Posted on February 9, 2019 by Ellen Brown
Modern Monetary Theory (MMT) is getting significant media attention these days, after Alexandria Ocasio-Cortez said in an interview that it should “be a larger part of our conversation” when it comes to funding the Green New Deal. According to MMT, the government can spend what it needs without worrying about deficits. MMT expert and Bernie Sanders advisor Prof. Stephanie Kelton says the government actually creates money when it spends. The real limit on spending is not an artificially imposed debt ceiling but a lack of labor and materials to do the work, leading to generalized price inflation. Only when that real ceiling is hit does the money need to be taxed back, and then not to fund government spending but to shrink the money supply in an economy that has run out of resources to put the extra money to work.
Predictably, critics have been quick to rebut, calling the trend to endorse MMT “disturbing” and “a joke that’s not funny.” In a February 1st post on The Daily Reckoning, Brian Maher darkly envisioned Bernie Sanders getting elected in 2020 and implementing “Quantitative Easing for the People” based on MMT theories. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Bolivarian Revolution, hyperinflation, MMT, public banking, Venezuela | 52 Comments »
Posted on January 26, 2019 by Ellen Brown
The Green New Deal endorsed by Alexandria Ocasio-Cortez and more than 40 other US Representatives has been criticized as imposing a too-heavy burden on the rich and upper-middle-class taxpayers who will have to pay for it, but taxing the rich is not what the Green New Deal resolution proposes. It says funding will come primarily from certain public agencies, including the Federal Reserve and “a new public bank or system of regional and specialized public banks.”
Funding through the Federal Reserve may be controversial, but establishing a national public infrastructure and development bank should be a no-brainer. The real question is why we don’t already have one, like China, Germany, and other countries that are running circles around us in infrastructure development. Many European, Asian and Latin American countries have their own national development banks, as well as belonging to bilateral or multinational development institutions that are jointly owned by multiple governments. Unlike the US Federal Reserve, which considers itself “independent” of government, national development banks are wholly owned by their governments and carry out public development policies. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: AOC, Green New Deal, KfW, public banking, public development banks, renewable energy revolution | 19 Comments »
Posted on December 28, 2018 by Ellen Brown
Calls for a Universal Basic Income have been increasing, most recently as part of the Green New Deal introduced by Rep. Alexandria Ocasio-Cortez (D-NY) and supported in the last month by at least 40 members of Congress. A Universal Basic Income (UBI) is a monthly payment to all adults with no strings attached, similar to Social Security. Critics say the Green New Deal asks too much of the rich and upper-middle-class taxpayers who will have to pay for it, but taxing the rich is not what the resolution proposes. It says funding would primarily come from the federal government, “using a combination of the Federal Reserve, a new public bank or system of regional and specialized public banks,” and other vehicles.
The Federal Reserve alone could do the job. It could buy “Green” federal bonds with money created on its balance sheet, just as the Fed funded the purchase of $3.7 trillion in bonds in its “quantitative easing” program to save the banks. The Treasury could also do it. The Treasury has the constitutional power to issue coins in any denomination, even trillion dollar coins. What prevents legislators from pursuing those options is the fear of hyperinflation from excess “demand” (spendable income) driving prices up. But in fact the consumer economy is chronically short of spendable income, due to the way money enters the consumer economy. We actually need regular injections of money to avoid a “balance sheet recession” and allow for growth, and a UBI is one way to do it. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: debt jubilee, public banking, UBI, Universal basic income | 69 Comments »
Posted on December 17, 2018 by Ellen Brown
With what Naomi Klein calls “galloping momentum,” the “Green New Deal” promoted by newly-elected Rep. Alexandria Ocasio-Cortez (D-NY) appears to be forging a political pathway for solving all of the ills of society and the planet in one fell swoop. It would give a House Select Committee “a mandate that connects the dots between energy, transportation, housing, as well as healthcare, living wages, a jobs guarantee” and more. But to critics even on the left it is just political theater, since “everyone knows” a program of that scope cannot be funded without a massive redistribution of wealth and slashing of other programs (notably the military), which is not politically feasible.
Perhaps, but Ocasio-Cortez and the 22 representatives joining her in calling for a Select Committee are also proposing a novel way to fund the program, one which could actually work. The resolution says funding will primarily come from the federal government, “using a combination of the Federal Reserve, a new public bank or system of regional and specialized public banks, public venture funds and such other vehicles or structures that the select committee deems appropriate, in order to ensure that interest and other investment returns generated from public investments made in connection with the Plan will be returned to the treasury, reduce taxpayer burden and allow for more investment.” Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Abenomics, Federal Reserve, Green New Deal, Ocasio-Cortez, public banking, QE for infrastructure, Reconstruction Finance Corporation | 21 Comments »
Posted on November 10, 2018 by Ellen Brown
The Los Angeles charter amendment to approve a city-owned bank did not pass, but it did get 42 percent of the vote, a remarkable feat considering that the dynamic young Public Bank LA advocacy group effectively only had a month to educate 4 million voters on what a public bank is and why passing the measure was a good idea. If they had had another month, the bill could well have passed. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Los Angeles public bank, Public Bank LA, public banking | 8 Comments »
Posted on November 4, 2018 by Ellen Brown
President Trump has stepped up his criticism of the Federal Reserve, saying of its aggressive interest rate hikes that it has “gone crazy.” The same charge has been leveled against Trump, but there may be a method to his madness . . . .
October was a brutal month for the stock market. After the Fed’s eighth interest rate hike on September 26th, the Dow Jones Industrial Average dropped more than 2,000 points and the NASDAQ had its worst month in nearly 10 years. After the Dow lost more than 800 points on October 10th and the S&P 500 suffered its first weeklong losing streak since Trump’s election, the president said, “I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy.” In a later interview on Fox News, he called the Fed’s rate hikes “loco.” And in a Wall Street Journal interview published on October 24th, Trump said he thought the biggest risk to the economy was the Federal Reserve, because “interest rates are being raised too quickly.” He also criticized the Fed and its chairman in July and August. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: End the Fed, Fed independence, Jerome Powell, public banking, stock market collapse, Trump and the Fed | 16 Comments »
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 | 17 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 | 29 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 »
The Venezuela Myth Keeping Us From Transforming Our Economy
Modern Monetary Theory (MMT) is getting significant media attention these days, after Alexandria Ocasio-Cortez said in an interview that it should “be a larger part of our conversation” when it comes to funding the Green New Deal. According to MMT, the government can spend what it needs without worrying about deficits. MMT expert and Bernie Sanders advisor Prof. Stephanie Kelton says the government actually creates money when it spends. The real limit on spending is not an artificially imposed debt ceiling but a lack of labor and materials to do the work, leading to generalized price inflation. Only when that real ceiling is hit does the money need to be taxed back, and then not to fund government spending but to shrink the money supply in an economy that has run out of resources to put the extra money to work.
Predictably, critics have been quick to rebut, calling the trend to endorse MMT “disturbing” and “a joke that’s not funny.” In a February 1st post on The Daily Reckoning, Brian Maher darkly envisioned Bernie Sanders getting elected in 2020 and implementing “Quantitative Easing for the People” based on MMT theories. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: Bolivarian Revolution, hyperinflation, MMT, public banking, Venezuela | 52 Comments »