California has over $17 billion on deposit in banks that have refused to honor its IOUs, forcing legislators to accept crippling budget cuts. These austerity measures are unnecessary. If the state were to deposit its money in its own state-owned bank, it could have enough credit to solve its budget crisis with funds to spare.

Read more here-

14 Responses

  1. Would any of these banks the same dysfunctional ones that went crawling for bailout money as their suck-ass business plans went belly-up?

  2. Have you spoken directly to Treasurer, Bill Lockyer? Do you suppose he is under pressure to go along with the tough love and accept the touch luck?

    Do you think there is collusion among the big banks? ( Is the Pope Catholic?)

    If CA were to charter its own state bank on the ND model, wouldn’t this be a dangerous hole in the dike of the private credit monopoly?

    Your modest proposal could lead the nation down the slippery slope to more economic justice.

    Better hire a body guard and a food taster! 🙂

    • Only got as far as the Treasurer’s office, but a woman here running for Congress did talk to state controller John Chiang. He said something to the effect that he didn’t think the state had the revenues to put in its own bank — odd comment! Unless there is some commitment to leave them in the depository banks. No doubt it would hurt the banks to pull out huge blocks of deposits, but that’s the point — tit for tat. Anyway this is an emergency. Bankruptcy calls for extreme measures.

  3. I think you spoke the truth everyone needs, Ellen.

    Don’t need to hire bodyguards.
    Good Angels don’t need notification.


  4. Great post Ellen. But the date of the article says June instead of July. Thought it was old.

  5. Ms Brown, Canada has a Central Bank controlled and managed directly by the Government under the direction of the Finance Minister. They have no Fed.

    Why then, hasn’t Canada achieved this over the rainbow paradise that you speak of? They’ve gone over the cliff in synchronized lockstep policy moves with the USA.

    • All very true, and I know Canadians who are asking the same question. The answer was written up recently in the Canadian monetary reform journal called “COMER.” The banking establishment has managed to get the upper hand, such that the Canadian government still borrows from the international banking system rather than from its own central bank. However, there is a political movement afoot to “monetize” its debt through its own bank. There is more to it but that’s the gist.

  6. Why doesn’t CA at least start with the modest step of accepting their own IOUs for tax and fee payments? That would effectively monetize their IOUs, without the difficulties of starting their own bank.

    • Re: “Why doesn’t CA at least start with the modest step of accepting their own IOUs for tax and fee payments?”

      That seems like the half-way stage to becoming your own bank.

      Has anyone spoken to the top management of the State of California yet?

      ‘SEIZE THE DAY’.

  7. re: the Canadian national bank – a level playing field for all the central banks means consensus control of the money supply by the central banks themselves in the interest of the central banking system itself and those who own it.

    The bank of ND coordinates its activities with the system as it is and is tolerated because it is small.

    On the other hand, if California were to assume authority to issue currency, central bank control over the aggregate money supply would be diminished significantly. The same is true of Canada.

    Ellen’s proposal undermines central bank control by counteracting the deflationary situation, breaking the stranglehold of high interest rate debt. Government monetary authority would directly challenge the private central bank authority and change the playing field. Every creditor would cry foul when its high interest debt began to be paid down with lower interest credit that becomes available.

    The name of the game is usury. Low interest credit would upset the private monopoly and inflate the money supply.

    • Since the private money monopoly still has power – they’d deliberately increase inflation to “prove” that government issuance of credit is “inflationary” – thereby getting the public to cry “foul!” and return control to the private money monopoly.

      Breaking the money monopoly’s power will require a combination of things, all operating together so that the money held in reserve cannot come back to the market all at once, when the government retakes control of money issuance.

  8. Inflation is the creditor’s enemy, and the debtor’s friend. The private system mismanages the currency by funding speculation, which devalues the dollar. Financiers hedge this loss of value through interest rate arbitrage. This usury game in turn sucks all the credit out of the productive economy, creating a deflationary environment. This is where we’re at now.

    The private system does not deliberately induce inflation. Quite the opposite. They induce deflation. The creditor class tirelessly preaches the gospel of anti-inflation. The inflationary effect of the Fed’s management. which Ron Paul never tires of pointing out, is a problem the financiers themselves create as a byproduct of their gambling addiction. It is endemic in the management of private finance, and not caused by paper money, as R Paul believes.

    Private finance would attempt to discredit any government financial management by asserting it is inherently inflationary, just as the for-profit private health care system claims government health care is inherently inferior to the private system.

    It doesn’t matter that those who trash single-payer are blatant liars, or that those who claim government management of the financial system is similarly doomed to fail ( most main stream economists ), what matters is who controls the media.

    The media is controlled by finance. Just as single payer advocates are not allowed to make their case, so any alternative to the private financial monopoly is censored from the official discussion.

    But the discussion goes forward at the grass roots ( here ) as ordinary people struggle to find their way. As conditions do not improve or deteriorate, official propaganda loses its hold and the simple, practical, and elegant solutions that EHB has to offer have an opportunity to take hold.

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