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PIMCO’s* Bill Gross has remarked that our nation became a superpower because “we were getting richer by making things, not paper.”

Unfortunately, for the last few decades, our nation has primarily grown weaker by making worthless paper in a variety of ways — junk bonds, subprime mortgages and countless types of derivatives — through banks. If we step back and ask ourselves what banks were originally designed to do, it was simply a depository where people with savings can store their wealth, and borrowers could access capital to pursue investment opportunities....

From a lending perspective, the banks clearly have failed to allocate their resources to investment opportunities that would power economic growth into the 21st century. Their cash has primarily been used for short-term profit opportunities such as speculating in the capital markets for quick profits, leaving many small and medium-sized businesses cash-strapped....

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The general sense I get... [is that] huge pools of money are desperately seeking out the next asset craze, [and] the financial industry is no longer servicing the real economy. It has lost its purpose, has become self serving and is damaging the real economy in the process . Perhaps if capital gains were taxed heavily, the financial industry would snap out of this relentless obsession and return to servicing the real economy, seeking out profits and dividends and generate some jobs as well. Its a shame that we have too much money and too much unemployment in the same room and no one can seem to bring them together.

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