Kindred’s Special: My Financial Interest in America–A chessplayers perspective

Dear Reader: occasionally I find it necessary to delve into my past with regards to understanding the workings of the financial world in which we live. As a former banker, I have studied the current situation and find it personally disgustingly led almost exclusively by people who would not have got in the door of leadership roles in my time. That said, hold on to your hat and learn something worthwhile. For students, you might get a bit of wisdom about how our financial system developed in America. Obviously, you never got a lesson about it in your history classes at least as far as I have been able to determine. So lets begin. Hats off please and put on your thinking caps for a change.

Where to start? Like my chess columns and articles, much is given to history and so-to-here I provide a historic lesson that will enrich your life and add some understanding to what makes our financial world work. I cut out all the garbage: idiots in the media who have little or no knowledge in the area and yet often are proclaiming themselves as experts. Even many economists are ignornant of what I am about to impart to you so you can judge for yourself the value of my lesson and research.

Why the mystery? Why are banks today regulated? To discover this is a beginning of our adventure together. Business conducted as far back as Persia and Greece gave birth to some of our modern day practices in commercial banking. The Dark Ages period financial wizzards of the time knew how to make payments across international boundaries without using gold, silver or other means. Still, it was about the 13th-Century where Genoa (what we might term the center of the finanical world much like New York) began the practice of extending credit to human creativity of ideas, individualism, and risks with speculation toward financial success and reward. From the time of the Renaissance, bankers, their customers and the public-at-large handled financial matters with due conservative principles. Progress in any form was very long term and new ideas really did not take formation until relatively recent times. One might say the commercial banks and banking in general was rather narrow in terms of any consideration toward advancing new proposals. For example, today we see account number accounts which, in the beginning was met with suspicion and fear that it could lead to clerical mistakes, fraud, etc. etc. It was generally accepted philosophy that bankers need to conduct financial matters to create profits while keeping cash reserves for daily bank business with customers. In short bankers began to understand better the loan concept practice with relationships with their customers with reasonable assurance that such loans would be repaid with interest. Hence, we see the expansion of bank role from merely business transactions to one embracing the general public and individual depositor. Today we see advanced economically successful countries utilizing their central structure setting out regulatory govenance of commerical banks permitting certain functioning with constraints with the end result being the creation of the money supply necessary for modern finanical institutions. Today’s households via mortgages, loans, etc. have a broad and knowledgeable understanding of this social fabric but it seldom goes beyond this. Children are rarely ever included in finanical dealings where imparting such education to children have long term benefits.

Where have we gone astray? At one time, bankers recognized that conservative management policies sort of self-regulated the whole industry as the number of banks and types of banks multiplied. The Congress set policy to protect the interests of smaller banks during this period of larger bank expansion. It was definitely a no-no for managers to discard such practice by acting without constraint a drive to maximize profits for their firms. The introduction of the bonus concept achieving such aims began to enter the picture and we see the result of such folly that evolved throughout just about everything to do with wealth–both corporate and personal. Leaving the row boat of financial stability practices in favor of a fast speed boat has put the world financial markets in a HOLE. Part of this can be laid at the foot of a world-wide socialist agenda that counters the capitalistic concept of successful business ventures. Yet the relaxation within the latter has set ablaze any trust toward either system by the public in America.

This ends part one of my paper if you will on the subject. Invite your family and friends to share the enlightenment with my coming essays on the subject. I must apologize for not weaving herewith the first segment a chessic theme per se. Let me see. Is there one I can leave you with? Here goes! Like it or not I leave its worth in your thoughts: Chess is a history of trial and error.


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