Posted on October 3, 2018 by Ellen Brown
Wall Street owns the country. That was the opening line of a fiery speech by populist leader Mary Ellen Lease in 1890. Franklin Roosevelt said it again in a letter to Colonel House in 1933, and Sen. Dick Durbin was still saying it in 2009. “The banks – hard to believe in a time when we’re facing a banking crisis that many of the banks created – are still the most powerful lobby on Capitol Hill,” Durbin said in an interview. “And they frankly own the place.”
Wall Street banks triggered a credit crisis in 2008-09 that wiped out over $19 trillion in household wealth, turned some 10 million families out of their homes, and cost almost 9 million jobs in the US alone; yet the banks were bailed out without penalty, while defrauded homebuyers were left without recourse or compensation. The banks made a killing on interest rate swaps with cities and states across the country, after a compliant and accommodating Federal Reserve dropped interest rates nearly to zero. Attempts to renegotiate these deals have failed. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: infrastructure financing, Los Angeles public bank, public banking, Wall Street costs | 8 Comments »
Posted on September 14, 2018 by Ellen Brown
Central bankers are now aggressively playing the stock market. To say they are buying up the planet may be an exaggeration, but they could. They can create money at will, and they have declared their “independence” from government. They have become rogue players in a game of their own.
Excluding institutions such as Blackrock and Vanguard, which are composed of multiple investors, the largest single players in global equity markets are now thought to be central banks themselves. An estimated 30 to 40 central banks are invested in the stock market, either directly or through their investment vehicles (sovereign wealth funds). According to David Haggith on Zero Hedge:
Central banks buying stocks are effectively nationalizing US corporations just to maintain the illusion that their “recovery” plan is working . . . . At first, their novel entry into the stock market was only intended to rescue imperiled corporations, such as General Motors during the first plunge into the Great Recession, but recently their efforts have shifted to propping up the entire stock market via major purchases of the most healthy companies on the market.
Continue reading →
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Posted on August 23, 2018 by Ellen Brown
Giant Chinese tech companies have bypassed credit cards and banks to create their own low-cost digital payment systems.
The US credit card system siphons off excessive amounts of money from merchants, who must raise their prices to cover this charge. In a typical $100 credit card purchase, only $97.25 goes to the seller. The rest goes to banks and processors. But who can compete with Visa and MasterCard?
It seems China’s new mobile payment ecosystems can. According to a May 2018 article in Bloomberg titled “Why China’s Payment Apps Give U.S. Bankers Nightmares”:
The future of consumer payments may not be designed in New York or London but in China. There, money flows mainly through a pair of digital ecosystems that blend social media, commerce and banking—all run by two of the world’s most valuable companies. That contrasts with the U.S., where numerous firms feast on fees from handling and processing payments. Western bankers and credit-card executives who travel to China keep returning with the same anxiety: Payments can happen cheaply and easily without them.
Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Alipay, Amazon, China's banks, credit cards, mobile payments, public banking | 15 Comments »
Posted on July 30, 2018 by Ellen Brown
The president has criticized Federal Reserve policy for undermining his attempts to build the economy. The best way to make the central bank serve the needs of the economy is to make it a public utility.
For nearly half a century, presidents have refrained from criticizing the “independent” Federal Reserve; but that was before Donald Trump. In response to a question about Fed interest rate policy in a CNBC interview on July 19, 2018, he shocked commentators by stating, “I’m not thrilled. Because we go up and every time you go up they want to raise rates again. . . . I am not happy about it. . . . I don’t like all of this work that we’re putting into the economy and then I see rates going up.” He acknowledged the central bank’s independence, but the point was made: the Fed was hurting the economy with its “Quantitative Tightening” policies and needed to watch its step.
In commentary on CNBC.com, Richard Bove contended that the president was positioning himself to take control of the Federal Reserve. Bove said Trump will do it “both because he can and because his broader policies argue that he should do so. . . . By raising interest rates and stopping the growth in the money supply [the Fed] stands in the way of further growth in the American economy.” Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, infrastructure crisis, Nationalize the Fed, quantitative easing | 35 Comments »
Posted on July 4, 2018 by Ellen Brown
California legislators exploring the public bank option may be breaking not just from Wall Street but from the Federal Reserve.
Voters in Los Angeles will be the first in the country to weigh in on a public banking mandate, after the City Council agreed on June 29th to put a measure on the November ballot that would allow the city to form its own bank. The charter for the nation’s second-largest city currently prohibits the creation of industrial or commercial enterprises by the city without voter approval. The measure, introduced by City Council President Herb Wesson, would allow the city to create a public bank, although state and federal law hurdles would still need to be cleared.
The bank is expected to save the city millions, if not billions, of dollars in Wall Street fees and interest paid to bondholders, while injecting new money into the local economy, generating jobs and expanding the tax base. It could respond to the needs of its residents by reinvesting in low-income housing, critical infrastructure projects, and clean energy, as well as serving as a depository for the cannabis industry. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: cannabis cash, Fiona Ma, Los Angeles public bank, pot banks, public banking, SB 930 | 27 Comments »
Posted on May 26, 2018 by Ellen Brown
California has over $700 billion parked in private banks earning minimal interest, private equity funds that contributed to the affordable housing crisis, or shadow banks of the sort that caused the banking collapse of 2008. These funds, or some of them, could be transferred to an infrastructure bank that generated credit for the state – while the funds remained safely on deposit in the bank.
California needs over $700 billion in infrastructure during the next decade. Where will this money come from? The $1.5 trillion infrastructure initiative unveiled by President Trump in February 2018 includes only $200 billion in federal funding, and less than that after factoring in the billions in tax cuts in infrastructure-related projects. The rest is to come from cities, states, private investors and public-private partnerships (PPPs) one. And since city and state coffers are depleted, that chiefly means private investors and PPPs, which have a shady history at best. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: BlackRock, Blackstone, California Infrastructure Bank, CalPERS, CalSTRS, public banking | 15 Comments »
Posted on April 22, 2018 by Ellen Brown
The Fed is aggressively raising interest rates, although inflation is contained, private debt is already at 150% of GDP, and rising variable rates could push borrowers into insolvency. So what is driving the Fed’s push to “tighten”?
On March 31st the Federal Reserve raised its benchmark interest rate for the sixth time in 3 years and signaled its intention to raise rates twice more in 2018, aiming for a fed funds target of 3.5% by 2020. LIBOR (the London Interbank Offered Rate) has risen even faster than the fed funds rate, up to 2.3% from just 0.3% 2-1/2 years ago. LIBOR is set in London by private agreement of the biggest banks, and the interest on $3.5 trillion globally is linked to it, including $1.2 trillion in consumer mortgages.
Alarmed commentators warn that global debt levels have reached $233 trillion, more than three times global GDP; and that much of that debt is at variable rates pegged either to the Fed’s interbank lending rate or to LIBOR. Raising rates further could push governments, businesses and homeowners over the edge. In its Global Financial Stability report in April 2017, the International Monetary Fund warned that projected interest rises could throw 22% of US corporations into default. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Fed tightening, Federal Reserve, FOMC, interest rates, LIBOR, public banking | 23 Comments »
Posted on April 4, 2018 by Ellen Brown
Bayer and Monsanto have a long history of collusion to poison the ecosystem for profit. The Trump administration should veto their merger not just to protect competitors but to ensure human and planetary survival.
Two new studies from Europe have found that the number of farm birds in France has crashed by a third in just 15 years, with some species being almost eradicated. The collapse in the bird population mirrors the discovery last October that over three quarters of all flying insects in Germany have vanished in just three decades. Insects are the staple food source of birds, the pollinators of fruits, and the aerators of the soil.
The chief suspect in this mass extinction is the aggressive use of neonicotinoid pesticides, particularly imidacloprid and clothianidin, both made by German-based chemical giant Bayer. These pesticides, along with toxic glyphosate herbicides (Roundup), have delivered a one-two punch against Monarch butterflies, honeybees and birds. But rather than banning these toxic chemicals, on March 21st the EU approved the $66 billion merger of Bayer and Monsanto, the US agribusiness giant producing Roundup and the genetically modified (GMO) seeds that have reduced seed diversity globally. The merger will make the Bayer-Monsanto conglomerate the largest seed and pesticide company in the world, giving it enormous power to control farm practices, putting private profits over the public interest. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Bayer, glyphosate, I.G. Farben, Monsanto, neonicotinoids, organic farming | 14 Comments »
Posted on March 17, 2018 by Ellen Brown
The US Postal Service, under attack from a manufactured crisis designed to force its privatization, needs a new source of funding to survive. Postal banking could fill that need.
The US banking establishment has been at war with the post office since at least 1910, when the Postal Savings Bank Act established a public savings alternative to a private banking system that had crashed the economy in the Bank Panic of 1907. The American Bankers Association was quick to respond, forming a Special Committee on Postal Savings Legislation to block any extension of the new service. According to a September 2017 article in The Journal of Social History titled “‘Banks of the People’: The Life and Death of the U.S. Postal Savings System,” the banking fraternity would maintain its enmity toward the government savings bank for the next 50 years. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: postal banking, privatization, public banking, US Postal Service | 11 Comments »
Posted on February 27, 2018 by Ellen Brown
“One Belt, One Road,” China’s $1 trillion infrastructure initiative, is a massive undertaking of highways, pipelines, transmission lines, ports, power stations, fiber optics, and railroads connecting China to Central Asia, Europe and Africa. According to Dan Slane, a former advisor in President Trump’s transition team, “It is the largest infrastructure project initiated by one nation in the history of the world and is designed to enable China to become the dominant economic power in the world.” In a January 29th article titled “Trump’s Plan a Recipe for Failure, Former Infrastructure Advisor Says,” he added, “If we don’t get our act together very soon, we should all be brushing up on our Mandarin.” Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Chinese economy, infrastructure financing, One Belt One Road, public banking, quantitative easing, Trump infrastructure plan | 29 Comments »
Posted on January 23, 2018 by Ellen Brown
In a blatant example of “do as I say, not as I do,” the US government is profiting handsomely by accepting marijuana cash in the payment of taxes while imposing huge penalties on banks for accepting it as deposits. Onerous reporting requirements are driving small local banks to sell out to Wall Street. Congress needs to harmonize federal with state law. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: marijuana cash, money laundering, Safe Banking Act | 22 Comments »
Posted on January 5, 2018 by Ellen Brown
This is the second in a two-part article on the debt burden America’s students face. Read Part 1 here.
The lending business is heavily stacked against student borrowers. Bigger players can borrow for almost nothing, and if their investments don’t work out, they can put their corporate shells through bankruptcy and walk away. Not so with students. Their loan rates are high and if they cannot pay, their debts are not normally dischargeable in bankruptcy. Rather, the debts compound and can dog them for life, compromising not only their own futures but the economy itself. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: free tuition, public banking, student debt crisis, Wall Street fraud | 18 Comments »
Posted on December 26, 2017 by Ellen Brown
Higher education has been financialized, transformed from a public service into a lucrative cash cow for private investors.
The advantages of slavery by debt over “chattel” slavery – ownership of humans as a property right – were set out in an infamous document called the Hazard Circular, reportedly circulated by British banking interests among their American banking counterparts during the American Civil War. It read in part:
Slavery is likely to be abolished by the war power and chattel slavery destroyed. This, I and my European friends are glad of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages.
Slaves had to be housed, fed and cared for. “Free” men housed and fed themselves. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: GI Bill, Greenbacks, public banking, student debt | 37 Comments »
Posted on November 4, 2017 by Ellen Brown
Phil Murphy, a former banker with a double-digit lead in New Jersey’s race for governor, has made a state-owned bank a centerpiece of his platform. If he wins on November 7, the nation’s second state-owned bank in a century could follow.
A UK study published on October 27, 2017 reported that the majority of politicians do not know where money comes from. According to City A.M. (London) :
More than three-quarters of the MPs surveyed incorrectly believed that only the government has the ability to create new money. . . .
The Bank of England has previously intervened to point out that most money in the UK begins as a bank loan. In a 2014 article the Bank pointed out that “whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”
The Bank of England researchers said that 97% of the UK money supply is created in this way. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Bank of North Dakota, Phil Murphy, public banking | 50 Comments »
Posted on October 30, 2017 by Ellen Brown
Crushing regulations are driving small banks to sell out to the megabanks, a consolidation process that appears to be intentional. Publicly-owned banks can help avoid that trend and keep credit flowing in local economies.
At his confirmation hearing in January 2017, Treasury Secretary Stephen Mnuchin said, “regulation is killing community banks.” If the process is not reversed, he warned, we could “end up in a world where we have four big banks in this country.” That would be bad for both jobs and the economy. “I think that we all appreciate the engine of growth is with small and medium-sized businesses,” said Mnuchin. “We’re losing the ability for small and medium-sized banks to make good loans to small and medium-sized businesses in the community, where they understand those credit risks better than anybody else.”
The number of US banks with assets under $100 million dropped from 13,000 in 1995 to under 1,900 in 2014. The regulatory burden imposed by the 2010 Dodd-Frank Act exacerbated this trend, with community banks losing market share at double the rate during the four years after 2010 as in the four years before. But the number had already dropped to only 2,625 in 2010. What happened between 1995 and 2010?
Six weeks after September 11, 2001, the 1,100 page Patriot Act was dropped on congressional legislators, who were required to vote on it the next day. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Bank of North Dakota, banking regulations, community banks, Dodd-Frank, Patriot Act, public banking | 22 Comments »
Posted on October 12, 2017 by Ellen Brown
During his visit to hurricane-stricken Puerto Rico, President Donald Trump shocked the bond market when he told Geraldo Rivera of Fox News that he was going to wipe out the island’s bond debt. He said on October 3rd:
You know they owe a lot of money to your friends on Wall Street. We’re gonna have to wipe that out. That’s gonna have to be — you know, you can say goodbye to that. I don’t know if it’s Goldman Sachs but whoever it is, you can wave good-bye to that.
How did the president plan to pull this off? Pam Martens and Russ Martens, writing in Wall Street on Parade, note that the U.S. municipal bond market holds $3.8 trillion in debt, and it is not just owned by Wall Street banks. Mom and pop retail investors are exposed to billions of dollars of potential losses through their holdings of Puerto Rican municipal bonds, either directly or in mutual funds. Wiping out Puerto Rico’s debt, they warned, could undermine confidence in the municipal bond market, causing bond interest rates to rise, imposing an additional burden on already-struggling states and municipalities across the country.
True, but the president was just pointing out the obvious. As economist Michael Hudson says, “Debts that can’t be paid won’t be paid.” Puerto Rico is bankrupt, its economy destroyed. In fact it is currently in bankruptcy proceedings with its creditors. Which suggests its time for some more out-of-the-box thinking . . . . Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Municipal bond debt, public banking, Puerto Rico, quantitative easing | 16 Comments »
Posted on October 3, 2017 by Ellen Brown
The policy of guaranteeing every citizen a universal basic income is gaining support around the world, as automation increasingly makes jobs obsolete. But can it be funded without raising taxes or triggering hyperinflation? In a panel I was on at the NexusEarth cryptocurrency conference in Aspen September 21-23rd, most participants said no. This is my rebuttal.
In May 2017, a team of researchers at the University of Oxford published the results of a survey of the world’s best artificial intelligence experts, who predicted that there was a 50 percent chance of AI outperforming humans in all tasks within 45 years. All human jobs were expected to be automated in 120 years, with Asian respondents expecting these dates much sooner than North Americans. In theory, that means we could all retire and enjoy the promised age of universal leisure. But the immediate concern for most people is that they will be losing their jobs to machines.
That helps explain the recent interest in a universal basic income (UBI) – a sum of money distributed equally to everyone. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: helicopter money, Inflation, public banking, QE for people, Universal basic income | 61 Comments »
Posted on July 23, 2017 by Ellen Brown
Illinois is teetering on bankruptcy and other states are not far behind, largely due to unfunded pension liabilities; but there are solutions. The Federal Reserve could do a round of “QE for Munis.” Or the state could turn its sizable pension fund into a self-sustaining public bank.
Illinois is insolvent, unable to pay its bills. According to Moody’s, the state has $15 billion in unpaid bills and $251 billion in unfunded liabilities. Of these, $119 billion are tied to shortfalls in the state’s pension program. On July 6, 2017, for the first time in two years, the state finally passed a budget, after lawmakers overrode the governor’s veto on raising taxes. But they used massive tax hikes to do it – a 32% increase in state income taxes and 33% increase in state corporate taxes – and still Illinois’ new budget generates only $5 billion, not nearly enough to cover its $15 billion deficit. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Illinois bankruptcy, Pension fund crisis, public banking, quantitative easing | 16 Comments »
Posted on June 27, 2017 by Ellen Brown
Japan has found a way to write off nearly half its national debt without creating inflation. We could do that too.
Let’s face it. There is no way the US government is ever going to pay back a $20 trillion federal debt. The taxpayers will just continue to pay interest on it, year after year.
A lot of interest.
If the Federal Reserve raises the fed funds rate to 3.5% and sells its federal securities into the market, as it is proposing to do, by 2026 the projected tab will be $830 billion annually. That’s nearly $1 trillion owed by the taxpayers every year, just for interest. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: debt jubilee, Inflation, Japanese economy, public banking, quantitative easing | 104 Comments »
Posted on June 11, 2017 by Ellen Brown
Higher interest rates will triple the interest on the federal debt to $830 billion annually by 2026, will hurt workers and young voters, and could bankrupt over 20% of US corporations, according to the IMF. The move is not necessary to counteract inflation and shows that the Fed is operating from the wrong model.
Responding to earlier presidential pressure, the Federal Reserve is expected to raise interest rates this week for the third time since November, from a fed funds target of 1% to 1.25%. But as noted in The Guardian in a March 2017 article titled “Trump Is Set to Win the Battle on Interest Rates, but US Economy Will Pay the Price”:
An increase in the base rate, however small, will tighten the screw on younger voters and some of the poorest communities who voted for him and rely on credit to get by.
More importantly for his economic programme, higher interest rates in the US will act like a honeypot for foreign investors . . . . [S]ucking in foreign cash has a price and that is an expensive dollar and worsening trade balance. . . . It might undermine his call for the repatriation of factories to the rust-belt states if goods cost 10% or 20% more to export.
In its Global Financial Stability report in April, the International Monetary Fund issued another dire warning: projected interest rises could throw 22% of US corporations into default. As noted on Zero Hedge the same month, “perhaps it was this that Gary Cohn explained to Donald Trump ahead of the president’s recent interview with the WSJ in which he admitted that he suddenly prefers lower interest costs.”
But the Fed was undeterred and is going full steam ahead. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, interest on excess reserves, interest rate hike, normalization policy, public banking | 48 Comments »
Breaking with Wall Street: L.A. Puts It to the Voters
Wall Street owns the country. That was the opening line of a fiery speech by populist leader Mary Ellen Lease in 1890. Franklin Roosevelt said it again in a letter to Colonel House in 1933, and Sen. Dick Durbin was still saying it in 2009. “The banks – hard to believe in a time when we’re facing a banking crisis that many of the banks created – are still the most powerful lobby on Capitol Hill,” Durbin said in an interview. “And they frankly own the place.”
Wall Street banks triggered a credit crisis in 2008-09 that wiped out over $19 trillion in household wealth, turned some 10 million families out of their homes, and cost almost 9 million jobs in the US alone; yet the banks were bailed out without penalty, while defrauded homebuyers were left without recourse or compensation. The banks made a killing on interest rate swaps with cities and states across the country, after a compliant and accommodating Federal Reserve dropped interest rates nearly to zero. Attempts to renegotiate these deals have failed. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: infrastructure financing, Los Angeles public bank, public banking, Wall Street costs | 8 Comments »