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.”
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 →
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 →
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 →
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 →
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 →
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.
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.”
May 15th-19th has been designated “National Infrastructure Week” by the US Chambers of Commerce, the American Society of Civil Engineers (ASCE), and over 150 affiliates. Their message: “It’s time to rebuild.” Ever since ASCE began issuing its “National Infrastructure Report Card” in 1998, the nation has gotten a dismal grade of D or D+. In the meantime, the estimated cost of fixing its infrastructure has gone up from $1.3 trillion to $4.6 trillion.
While American politicians debate endlessly over how to finance the needed fixes and which ones to implement, the Chinese have managed to fund massive infrastructure projects all across their country, including 12,000 miles of high-speed rail built just in the last decade. How have they done it, and why can’t we?
The cavalry has arrived! Great to see so many young people getting behind public banking. We had a rousing forum on Saturday, May 13th, at the Puente Learning Center in Los Angeles. The links to the Facebook live videos and photo album are here:
Phil Murphy, the leading Democratic candidate for governor of New Jersey, has made a state-owned bank a centerpiece of his campaign. He says the New Jersey bank would “take money out of Wall Street and put it to work for New Jersey – creating jobs and growing the economy [by] using state deposits to finance local investments … and … support billions of dollars of critical investments in infrastructure, small businesses, and student loans – saving our residents money and returning all profits to the taxpayers.”
A former Wall Street banker himself, Murphy knows how banking works. But in an April 7 op-ed in The New Jersey Spotlight, former New Jersey state treasurer Andrew Sidamon-Eristoff questioned the need for a state-owned bank and raised the issue of risk. This post is in response to those arguments, including a short refresher on the stellar model of the Bank of North Dakota (BND), currently the nation’s only state-owned depository bank. Continue reading →
The Canadian plan also helps Canadians live longer and healthier than Americans. . . . We need, as a nation, to reexamine the single-payer plan, as many individual states are doing.
The new American Health Care Act has been unveiled, and critics are calling it more flawed even than the Obamacare it was meant to replace. Dubbed “Ryancare” or “Trumpcare” (over the objection of White House staff), the Republican health care bill is under attack from left and right, with even conservative leaders calling it “Obamacare Lite”, “bad policy”, a “warmed-over substitute,” and “dead on arrival.”
The problem for both administrations is that they have been trying to fund a bloated, inefficient, and overpriced medical system with scarce taxpayer funds, without capping its costs. US healthcare costs in 2016 averaged $10,345 per person, for a total of $3.35 trillion dollars, a full 18 percent of the entire economy, twice as much as in other industrialized countries.
Ross Perot, who ran for president in 1992, had the right idea: he said all we have to do is to look at other countries that have better health care at lower cost and copy them.
A handful of Canadians are waging a noble fight to return their central bank, the Bank of Canada, to its chartered role as a low and no-interest financier of government projects and the public interest. That case is at the center of a new book called Beyond Banksters: Resisting the New Feudalism. We speak with author Joyce Nelson about how the global debt cartel of international finance is creating a permanent trap for citizens the world over. And we visit with economic strategist Mark Anielski about his book The Economics of Happiness – a different way of measuring wealth.
Americans could save $1 trillion over 10 years by financing infrastructure through publicly-owned banks like the one that has long been operating in North Dakota.
President Donald Trump has promised to rebuild America’s airports, bridges, tunnels, roads and other infrastructure, something both Democrats and Republicans agree should be done. The country needs a full $3 trillion in infrastructure over the next decade. The $1 trillion plan revealed by Trump’s economic advisers relies heavily on public-private partnerships, and private equity firms are lining up for these plumbing investments. In the typical private equity water deal, for example, higher user rates help the firms earn annual returns of anywhere from 8 to 18 percent – more even than a regular for-profit water company might expect. But the price tag can come as a rude surprise for local ratepayers. Continue reading →
It has been called “a bigger risk than Brexit”– the Italian banking crisis that could take down the eurozone. Handwringing officials say “there is no free lunch” and “no magic bullet.” But UK Prof. Richard Werner says the magic bullet is just being ignored.
On December 4, 2016, Italian voters rejected a referendum to amend their constitution to give the government more power, and the Italian prime minister resigned. The resulting chaos has pushed Italy’s already-troubled banks into bankruptcy. First on the chopping block is the 500 year old Banca Monte dei Paschi di Siena SpA (BMP), the oldest surviving bank in the world and the third largest bank in Italy. The concern is that its loss could trigger the collapse of other banks and even of the eurozone itself.
There seems little doubt that BMP and other insolvent banks will be rescued. The biggest banks are always rescued, no matter how negligent or corrupt, because in our existing system, banks create the money we use in trade. Virtually the entire money supply is now created by banks when they make loans, as the Bank of England has acknowledged. When the banks collapse, economies collapse, because bank-created money is the grease that oils the wheels of production.
So the Italian banks will no doubt be rescued. The question is, how? Continue reading →
To stimulate the economy, create new jobs and generate new GDP requires an injection of new money. Borrowing from the bond markets or off-balance-sheet in public/private partnerships won’t do it. If Congress won’t issue money directly, it should borrow from banks, which create money on their books when they make loans.
The Trump agenda, it seems, is not set in stone. The president-elect has a range of advisors with as many ideas. Steven Mnuchin, his nominee for Treasury Secretary, said in November that “we’ll take a look at everything,”even the possibility of extending the maturity of the federal debt with 50-year or 100-year bonds to take advantage of unusually low interest rates.
Steve Bannon, appointed chief White House strategist, seems to be envisioning Roosevelt-style experimentation with whatever works. Continue reading →
Here are my latest efforts at presenting the public banking model by power point. The longer version was at an event in Englewood, CO, on October 30, called “Taking Back the Money Power: The Public Option in Banking.” The shorter version was at an event in Santa Rosa, CA, on November 9 called “Cannabis Cash and Public Banking.” My part was on public banking in general, followed by Marc Armstrong who spoke on how a public bank could serve the newly legalized recreational cannabis business. Many thanks to Earl Staelin for the Colorado event and Shelly Browning for the Santa Rosa event. Great fun!
Donald Trump was an outsider who boldly stormed the citadel of Washington DC and won. He has promised real change, but his infrastructure plan appears to be just more of the same – privatizing public assets and delivering unearned profits to investors at the expense of the people. He needs to try something new; and for this he could look to Abraham Lincoln, whose bold solution was very similar to one now being considered in Europe: just print the money.
In Donald Trump’s victory speech after the presidential election, he vowed:
We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.
It sounds great; but as usual, the devil is in the details. Continue reading →
School districts are notoriously short of funding – so short that some California districts have succumbed to Capital Appreciation Bonds that will cost taxpayers as much is 10 to 15 times principal by the time they are paid off. By comparison, California’s Prop. 51, the school bond proposal currently on the ballot, looks like a good deal. It would allow the state to borrow an additional $9 billion for educational purposes by selling general obligation bonds to investors at an assumed interest rate of 5%, with the bonds issued over a five-year period and repaid over 30 years. $9 billion × 5% × 35 equals $15.75 billion in interest – nearly twice principal, but not too bad compared to the Capital Appreciation Bond figures.
However, there is a much cheaper way to fund this $9 billion school debt. By borrowing from its own state-chartered, state-owned bank, the state could save over $10 billion – on a $9 billion loan. Here is how. Continue reading →
So says this week’s guest Bill Black about the recent Wells Fargo scandal in which millions of customers were beset with unrequested accounts that cost them fees and affected their credit scores – another in the long line of Big-Bank violations. Black, author of “The Best Way To Rob A Bank Is To Own One” is renowned for obtaining convictions of almost a thousand bankers and sending several hundred of them to prison when he was a Federal regulator back in 1990 during the savings and loan scandal. He talks with Ellen about why that sort of regulatory punch no longer exists. Selling-off public assets and services is discussed by co-host Walt McRee with the Executive Director of In The Public Interest, Donald Cohen, who issued a recent report on how privatization is helping perpetuate economic inequality. Matt Stannard returns on the Public Banking Report to reflect on how Wells Fargo’s scandal hurts everyone at the bank, not just their customers.
996. Oct 19-21, Bioneers Conference, panelist on Oct 20, 2:45 pm, Marin Center, San Rafael, CA.997. Oct. 22, speaker with Gar Alperovitz at Praxis Peace Institute, “Changing the System: California’s Strategic Role in National Strategic Change,” Sonoma, CA, 276 E. Napa St, Sonoma. 7:00 pm.
994. Interview with Harvey Wasserman, Greenpower and Wellness, prn.fm, KPFK Los Angeles, 2 pm
993. Oct. 9, speaker, State Bank Forum, University of Washington, Kane Hall, 7-9pm http://sdc.wastateleg.org/hasegawa/state-bank/
992. Oct. 4, 7:30 pm, Living Economy Salon, panelist, Public Bank LA: “Solutions for Social and Environmental Justice”, 3110 Main St., Annex Building C 2nd Floor, Santa Monica, CA 90405
991. Oct. 3, interview on Unmediated, podcast of Reader Magazine, episode title: Making Money The Public’s Slave (The Public Banking Solution), 10 a.m. PT
990. Sept. 28, interview with Sinclair Noe, Money Radio 1510, pre-recorded for a later date
989. Sept. 20-22, California Vision 2020 Conference, speaking at 11 am on Sept 20, Sheraton Grand Hotel , Sacramento.
988. Sept. 10, interview with Lila Garrett on KPFK, “Connect the Dots”, http://www.kpfk.org/on-air/connect-the-dots/ 7. a.m. PT
963. Nov. 17, Interview with Sarah Westall, Business Game Changers with Sarah Westall, Sarawestall.com
962. Nov. 13, interview with Scott Harris, WPKN radio, Bridgeport, CT–“Between the Lines” radio news magazine. 9 pm ET. http://www.btlonline.org/2018/seg/180105bf-btl-brown.html
955. Sept. 21-23rd, speaker, The Nexus Conference, http://www.nexusearth.com/conference.html — cryptocurrency/blockchain conference, Aspen CO
954. Aug. 17, interview with Sinclair Noe, Financial Review, moneyradio.com. Listen to podcast here.
953. July 15, Public Banking Forum, with Seattle mayoral candidate Bob Hasegawa and Ellen Brown, UW Evans School of Public Policy and Governance, Kane Hall, UW Campus, 7-9 pm.
952. June 19, interview with Eric Draitser, CounterPunch radio. 6 pm EDT. Podcast here.
951. June 1, interview with Tom Kiely, INN World Report, 7:30 pm Eastern
949. May 24, interview with Michael Rivero on whatreallyhappened.com, 5 pm Central
948. May 17, Interview on Al Jazeera, in which Ellen Brown gives her critique of President Trump’s approach to infrastructure. Part of coverage of the U.S. Chamber of Commerce’s “Infrastructure Week”. Watch it here.
947. May 13, Bring On the Power of a Public Bank for CA: People’s Forum, L.A., 3 pm. Info here. At the beautiful PUENTE Learning Center DTLA in Boyle Heights: https://www.puente.org/locations/
946. May 2, presentation, The Web of Debt and the Deep State: How do we break Free? Info here.
945. May 1, 12:30 pm, The Schilling Show, Charlottesville, VA, http://wina.com/podcasts/the-schilling-show-5117-hour1-tom-garrett-and-ellen-brown/
944. April 29, interview with Ralph Nader, The Ralph Nader Radio Hour, Pacifica Radio Network, ralphnaderradiohour.com
943. April 6, “A Public Option for Banking: A Conversation with Michael Hudson and Ellen Brown,” Franklin and Marshall College, Lancaster, PA., 7 pm
942. March 31, “Special event with Ellen Brown, founder of the Public Banking Institute, Boston.” Info here.
941. March 29-30, speaker, “Designing the Next Economy for the People and the Planet,” Babson Executive Conference Center, Boston/Wellesley area, Massachusetts,
940. March 28, interview with Stacy Herbert and Max Keiser on single payer as a replacement for Obamacare, here. 12 noon PDT
939. Feb. 25, 26 interview with Robin Koerner on “Liberty With Love” radio show, 5 pm, ET, listen online here.
938. Feb. 24, interview, The Gary Null Show, noon, EST, listen here.
937. Jan. 18, It’s Our Money with Ellen Brown, PRN, 3 pm EST
936. January 12, interview with Sinclair Noe, Financial Review, moneyradio.com 9:30 a.m. PST
–2016–
935. Dec. 28, Black Tower Radio, 1040 AM WYSL in Rochester, NY, 6:30 PM EST
934. Dec. 21, “It’s Our Money with Ellen Brown,” http://itsourmoney.podbean.com/
933. Dec. 8, Ellen interviews Gar Alperovitz on “It’s Our Money,” http://itsourmoney.podbean.com/.
932. Nov. 17-20, participant, FINTECH retreat in St. Augustine with Hazel Henderson
931. Nov. 9, speaker, “Cannabis Cash & Public Banking,”
Odd Fellows Hall – 575 Pacific Ave., Santa Rosa, CA, 5:30 pm
929. Oct. 30, presentation at Community Forum of the First Universalist Church, Denver
928. Oct. 21, interview with Kevin Barrett, http://truthjihadradio.blogspot.com/, 6 pm PT
927. Sept. 27, presenter on public banking, Ralph
er event, “Breaking Through Power,” Carnegie Institute, Washington DC
926. Sept. 24, interview with Ralph Nader, The Ralph Nader Radio Hour, Pacifica Radio Network, ralphnaderradiohour.com; also noon, PST on KPFK, listen online here.
925. Sept. 14, “It’s Our Money” on PRN, http://itsourmoney.podbean.com/
924. Aug. 25, interview with Richard C. Hoagland on The Other Side of Midnight, www.theothersideofmidnight.com, 12 a.m.-2 a.m Pacific
923. Aug. 25, interview with Fred Smart, www.aunetwork.tv, 9 pm Eastern
922. Aug. 17, “It’s Our Money” on PRN, http://itsourmoney.podbean.com/
921. Aug. 16, interview with Gregg Hunter, USAWatchdog.com, 11:30 a.m. Eastern time
920. Aug. 9, interview with Annie Esposito and Steve Scalmanini on Corporations and Democracy, KZYX, Mendocino, CA, 1:30 pm Pacific
919. June 24, interview with Gordon Long, gordontlong.com, 9 a.m., PDT
918. May 25, interview with Phil Watt, “The Conscious Society” Youtube channel, 6 pm, pst
917. May 19, interview with Brian Greenberg, WNJC, Philadelphia, 5 pm EDT
916. April 26, interview with Jay Taylor, VoiceAmerica, 3:30 pm Pacific time
915. April 12, interview, The Gary Null Show, 4 pm Pacific
914. April 7, speaker, 11th annual Sustainability Enterprise Conference (SEC), Sonoma, CA
913. Interview with Dennis Bernstein, Flashpoints, KPFA, Berkley. Listen to archive here.
912. March 22, interview with Jay Taylor, VoiceAmerica, 12:25 Pacific time. Listen to archive here.
911. March 22, interview with Tom Kiely, INN World Report, 3 pm PDT
910. March 22, interview with Martin and Lois Griffiths, Earthwise, NZ Community Radio, Christchurch, NZ 2 pm PDT Listen to podcast here.
909. March 21, interview with Paul J. Malikowski, KCKQ 1180. Reno, NV, 2 pm PDT
908. March 18, interview with Kevin Barrett, http://truthjihadradio.blogspot.com/, 5 pm PDT
907. March 18, interview with John Wells, http://caravantomidnight.com/radio/, 11 am Central
906. March 17, interview with John Loeffler, Steel on Steel radio show (steelonsteel.com), 10 a.m. PDT (pre-recorded)
905. March 17, interview with
Dennis Tubbergen, host of “The Everything Financial Radio Program”, 11 a.m. and 2 p.m. Pacific time
904. March 1, interview with Brian Greenberg, WNJC, Philadelphia, 5:25 PDT
903. March 14, Interview with Jim Hogue, http://www.wgdr.org/house-at-pooh-corner/, WGDR, Plainfield, VT, 7 a.m. PST
902. March 14, interview on The Moneywise Guys, KERN-FM 96.1, Bakersfield, CA, 11:00 a.m., PST
901. March 10, interview on The Bev Smith Show, http://tunein.com/radio/The-Bev-Smith-Show-p49679/, Atlanta Georgia. 7:15 pm EDT
900. Wed., Feb. 24, public banking presentation in Cardiff, Wales. Get info and tickets here.
898. Feb. 18, interview with Richie Allen, Manchester, England, http://richieallenshow.com/. Fab Radio 2, TRE, ACR. Also live-streamed on davidicke.com. 9 pm GMT
Listen here.
897. Wed., Feb. 17, presentation on public banking at Royal Society of Arts, 8 John Adam Street, London, 1 pm
896. Feb 13, public banking presentation in Reykjavík, Iceland http://nordichouse.is/is/event/fundur-um-samfelagsbanka-streymi/
895. Mon., Feb. 8, interview, MaxKeiser.com, London
894. Feb. 4, interview with Dennis Tubbergen, The Everything Financial Radio Program, 10:30 EST
“Fish Rot from the Head”
The Public Bank Option – Safer, Local and Half the Cost
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) :
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 | 49 Comments »