. Harvard Business Review reports that stock options are now more than half of what CEOs of large companies are paid in the United States.3
Open-market buybacks can also temporarily boost the price of a company's stock, helping it hit quarter-end earnings per share (EPS) targets. This is one of the ramifications of achieving short-term goals. If executives of a company invest 91% of their wealth in their prosperity, only 9% of that money will now go to A) employee happiness via wages, or at the very least, stable employment or B) shared prosperity, which is derived from the business producing something of value for its customers.
A unidirectional connection exists between the most wealthy earning maximum profits and economic downturns such as the Great Depression and the more recent Financial Crisis. In the age of dividends from shareholders and stock-based payments, the U.S. has lost many of its once-stable jobs due to "offshoring" (businesses shifting production to employ lower-cost labor).
The Securities Exchange Act in 1934 was passed to stop the sloppy conduct of Wall Street during the period before the Great Depression. Like every other regulation, it was gradually removed. In the following years, Wall Street gained a foothold within the federal government in the Reagan and Clinton period. The SEC, the Federal Reserve, Fannie Mae, and a host of other important agencies were under the control of Wall Street insiders, who helped to create the dot.com and housing bubbles, which burst at the beginning of the new century.
-
Market division or allocation schemes allow competitors to divide their markets between themselves. In these schemes, competing firms share certain kinds of customers, types of products, or regions to themselves. For instance, one competitor can sell to or even bid on contracts offered by specific customers or kinds of customers. In return, they do not sell or bid on contracts negotiated by customers allocated to other competitors. In other arrangements, competitors agree to only sell to customers who reside in some geographic regions. They also do not sell to or deliberately provide high prices to customers in areas assigned to conspirator firms.
Anticompetitive agreements that let firms divide markets between themselves.
American consumers are entitled to the advantages of free and open competition. This means they can get the best products and services at the lowest cost. Public and private businesses frequently depend on a bidding system to achieve this goal. The competitive process works only when the competitors make their prices fair and independent. If competitors collide in price fixing, prices are increased, and the consumer is scammed. Price fixing, bid rigging, and other types of collusion are unlawful and susceptible to legal prosecution by the Antitrust Division of the United States Department of Justice.
In recent years the Antitrust Division has successfully prosecuted regional national, international, and regional conspiracy involving agriculture, construction manufacturing services and consumer products, as well as numerous other areas of the economy. A majority of these cases resulted from information obtained by people in the public who provided the information to the Antitrust Division. Together we can keep up the fight to safeguard and encourage free and open competition in the marketplaces of America.
Bid price fixing, price rigging, and other forms of collusion are difficult to spot. Most agreements between collusion partners are made in secret, with only participants being aware of the arrangement. However, suspicions could be raised due to unusual bidding or pricing patterns or by something an individual vendor does or says.
*Share buybacks, dividends, high-speed trading makes perfect sense in this mad rush for cash, where the only thing that is really worth doing is the only predictable externality. Wall Street is about growing
The Ethos of Long-Term National Public Bank Priorities
Here are
Infrastructure with a multi-decade time horizon
There's no reason to believe that America's infrastructure report card shouldn't always be in the "Crange" to "D" range. The American Society of Civil Engineers (ASCE)6 grades 17 different categories. Mains of water break down every two minutes and are currently underfunded. 43percent of the nation's roads remain in poor to mediocre state. The terminals at our airports must grow, and our planes still pollute. ASCE rates it with the "D+" grade. Bridge repair is graded an "C"--we are making progress however 231,000 bridges require repairs. Broadbandor high-speed internet access is seriously slow and 65percent of U.S. counties aren't up to speed with connection speeds. This is critical for healthcare and education online access. A majority of schoolchildren do not have the speed of connection required to complete online schoolwork.
America's dams receive their dams a "D grade. If dams fail, the risk for human life loss is very high. Furthermore, since more than 56 percent of dams are owned by private companies, the expense of repairs isn't as urgent as the public would like. U.S. energy is in need of a definite federal policy to guarantee security, reliability and sustainable solutions going forward.
Hazardous Waste Management gets a "D+;" through the cleanup program dubbed "Superfund," government is working to address old hazardous waste issues as the Resource Conservation and Recovery Act (RCRA) is in place to control new waste creation from the moment it's produced until it is disposed of. More than 80 percent of all produced hazardous waste is generated through the chemical manufacturing sector, as well as the coal and petroleum manufacturing industry. More than half of America's hazardous waste is produced within Texas. Texas.
Other areas include schools, rails and transit, levees and ports, inland waterways public parks solid waste wastewater, stormwater, and other areas. They all hover around D+, with the exception of ports (B-) and rails (B).
Countercyclical lending is a key role
Priority sectors that require patience
- Manufacturing innovations
- Infrastructure platforms
Capacity of Agriculture
Social returns over fast ROI decides lending
Summary of Differences
Private banks - the mentality of traders who are impatient
Conclusion: Private banks provide nothing worth to Americans they are an intermediary company that claims to facilitate larger exchanges, and often extracting more than 100% of this service.
National Public bank the mindset of economic and stewards, patiently investing in the nation's potential
[cta]
Humanity is currently on high in the world due to economically it is an able-bodied species. In the natural world, "too big" is bound to fail because it isn't able to consume enough food to keep expanding, and it also cannot change to change at a rapid pace once it gets too large.
It is crucial to move away from the predatory liberty and parasitic extraction and move towards the positive freedom of internal growth which means the elimination of our ignorance.