richardhutnik said:
And I will extend what I wrote earlier even further. Startups do NOT get money from banks. Start ups get money from venture capitalists. Once a start up gets going, and gets large enough, it will offer an IPO, which then gets it to go to the next level. A bank will provide a line of credit, sometimes, which can help. But beyond this, not much else. The job of a banker is exclusively involved with money. Money, in and of itself, is a means of facilitating the acquisition of goods and services. But, merely pumping more money into an economy doesn't fix things. Doing this will end up causing inflation if sufficient goods and services are not generated. This is not to say that bankers don't provide some service. In an economy, they do. But, in comparisons to a lot of other parts of the economy, bankers contribute very little to the economy. Some would argue, "but banks hire people, and employ people". Yes, but so do casinos and race tracks. Casinos and race tracks contribute very little value to the economy. I would argue less than banks, but still both don't do much. There is a need for the bank and its ability to help society faciliate the consumption of future production in order to make now better. There are times accelerating this process can get someone somewhere. But this ability is far less positive than one would initially believe. And on looping back to the next note, if someone occupying a park long hours, feeding the poor providing hope, and building community comes out, I would argue this is more important than a banking firm who ends up playing around with derivatives and gets rich on them. At least the down side of the occupying the park is less than the investment house monkeying around with derivatives. |
Actually most small businesses and start-ups DO use banks to get financing; after all a restaurant, farm, small retailer or countless other small firms will never be large enough to attract interest from venture capitalists or be large enough to have an IPO. Certainly entrepreneurial start-ups (like tech companies) which are so vital to economic growth need venture capital because they're too high risk for a bank; but that doesn't mean a bank doesn't play a critical role in the economy.
Beyond this, companies of all sizes use banks to finance their payroll and to pay for their inventory because their costs are fairly constant throughout the year but their revenues are often very seasonal.
On top of this, as much as it goes against the rhetoric, banks actually prevent people from being exploited by those with capital. The most obvious example of this is the realestate market. Since an individual can go out and get a low to buy/build a home or become a land-lord people are not trapped paying exploitative rents to land owners simply because those land owners are the few people with the wealth to be able to purchase real estate.
Banks, and financial institutions that lend money in general, offer vital services that are critical to ensure the economy operates. The core problem with them is that their services are TOO GOOD and people willingly overindulge in
