Can we all agree to add these alternate usages to our government's economic glossary?Sure, you might think a banker to be a stuffy, unbending beancounters, but in the old days at least, you knew your money was safe in that stuffy old bank. Now, take a look at this passage:
help vt : hurt
stimulus n : suppression
jumpstart vt : jinx (syn see jolt)
But how about bank n : black hole ? Old-timers among us may have a dim memory of what the word "bank" used to mean. A bank was essentially a guardian of its depositors' money, and it also served as an intermediary, lending depositor's savings out to borrowers. A bank considered it vital to do two basic things: (1) stay solvent (by controlling costs and not making many bad loans) and (2) avoid a "bank run" (by always being able to pay its current obligations). The bank unable to do both these things could and did fail, its customers fleeing, or wishing they had fled, to more competent competitors. On the other hand, banks that always did both these things stayed in business and never needed government "help." A salutary fear of failure necessarily haunted every bank and guided the behavior of most. Even a hint of vulnerability might require a bank to fight for its life like a food processing plant suspected of selling a contaminated product.
Modern "banks" are little more than expenditure facilitators and loan retailers who process paperwork in compliance with "Fed policy." Their most important role, certainly in the eyes of a modern Treasury Secretary or Fed Chairman, is as government-guided money creators and disseminators-- front-line implementers of the "macroeconomy." Each bank has only to do its part in creating a politically appealing appearance of prosperity, in perfecting a pervasive illusion of profits, and, not least, in securing a significant stream of tax revenues.Government intervention then has added to the risk, not reduced the risk, because a bank that is "guaranteed" by the government has no incentive to act like a bank of old, that is being largely risk adverse or certainly more capable of assessing risk.
The irony is that decades of government bank regulation, bailouts, guarantees and loans of last resort -- all billed as support and protection -- actually have sabotaged the health of banks qua banks. They have turned what could have remained independent, sound financial intermediaries into creatures of government-bureaucratic appendages. In effect, they have destroyed real banks, leaving only pathetic purveyors of fiat money.
That guy with a $35,000 a year job, with three kids and credit card debt would thus, in the old model of banking, never would qualify for a $500,000 mortgage for a house he can't afford. Just as an exampe.