How Banking 2.0 Would Help You

The excess money we pay to the financial sector today saps production and increases our cost of living. We need banks to provide financial services, but it doesn't serve us to have banks making money off of money.

 

Under Banking 2.0, banks would do everything they do today—except they would be intermediaries for the Federal Reserve. Since the Fed is the source of money, it has no cost of funds. Borrowing from a bank would still cost money, but you'd no longer pay interest on loans.

 

The Money We'd Save by Not Paying Interest Would be Plowed Back Into the Economy

Let’s have a look at the math. The elimination of interest would:
Drop monthly payments on a $400,000 mortgage from $2,147 to $1,111, saving $372,960.
Drop monthly payments on a $100,000 student loan from$763 to $417, saving $83,040.

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The reduction in the cost of credit would help each of us individually and benefit our entire economy. Interest-free mortgages would cut the monthly cost of home ownership in half.

Today When Banks Qualify a Borrower For a Home Loan They Allow up to 1/3 of the Borrower’s Income to be Spent on Their Mortgage.

That rule would change under Banking 2.0 so that home prices don’t double with the advent of interest-free mortgages. We'd shrink the cost of housing from 1/3 of our income to 1/6 of our income.

 

The Last Recession Showed How Punishing Interest Is

Millions Lost Their Homes
We Spent Hundreds of Billions of Dollars Bailing Out the Banks

We could have spent a lot less money and stopped the landslide of foreclosures if we'd rolled back interest rates on home loans. The root cause of the recession was the financial sector was costing us too much. Our last recession would never have occurred with Banking 2.0.

 

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