BMO profit rises 27%

May 24, 2012 by
Filed under: Bank's Profits, Bankruptcy, Debt Management, debt relief, taxes 

Wow. Hidden in the back links of the CBC Business section is this wee little headline that screams, “BMO profit rises 27%.”

BMO Financial Group kicked off the Canadian banking sector’s earning season Wednesday by reporting a 27 per cent increase in second-quarter profit, coming in ahead of analyst expectations.

BMO says its net income for the three months ended April 30 was up $215 million from the same time last year, rising to nearly $1.03 billion or $1.51 per share before adjustments. [more …]

Banks create money using fractional reserve banking. In a nutshell, what this means is that if you deposit $100, the bank has to keep 10% and can lend out the remaining $90. This $90 that is lent out (by way of a computer keystroke) lands in another person’s bank account. Which means that the bank has to keep 10% and then lends out the remaining $81.

When this process repeats itself until there is no money left, the bank will have lent out a total of $1,000 from that initial $100 deposit.  (I write about this in an earlier article, which you can find here.)

Then, of course, they charge compound interest on that $1,000 that was lent out. Assuming a very low interest rate of 7%, and assuming the borrowers payback the minimal payment of $7/month (and let’s face it, most of us are paying the minimums on most of our debts), the bank earns back the principal ($1000) and the interest ($1156) in 25.5 years.

In other words, your $100 deposit has allowed them to invent the funds that returns them $900 of imaginary principle and $1156 of imaginary interest. But it’s only imaginary from their perspective. From ours, it’s very real. It’s our sweat and toil that has to earn (not invent) this money. We pay with time, with servitude.

Understanding this, understanding how banks invent money and can claim such obscene profits, can ultimately liberate you when it comes to stepping away from an insurmountable debt-load, whether it be through bankruptcy, consumer proposals, credit counselling or debt negotiation.

When you step away from your debt to banks, it’s not like you are costing John or Mary their $100 deposit. You are costing a bank a slight dent in their profits from their invented money.

I suspect that that is why the option of bankruptcy even exists.

An increase in profit of 27% is phenomenal. It’s money that Canadian’s don’t even have in their pockets, with the zero-percent raises that have been negotiated all over this great country of ours.

An increase of 27% should be criminal. Of course the government doesn’t complain, since a net income of $982 million ultimately means 30% in their pockets vis-a-vis a barrage of taxes. (Note, it is the movement of money that is ultimately taxed, not income and not “stuff.” So when banks invent money and people move it around, government coffers fill up.)

A three month net income of  $982 million. Or put another way,  $982 million were handed over (or owed) from Canadian citizens to BMO. (Actually, more, because their net income is after-tax income, or profit).

Who owns your soul? Don’t you wish it was you?

If you are insolvent (ie, you pay out more in debts that you have in available income) then perhaps you should be considering your options.

You do have them!

Contact us today to find out what all your options are, so that you can decide which one best for you!

UPDATE:

The other banks’ profit numbers are starting to roll in:

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