THE MYSTERIOUS CAFRS: HOW STAGNANT POOLS OF GOVERNMENT MONEY COULD HELP SAVE THE ECONOMY

California is in the anomalous position of being $26 billion in the red and plunging toward bankruptcy, while it has over $70 billion stashed away in an investment pool that it cannot touch.

Read more here –
http://www.webofdebt.com/articles/mysterious_cafrs.php

9 Responses

  1. If California took all the money the state has invested in the big wallstreet banks and invested in its own Bank of California, would the rest of the nation have to bail out – again – those “too big to fail” banks?

  2. Ellen. I pointed this out to you multiple times on truthout’s site, but apparently they are now blocking my IP because I criticized them.

    If I take the time to type up an explanation of how to read a Comprehensive Annual Financial Report, which will explain exactly why this idea is complete nonsense, will you be so kind as to post an apology at truthout, or will you just censor this comment like you had your friends do at truthout?

    • I did reply to your comments on Huffington Post. I never said Burien’s multi-trillion dollar figures were correct, only that he had pointed to an interesting source of capital, which is very inefficiently used at present. I’m suggesting what might be a more efficient use of it. I’m not saying pension money should be “spent,” only that it should be moved from the very low-paying investments where it is parked now into a capital investment in the State Bank of California. If the SBC is as profitable as the Bank of North Dakota is, Calpers will increase its return on equity from 1% to 26% annually.

  3. Thanks for looking into Walter Burien’s claims, Ellen. Given that governments at any level tend to be insider’s clubs, one is inclined to take his conspiracy claims seriously, especially at the state level.

    Forget about the federal level, where the web of obfuscation is so impenetrable, with “national security” cover and black budgets, corruption at the state level seems easier to expose.

    A transparent state banking plan could incorporate the “off balance sheet” monies into a transparent accounting system where an informed public could keep watch over the insiders.

  4. Ellen,
    I belong to a state employee credit union, which I love. Is there potential for conflicting interests if the state were to create a state bank where a successful state credit union system exists (which nearly any state citizen can join by using any one of the broad brush qualifications)?

    It seems to me that each represents the interests of different segments of a state’s citizenry and must follow different guidelines and laws. But are credit unions’ and commercial banks’ functions different enough so as not to cause competing conflicts?

    • From what I have read about the North Dakota state bank, the system works synergistically with private banks. The North Dakota state bank acts in a way that is similar to a Federal Reserve branch except they actually have skin in the game in the form of keeping taxpayers and depositors happy. From what I have gathered the North Dakota bank use taxes as reserves and then uses fractional reserve practices to increase the money supply. If another commercial bank finds itself short on liquidity the state bank will take on some of their assets and in exchange supply liquidity to the commercial bank . One big benefit of the state bank in North Dakota seems to be that the state bank wanted nothing to do with risky assets like derivatives and since they were a backstop and source of liquidity for the commercial banks the commercial banks followed the state banks lead and avoided risky but lucrative and in the short term extremely profitable investments knowing it could easily leave them in the lurch without a backstop or a source of liquidity.

      This state of affairs shows that all it would take to drastically improve the current monetary system is a change to the current monetary framework since %99 of current financial problems are systemic and not an indictment of humankind other than our many ingenious ways of creating environments, systems and frameworks that bring out the worst in people rather than environments, systems and frameworks that bring out the best.

    • Hi, I’m in Europe for 3 weeks so am slow to get to emails and blogs. Credit unions are great, but they serve a difference purpose. In Sweden, where I just spoke at a conference, credit unions are not allowed to lend beyond what they take in from their customers. In the U.S., my understanding is that they can engage in “fractional reserve” lending to some extent, but they don’t; they tend to lend very conservatively. The advantage of a state-owned bank is that it would have an enormous capital and deposit base from which to create credit for public purposes. For building something like a high-speed train to San Francisco, low-cost housing, or a power plant, you need a major credit source of the sort that only major banks can give. The state itself needs its own bank.

  5. I found Joseph Danison’s comment to be particularly interesting as I had attempted to learn more about Mr Burien’s claims about a year or so ago with little success other than to review CAFR reports from several states:

    ‘Thanks for looking into Walter Burien’s claims, Ellen. Given that governments at any level tend to be insider’s clubs, one is inclined to take his conspiracy claims seriously, especially at the state level.’

    I think that most American citizens have no idea of the existence of the CAFR funds; I did not prior to watching one of Mr Burien’s YouTube videos.

    By the way, many of your readers might find the activities on another front related to economics to be of interest in the context of operation of a fiat money system such as has existed in the US over the past 38 years since Nixon endorsed that policy.

    To follow up on a comment I left a couple of weeks ago at the PublicBanking website ‘Welcome’ blog, the presentations given at the ‘Fiscal Sustainability Teach-In’ held at GWU in Washington D C on April 28 are available at the following link:

    http://www.netrootsmass.net/fiscal-sustainability-teach-in-and-counter-conference/

    An audio recording of each of the presentations may be coordinated with PowerPoint slides of the information offered by each speaker. The Teach-In was organized by Dr Joe Firestone and associates; I think he did an excellent job of getting economists (Bill Mitchell, Marshall Auerback, Randall Wray, Stephanie Kelton, Warren Mosler and Pavlina Tcherneva) to offer their insights into how Modern Money theoretical/practical (B Mitchell defines this as MMT) macroeconomic policies could provide a framework to solve most of the economic difficulties which are so devastating at the present time. I found Dr Randall Wray’s book to be quite helpful in explaining how to perform money/currency regulation with the objective of facilitating full employment:

    ‘Understanding Modern Money. The Key to Full Employment and Price Stability’ 1998 Edward Elgar.

    In searching for some sort of strategy which might actually work to get around our current economic disasters (which result from bankster manipulations which have been off and on repeated in a recognizable pattern throughout several centuries), I have concluded that the MMT (or an appropriate variant) would work if competent, realistic decision-makers were made a prerequisite; of course, other constructs might also work in a theoretical context should the people running the show be honest rather than fundamental opportunists. During a few intervals of American history, government printed and controlled the currency; however, the clever opportunists have managed to convince most people to accept the even more clever advertising and control methods which are hallmarks of today’s banksters (perhaps, their constant messages are appealing because each of us would like to think that he/she would also enjoy being wealthy).

    It is difficult for many people to argue with/comprehend/dispute the official USA government propaganda regarding fiscal matters, however, the final paragraph of Joe Firestone’s web blog at seminal.firedoglake.com may help:

    Fiscal Sustainability and the American Future
    By: letsgetitdone Saturday April 10, 2010 10:52 pm

    http://seminal.firedoglake.com/diary/40175

    I urge your readers to become familiar with the approaches which several competent (iconoclastic?) economists explain how MMT (modern money theory) can be employed to facilitate full employment. A critical assumption is that the Treasury Dept would issue the currency, however, the role of the Central Bank would have to be subservient to the actual Federal Government (not the banksters).

  6. I think the state people are using a cover up smokescreen story/why else would this have been kept secret for 50 years plus/think about it !!!!!!!!!!

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