Filed under: video | Tagged: Federal Reserve, public banking, repo madness, repo market crisis | 1 Comment »
The Key to the Environmental Crisis Is Beneath Our Feet
Posted on December 28, 2019 by Ellen Brown
The Green New Deal resolution that was introduced into the U.S. House of Representatives in February hit a wall in the Senate, where it was called unrealistic and unaffordable. In a Washington Post article titled “The Green New Deal Sets Us Up for Failure. We Need a Better Approach,” former Colorado governor and Democratic presidential candidate John Hickenlooper framed the problem like this:
The resolution sets unachievable goals. We do not yet have the technology needed to reach “net-zero greenhouse gas emissions” in 10 years. That’s why many wind and solar companies don’t support it. There is no clean substitute for jet fuel. Electric vehicles are growing quickly, yet are still in their infancy. Manufacturing industries such as steel and chemicals, which account for almost as much carbon emissions as transportation, are even harder to decarbonize.
Amid this technological innovation, we need to ensure that energy is not only clean but also affordable. Millions of Americans struggle with “energy poverty.” Too often, low-income Americans must choose between paying for medicine and having their heat shut off. …
If climate change policy becomes synonymous in the U.S. psyche with higher utility bills, rising taxes and lost jobs, we will have missed our shot.
The problem may be that a transition to 100% renewables is the wrong target. Reversing climate change need not mean emptying our pockets and tightening our belts. It is possible to sequester carbon and restore our collapsing ecosystem using the financial resources we already have, and it can be done while at the same time improving the quality of our food, water, air and general health. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: big agribusiness, carbon sequestration, drawdown, farm subsidies, Federal Reserve, Green New Deal, public banking, regenerative agriculture | 21 Comments »
Paul Volcker’s Long Shadow
Posted on December 13, 2019 by Ellen Brown
Former Federal Reserve Chairman Alan Greenspan called Paul Volcker “the most effective chairman in the history of the Federal Reserve.” But while Volcker, who passed away Dec. 8 at age 92, probably did have the greatest historical impact of any Fed chairman, his legacy is, at best, controversial.
“He restored credibility to the Federal Reserve at a time it had been greatly diminished,” wrote his biographer, William Silber. Volcker’s policies led to what was called “the New Keynesian revolution,” putting the Fed in charge of controlling the amount of money available to consumers and businesses by manipulating the federal funds rate (the interest rate at which banks borrow from each other). All this was because Volcker’s “shock therapy” of the early 1980s – raising the federal funds rate to an unheard of 20% – was credited with reversing the stagflation of the 1970s. But did it? Or was something else going on?
Less discussed was Volcker’s role at the behest of President Richard Nixon in taking the dollar off the gold standard, which he called “the single most important event of his career.” He evidently intended for another form of stable exchange system to replace the Bretton Woods system it destroyed, but that did not happen. Instead, freeing the dollar from gold unleashed an unaccountable central banking system that went wild printing money for the benefit of private Wall Street and London financial interests. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Alan Greenspan, fed funds rate, Federal Reserve, Federal Reserve policy, Inflation, Paul Volcker, public banking, recession, shock therapy, stagflation | 4 Comments »
A run of presentations on public banking
Posted on December 5, 2019 by Ellen Brown
Interest in public banking is high! I just finished a run of 11 presentations and in-person interviews in 7 cities in 10 weeks. Here’s a video from one, a debate with a county official sponsored by the League of Women Voters in San Diego, and two power points from another, the Soil and Nutrition Conference in Southbridge, MA.
Power point, A Deep Dive into Money and Banking, Soil & Nutrition Conf 11-19
Power point, Funding the Green Transition, Soil & Nutrition Conf 11-19
Filed under: video | Tagged: Bank of North Dakota, Cal. AB 857, Federal Reserve, Green New Deal, People's QE, public banking, regenerative agriculture | 8 Comments »
Is the Run on the Dollar Due to Panic or Greed?
Posted on November 7, 2019 by Ellen Brown
What’s going on in the repo market? Rates on repurchase agreements (“repo”) should be around 2%, in line with the fed funds rate. But they shot up to over 5% on September 16 and got as high as 10% on September 17. Yet banks were refusing to lend to each other, evidently passing up big profits to hold onto their cash – just as they did in the housing market crash and Great Recession of 2008-09.
Since banks weren’t lending, the Federal Reserve Bank of New York jumped in, increasing its overnight repo operations to $75 billion; and on October 23 it upped the ante to $120 billion in overnight operations and $45 billion in longer-term operations.
Why are banks no longer lending to each other? Are they afraid that collapse is imminent somewhere in the system, as with the Lehman collapse in 2008?
Perhaps, and if so the likely suspect is Deutsche Bank. But it looks to be just another case of Wall Street fattening itself at the public trough, using the funds of mom and pop depositors to maximize bank profits and line the pockets of bank executives while depriving small businesses of affordable loans. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, lehman brothers, public banking, QE, quantitative easing, repo market, repurchase agreements | 4 Comments »
The Disaster of Negative of Interest Rates
Posted on September 29, 2019 by Ellen Brown
President Trump wants negative interest rates, but they would be disastrous for the U.S. economy, and his objectives can be better achieved by other means.
The dollar strengthened against the euro in August, merely in anticipation of the European Central Bank slashing its key interest rate further into negative territory. Investors were fleeing into the dollar, prompting President Trump to tweet on Aug. 30:
The Euro is dropping against the Dollar “like crazy,” giving them a big export and manufacturing advantage… And the Fed does NOTHING!
When the ECB cut its key rate as anticipated, from a negative 0.4% to a negative 0.5%, the president tweeted on Sept. 11:
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term.
And on Sept. 12 he tweeted:
European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports…. And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!
However, negative interest rates have not been shown to stimulate the economies that have tried them, and they would wreak havoc on the U.S. economy, for reasons unique to the U.S. dollar. The ECB has not gone to negative interest rates to gain an export advantage. It is to keep the European Union from falling apart, something that could happen if the United Kingdom does indeed pull out and Italy follows suit, as it has threatened to do. If what Trump wants is cheap borrowing rates for the U.S. federal government, there is a safer and easier way to get them. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: bail-in, bailout, derivatives, Donald Trump, EU, European Central Bank, Federal Reserve, Jay Powell, money market, negative interest rates, public banking | 5 Comments »
Desperate Central Bankers Grab for More Power
Posted on September 18, 2019 by Ellen Brown
Conceding that their grip on the economy is slipping, central bankers are proposing a radical economic reset that would shift yet more power from government to themselves.
Central bankers are acknowledging that they are out of ammunition. Mark Carney, the soon-to-be-retiring head of the Bank of England, said in a speech at the annual meeting of central bankers in August in Jackson Hole, Wyoming, “In the longer-term, we need to change the game.” The same point was made by Philipp Hildebrand, former head of the Swiss National Bank, in an August 2019 interview with Bloomberg. “Really there is little if any ammunition left,” he said. “More of the same in terms of monetary policy is unlikely to be an appropriate response if we get into a recession or sharp downturn.” Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: central banks, economics, Ellen Brown, Federal Reserve, helicopter money, IMF, Mark Carney, Nationalize the Fed, public banking | 20 Comments »
The Bankers’ “Power Revolution”: How the Government Got Shackled by Debt
Posted on May 31, 2019 by Ellen Brown
This article is excerpted from my new book Banking on the People: Democratizing Money in the Digital Age, available in paperback June 1.
The U.S. federal debt has more than doubled since the 2008 financial crisis, shooting up from $9.4 trillion in mid-2008 to over $22 trillion in April 2019. The debt is never paid off. The government just keeps paying the interest on it, and interest rates are rising.
In 2018, the Fed announced plans to raise rates by 2020 to “normal” levels — a fed funds target of 3.375 percent — and to sell about $1.5 trillion in federal securities at the rate of $50 billion monthly, further growing the mountain of federal debt on the market. When the Fed holds government securities, it returns the interest to the government after deducting its costs; but the private buyers of these securities will be pocketing the interest, adding to the taxpayers’ bill.
In fact it is the interest, not the debt itself, that is the problem with a burgeoning federal debt. The principal just gets rolled over from year to year. But the interest must be paid to private bondholders annually by the taxpayers and constitutes one of the biggest items in the federal budget. Currently the Fed’s plans for “quantitative tightening” are on hold; but assuming it follows through with them, projections are that by 2027 U.S. taxpayers will owe $1 trillion annually just in interest on the federal debt. That is enough to fund President Donald Trump’s trillion-dollar infrastructure plan every year, and it is a direct transfer of wealth from the middle class to the wealthy investors holding most of the bonds.
Where will this money come from? Crippling taxes, wholesale privatization of public assets, and elimination of social services will not be sufficient to cover the bill. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: federal debt, Federal Reserve, modern monetary theory, public banking | 40 Comments »
Why Is the Fed Paying So Much Interest to Banks?
Posted on April 3, 2019 by Ellen Brown
“If you invest your tuppence wisely in the bank, safe and sound,
Soon that tuppence safely invested in the bank will compound,“And you’ll achieve that sense of conquest as your affluence expands
In the hands of the directors who invest as propriety demands.”— Mary Poppins, 1964
When Mary Poppins was made into a movie in 1964, Mr. Banks’ advice to his son was sound. Banks were then paying more than 5% interest on deposits, enough to double young Michael’s investment every 14 years.
Now, however, the average savings account pays only 0.10% annually – that’s 1/10th of 1% – and many of the country’s biggest banks pay less than that. If you were to put $5,000 in a regular Bank of America savings account (paying 0.01%) today, in a year you would have collected only 50 cents in interest.
That’s true for most of us, but banks themselves are earning 2.4% on their deposits at the Federal Reserve. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, interest on deposits, IOER, negative interest, postal banking, public banking | 8 Comments »
This Radical Plan to Fund the ‘Green New Deal’ Just Might Work
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 »
Interview with Sarah Westall
Posted on August 21, 2018 by Ellen Brown
Filed under: video | Tagged: Federal Reserve, public banking | 5 Comments »
Trump Takes on the Fed
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 »
Fox in the Hen House: Why Interest Rates Are Rising
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 »
Dear Mr. President, Be Careful What You Wish for: Higher Interest Rates Will Kill the Recovery
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 »
“Fixing Debt and Money with Publicly Owned Banking”: video interview by Australian blogger Phillip Watt
Posted on June 11, 2016 by Ellen Brown
Filed under: video | Tagged: debt crisis, Ellen Brown, Federal Reserve, public banking | 7 Comments »
The Citadel Is Breached: Congress Taps the Fed for Infrastructure Funding
Posted on January 16, 2016 by Ellen Brown
In a landmark infrastructure bill passed in December, Congress finally penetrated the Fed’s “independence” by tapping its reserves and bank dividends for infrastructure funding.
The bill was a start. But some experts, including Congressional candidate Tim Canova, say Congress should go further and authorize funds to be issued for infrastructure directly.
For at least a decade, think tanks, commissions and other stakeholders have fought to get Congress to address the staggering backlog of maintenance, upkeep and improvements required to bring the nation’s infrastructure into the 21st century. Countries with less in the way of assets have overtaken the US in innovation and efficiency, while our dysfunctional Congress has battled endlessly over the fiscal cliff, tax reform, entitlement reform, and deficit reduction. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, infrastructure crisis, public banking, quantitative easing | 65 Comments »
Dr. Tim Canova on “It’s Our Money”
Posted on August 28, 2015 by Ellen Brown
“No flow, no go.” That may be the simplest way to describe the critical role of central banks to the flow of credit and money into any monetary system. It was the lack of access to cash and bank liquidity that humbled Greece, Detroit and others. Ellen speaks with Dr. Timothy Canova, one of the foremost experts on our central bank, the Federal Reserve, about why their operation of our cash spigot determines who wins and who loses.
Read more and listen here.
Filed under: Audio | Tagged: Federal Reserve, infrastructure crisis, public banking, Timothy Canova | 4 Comments »
Preparing To Asset-strip Local Government? The Fed’s Bizarre New Rules
Posted on September 8, 2014 by Ellen Brown
In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement. Continue reading
Filed under: Ellen Brown Articles/Commentary | Tagged: Basel III, Federal Reserve, municipal bonds, public banking | 34 Comments »
The Fed Protects Gamblers at the Expense of the Economy
Although the repo market is little known to most people, it is a $1-trillion-a-day credit machine, in which not just banks but hedge funds and other “shadow banks” borrow to finance their trades. Under the Federal Reserve Act, the central bank’s lending window is open only to licensed depository banks; but the Fed is now pouring billions of dollars into the repo (repurchase agreements) market, in effect making risk-free loans to speculators at less than 2%.
This does not serve the real economy, in which products, services and jobs are created. However, the Fed is trapped into this speculative monetary expansion to avoid a cascade of defaults of the sort it was facing with the long-term capital management crisis in 1998 and the Lehman crisis in 2008. The repo market is a fragile house of cards waiting for a strong wind to blow it down, propped up by misguided monetary policies that have forced central banks to underwrite its highly risky ventures. Continue reading →
Filed under: Ellen Brown Articles/Commentary | Tagged: banks, economy, Fed, Federal Reserve, hedge funds, helicopter money, interest rates, loans, markets, MMT, public banking, repo market, speculative loans, stocks, trade | 8 Comments »