REVIVING THE LOCAL ECONOMY WITH PUBLICLY-OWNED BANKS

The credit crunch is getting worse on Main Street, despite a Wall Street bailout now in the trillions of dollars. The Fed may have played all its cards, but state and local governments still hold a few aces. Some local politicians are looking into the feasibility of opening their own publicly-owned banks, providing them with their own credit machines.

Read more here –
http://www.webofdebt.com/articles/publicly-owned.php

9 Responses

  1. Is it true, as William Black says, that the recovery of the big banks is an illusion generated by “control fraud”? Is the 3.6 bn profit of JP Morgan an Eronesque lie and their reluctance to extend credit a reflection of this reality, as Ellen says. If Jamie Dimon is not making money through traditional bank lending, then is it being generated by derivative play?

    What are the chances of a guy named “khavari” to become Florida governor? Maybe he is an early voice in a developing chorus for Ellen’s state banking model.

    That would be grand, yes indeed!

    I would like to hear about the AMI meeting. Is there a chance of an article on that, Ellen?

  2. Only Wall Street greed is capable of busting through the American urban myth that privagte corparations do everythign better than publicly run companies. Keep it up Goldman, BofA, and people will go running to form public banks just to keep money from you, besides the benefits Ellen aptly describes

  3. I can give you another example of publicly operated companies. In state of Washington, electricity is provided by public utilities to communities. As a result, many residents and businesses pay for electricity at cost. If we had private companies providing electricity, we’d be paying more money to shareholders.

    City of Seattle has one of the lowest electricity rates in the country – about 4 cents per kwh in the summer. Winter rates are little higher.

  4. Banks are not only making life difficult for mortgage borrowers, they’re now also cutting credit, without warning to their credit card customers.

    http://www.cbsnews.com/stories/2009/10/20/business/main5402319.shtml

  5. […] https://webofdebt.wordpress.com/2009/10/15/reviving-the-local-economy-with-publicly-owned-banks/ […]

  6. Hi Ellen,

    One of your critics seems to have a point (kinda, sorta) about just creating money as opposed to jobs. But first, my 2 cents worth …

    One of my epiphanies about Monetary Reform has been that it is a necessary but not sufficient condition for turning things around in this country and the world. Everybody is basically calling for a ‘New New Deal’ – fix money, credit and banking and get people working and consuming again. Even this guy, Jon. (See http://dandelionsalad.wordpress.com/2009/10/15/reviving-the-local-economy-with-publicly-owned-banks-by-dr-ellen-brown/#comment-107825#comment-107825) Jon makes two points:

    1. There’s always one thing missing in the big financial discussions. People don’t have any money anymore. No savings. No equity. No earning potential. …. Wall Street isn’t the American economy and local banks can’t be granting more credit to the average consumer that has a pile of bills and new job paying a dreamy 12 bucks an hour. More debt isn’t going to magically launch the new golden age.

    2. Fractional lending just creates more inflation. (Soddy provides an abstract model for how to create money without inflation. It sounds logical.)

    My biggest objection to the ‘New New Deal’ approach is the focus on employment – as opposed to enough leisure and educational opportunities for people to understand the world around them and exercise their duties as citizens. No doubt the bankers and the Bushes have screwed up the economy enough with waste and inefficiency in the search for profits there will be enough to do for a long, long time for anybody who wants to work. I guess the point is that just creating money or employment is not enough. The world might even be better off without a country that has been turned into a death factory to create jobs or a ravenous mouth of employed, money-enabled consumers gobbling up what remains of the natural world.

    Returning to economies that recognize labor as the backbone of the economy instead of a drag on the balance sheets will — just like it did before. Labor isn’t an expense that must be reduced to compete globally. You can’t compete with slaves unless you’re wiling to become one. Labor is the reason for the economy. “Labor precedes capital.” Abraham Lincoln

    This may not be your bag but somebody is going to have to answer people like Jon.

    http://www.globalresearch.ca/PrintArticle.php?articleId=15649

    As PhD economist Steve Keen pointed out recently, 2 Nobel-prize winning economists have shown that the assumption that reserves are created from excess deposits is not true: The model of money creation that Obama’s economic advisers have sold him was shown to be empirically false over three decades ago.

    The first economist to establish this was the American Post Keynesian economist Basil Moore, but similar results were found by two of the staunchest neoclassical economists, Nobel Prize winners Kydland and Prescott in a 1990 paper Real Facts and a Monetary Myth.

    Looking at the timing of economic variables, they found that credit money was created about 4 periods before government money. However, the “money multiplier” model argues that government money is created first to bolster bank reserves, and then credit money is created afterwards by the process of banks lending out their increased reserves.

    Regards,

    Steven

    • Oops! There is a second part to the above post which confirms what you have been saying about bankers and ‘shadow bankers’ just creating money with nothing like depositor savings or ANY real wealth to back it. It doesn’t really have anything to do with the article and should have been a separate post.

      Back to the article… It occurs that state-owned banks would be in a far better position to direct new money (credit) creation to the creation of MEANINGFUL, socially valuable employment, NOT the rock-raking of the New Deal or the needed but too low a profit margin for private investors infrastructure like TVA. Or, needless to say, the post-WWII US military-industrial complex.

    • Ellen,

      I have continued to do research regarding how the US was manipulated into this position, I have compiled a couple of articles. If you are interested I will send them to you. I have a couple of questions regarding the Federal Reserve that I can not find the answer too.

      There is a reason we are not seeing new jobs, the monetary contraction is still taking place and will do so until it has served its purpose.

      The primary purpose of capilalism is to give people the opportunity to create a method of survival and to provide for their families. People used to know this, It was one of the reasons companies flurished. The leaders would not do anything to jeapordize the security of the workforce, even if it meant telling them no to unsustainable raises and benefits, they were loyal to their people. This belief lost its footing in business when the shareholder became more important than the employees, and the board of directors and executives became self serving.

      • Sure, relevant research always welcome!

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