Notable Quotable: The Virtue of Banking

11 May, 2015 (10:07) | Blog | By: admin

Modern banking has been the single greatest contributor to human progress.

From Strategas Research Partners Chairman Jason DeSena Trennert’s new book “My Side of the Street,” out May 26 from Macmillan:

It is assumed that banks should simply be a means to store wealth and facilitate transactions. Virtually no attention is paid to the social utility of turning money into capital. Money is simply cash and, therefore, inert. Capital is the result of turning money into resources that one hopes become productive—a factory, machine tools, trucks, roads, and the like. The West’s establishment of property rights and the banking system that has grown up around them turned assets into capital and fanciful ambitions into reality. As such, it can be argued that the genius of modern banking, while imperfect and subject at times to nefarious manipulation, has been the single greatest contributor to human progress, putting a serious dent in the crushing widespread poverty that was, even in Western civilizations, the norm rather than the exception before the modern banking system took hold. Academics have long noted the strong correlation between modern banking systems and national wealth, allowing businesses to take on more risks in their efforts to grow. Prudent risks can lead to faster economic growth, more jobs, and greater innovation in all fields of human endeavor.

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