It's long been a joke on the comedic circuit that banking is a backwards business. If you have money, they give you more money in the form of interest. If you don't have enough money, they take money from you in the form of overdraft and "insufficient funds" fees. Basically, money is funneled from the bottom to the top, taken from the poorest people and dumped into the accounts of the richest people. It's the cornerstone of modern banking. They pay the rich for the privilege of using their money to gamble on the stock market.
Western Culture did not always operate this way, however. In the Middle Ages, and earlier, it was considered a sin to charge interest on a loan. This isn't just a random Bible verse or two either. It is EVERYWHERE in the text, so much so that there can be no doubt that the many authors of the book could never be mistaken on this issue.
"If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him."
"If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit."
"You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it."
Luke 6:34-35If I listed them all, it would be rather exhaustive, so I won't. There are plenty more verses on interest and money lending that can be found here.
"And if you lend to those from whom you expect to receive, what credit is that to you? Even sinners lend to sinners, to get back the same amount. But love your enemies, and do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High, for he is kind to the ungrateful and the evil."
In the Middle Ages, and arguably the centuries before and after as well, the Bible was the highest law in the land. These verses presented a problem for the Christian who wanted to make a career out of money manipulation because the practice was outlawed, outright. There was another group, however, which could work around these laws because the Catholic Church, and most of the rest of Europe for that matter, did not see them as brothers. This was Europe's Jewish population.
They were subjected to hate, discriminated, and even countless murderous purges, known as Pogroms. They also fell victim to vicious rumors, which served to continue this cycle of hate, discrimination, and murder for well over a thousand years. Further, most Jews in Europe couldn't own property and couldn't be hired as labor by the Christian populace. This meant that they couldn't operate a proper business and couldn't work for someone else's business either. So, they had to find a niche that the predominately Christian populace needed filled but couldn't do themselves. Money-lending fit this bill perfectly. The reason that a great many rich bankers, to this very day, are Jewish is the fault of Christian bigotry, rather than an indictment of Jewish culture. Of course, the charging of interest was considered obscene, even if it was done by non-Christians, and this was used as an excuse for even further purges. It also produced legal foolery. Mock trials were held, where Christian debtors would testify against their Jewish lenders as a means of vacating their debt. People who were convicted of charging interest were burned at the stake. The logic was that it was pretty difficult to pay back a pile of ashes in the town square...
Another group, the Knights Templar, attempted to compete with the Jewish money-lenders by taking advantage of a loophole in Catholic dogma. They operated a highly profitable money lending enterprise by referring to interest as "rent" instead. Before this, they amassed a great deal of wealth by charging Christian pilgrims for protection along the roads to the Holy Land. They amassed even greater wealth by taking spoils during the many wars that they fought against innocent Muslim tradesmen and non offending Muslim rulers. When they came back to Europe with all of this stolen wealth, they had very little idea of what to do with it. What was their final decision? They chose to bankroll the extravagant lifestyles of the European aristocracy, with some monarchs becoming so deeply indebted and owing so many favors to the Knights that they could never repay their "rent" on the loans they had taken. Eventually, King Philip IV of France decided that he was done making these rent payments. He convinced the Pope, Boniface VIII, to disband the order which had become so rich and powerful that they threatened to bankrupt and topple entire governments. The Knights were rounded up, vicious rumors and allegations were hurled against them, and they were tortured and burned at the stake. It would seem that money-lending has always been a dangerous occupation.
The bankers in Iceland found this out just recently when, unlike America, which bailed their banks out with public money when they spent too much of their own money in the Wall Street slot machine, the people of Iceland rounded up the CEOs of all their major banks and arrested them. Most of these men are still in prison to this day. This so scared the banking establishment in the United States that there was a virtual media blackout of the event, and it was never covered by our top five major media outlets, most of whom have their own bank debts and bank sponsors to worry about.
The problem is, of course, interest, and it always has been. When you look at what a bank actually does, compared to what it should do, you can see why. Banks should be a place where you can safely store your money. Before the advent of these institutions, if you had an abundance of cash, you either reinvested it in property, or you locked it up in a chest, hid that chest, and hired guards to defend it, hoping that the guards didn't pinch any coins off for themselves. Holding onto cash was a dangerous proposition, and it regularly invited treachery.
If banks were run like real businesses and weren't allowed to gamble with their clients' money, investing in stocks, property of their own, and all manner of other moneymaking schemes, they'd have no income. They would instead have to charge for the services they actually provide to their customers...protecting their money. Instead of paying their clients for the privilege of using their money to make more, a fee of $1 for each $100 stored in the bank per month would keep most bankers rich. If the wealthy money hoarders didn't want to pay these fees, there would always be a mattress they could stuff their money into, or they could take their chances with a private safe and hired guards. Your average American would pay almost nothing for this protection, maybe $5-$10 a month, while the rich would be paying $10,000 a month for each million they had in storage doing absolutely nothing for the economy. Capitalism fails when money becomes stagnant and hoarded. The rich, to avoid excessive fees on their money, would actually have to make use of that money. This would actually encourage market fluidity and the loaning of money with no interest accrued. This would stabilize the market, help new businesses get started, and encourage the healthy competition that true capitalism actually relies upon. All the while, the banks would still make plenty of money.
This kind of banking, honest banking, wouldn't penalize the poor for having no money, but rather the rich, for having too much money and doing nothing with it. As it is now, the entire banking system is backwards, and it's pretty obvious that short of what Iceland has done, money, for the foreseeable future, will continue to flow from the poor to the rich, whilst the global economy continues to have depressions, recessions, and "market corrections." Think not? As long as banks are are allowed to use your money to gamble on the stock market, nothing will change.