Trump's Glass Steagal Act

 The Glass-Stegall Act was enacted by Congress in 1933 and signed by President Franklin D. Roosevelt. It was later repealed by President Bill W. Clinton in 1999. Big Mistake! The act served to draw up a boundary between investment banking and commercial banking activities, thereby ensuring greater restrictions and oversight of the banking operations. Upon the enactment of the Glass-Stegall Act, commercial banks could only derive ten percent of their income from securities but that same act empowered the banks to underwrite government issued bonds. Which in my opinion essentially saved money from one burning stockpile and feeding an even bigger blaze by giving the government officials a blank cheque book. As with all grandiose legislations, it was simply a charade to give the public the impression that the government was taking care of its people and keeping the overzealous banks in check. The legislation was introduced in the aftermath of the stock market crash of 1929, in a time when the people had lost faith in the big banks which they thought were safe keeping their hard earned money and investing prudently in conservative investments. 

 Unfortunately, this was not the case. In reality what was happening was the banks got greedy and were taking relatively huge risks with their depositors’ savings, investing in highly speculative stocks, and then hustling those same customers into purchasing stocks from the very companies the banks invested in!  Now you may be asking yourself, how is it that the banks could have taken such risks whilst at the same time guaranteeing their depositors principal and returns? Well think about it, the banks had access to large amounts of capital flowing in on an regular basis from depositors across the nation with a customer base that was growing exponentially on a yearly basis.  So even if some or in the unlikely scenario; or so the banks thought, all their investments had gone to shit, they could still theoretically guarantee the principal and interest should their customers decide to withdraw their savings because they had access to a steadily growing base of capital.  Does any of this sound familiar to you? Well it should, think PONZI SCHEME! Yup, the concept of a Ponzi scheme is not some recent financial scandal associated with Bernie Madoff in 2008, this is a hustle that has been going on since the dark ages. In fact, the first recorded financial scam of this nature was by Charles Ponzi in 1920, hence the name, and it most likely has been going on for way longer before poor old Charles came on the scene. In a way Charles was only emulating what the big banks were doing themselves. In fact, I still see this scheme or its variants thereof being perpetuated even today and it was one of the precursors of the mortgage crises of 2008. Unfortunately, our brains are wired to learn by experience and given our relatively short life span, we seemed doomed to repeat our mistakes as a generation of excess gives way to a generation of austerity and so the wheel keeps spinning.  Recently President Trump is talking about reinstatement of the Glass-Steagall Act or at least some variant of it. Though, I don’t have any political affiliations, I believe any form of restriction and oversight of the banking sector is a good thing. However, would the reinstatement of the Glass-Steagall act truly help to curb the tide of economic turmoil we see around us? I think unlikely. I don’t believe any piece of legislation is the answer to getting us out of the quagmire we find ourselves in. There must be a collective jolt out of our self-induced state of comatose, starting with a decrease in the reliance of governments or other forms of centralized regulation to take care of us and an awakening of social consciousness which rejects greed and encourages us to care for all living things. This can only come about if we truly and with the deepest of convictions believe in the words “I say to you, as you did it to one of the least of these my brothers, you did it to me” – Matthew 25:40, history is bound to repeat itself in perpetuity.