39: “Abandon All Hope, You Who Enter Here”


Here’s a topic that should be close to Danni’s heart (or distant from it, depending on her perspective).

Government sanctioned loan-sharking (a.k.a. banking).

I can’t speak from an insider’s perspective; but I can speak from the perspective of a consumer who understands mathematics and militaristic tactics.

I understand that speaking in a reproachful manner on the money-making tactics of banks given my current profession is a bit of a paradox; but let me put this angle of the discussion to bed right off the bat.

The difference between what I do for a living and what banking executives do for a living boils down to volunteerism and mathematics – I make money off of people who give me their bankrolls voluntarily by assuming that they can play my game at a competitive level; when, in actuality, they cannot. No one is forcing them to sit down at the table and put their money in play! They do so voluntarily, thinking they can be profitable at it, and when they discover that they are not… instead of walking away, they blame it on luck and buy-in again. Suckers are my bread and butter! It sounds unscrupulous but when you think about the bigger picture, it’s wholly sane and logical in that these people are not required to sit down at the table in the first place, let alone stay for hours on end trying to win back what they’ve lost. And there is definitely no politics involved as my advantage lies strictly in numbers… I always ensure that I put the mathematical odds in my favor and keep my wins big and my losses small. I don’t lobby senators to make laws that favor me; I simply take universal truths (i.e. odds and probabilities) and use them to my advantage.

Banks on the other hand rely on customers who have no other choice but to use them, and take them for every penny they are worth. They take people who didn’t want to be playing the game in the first place, and force them to not only play, but to play it out to the end! They fight to enact laws that require the populace to use their “services” (see the mandatory direct deposit laws instituted in many states) until they provide a substantial amount of profit to the bank, to spite the fact that these people wanted to stop playing long ago!

This would be akin to me lobbying Washington to enact laws that require poker lessons be given at Gamblers Anonymous meetings! It’s irresponsible to force (or even just passionately persuade) the general public to play your game when you know full well that they stand no chance of winning. I don’t go out looking for untalented opponents and try to convince them to play me. I simply sit down at a table and wait for them to show up of their own volition.

There, now that that’s out of the way…

Continuing with the theme of the conversation, the way banks operate is similar to the way that casino management operates – they skew the numbers in their favor enough to make it consistently profitable for them while giving the illusion of profitability to their consumers.

Here is an example – when you go to a craps table and place $10 on a one-roll “hard 12” – the odds of you hitting that in one roll are 36:1. So in order to make that a profitable bet, you would have to be getting somewhere around 37: 1 on your money. But the casino offers you 30:1 on your money, meaning that over the long run this is a sucker bet that will be very profitable for them. But the uninformed gambler looks at the 30-to-1 return on their money, and believes those to be great odds.

Banks do something similar – they offer interest rates that sound fair, and they skew the numbers to their favor by doing things such as: changing the date that interest compounds to either before or after the payment due date (depending on whether they are the giving or taking the money), instituting obscure fees and charges, and offering balloon payments. Small differences such as these can mean thousands of dollars over the course of a year, but most people never even notice them! And of those who do notice, only a handful actually cares! Every “it’s only money” customer mentality earns banks millions over the long-run. Normally I would say “buyer beware” in such situations, but when using their services is a requirement for survival in civilized society, I have a much harder time justifying it. Your only option is to use a different bank which will undoubtedly be using these same shady tactics.

The messed up thing is that most bank employees make modest wages compared to the bank’s big dogs (the CEO/CFO etc.) and thus, have no say in the policies… but yet take all of the blame from customers (Danni, I apologize on behalf of all bank patrons). It’s a small handful of ultra-wealthy people making fortunes off of those who cannot afford it.