How to Cut Infrastructure Costs in Half

By Ellen Brown, Web of Debt.

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.

Private equity investment now generates an average return of about 11.8% annually on a 10-year basis. For infrastructure investment, those profits are made on tolls and fees paid by the public. Even at simple interest, that puts the cost to the public of financing $1 trillion in infrastructure projects at $1.18 trillion, more than doubling the cost. Cities often make these desperate deals because they are heavily in debt and the arrangement can give them cash up front. But as a 2008 Government Accountability Office report warned, “there is no ‘free’ money in public-private partnerships.” Local residents wind up picking up the tab.

There is a more cost-effective alternative. The conservative state of North Dakota is funding infrastructure through the state-owned Bank of North Dakota (BND) at 2% annually. In 2015, the North Dakota legislature established a BND Infrastructure Loan Fund program that made $50 million in funds available to communities with a population of less than 2,000, and $100 million available to communities with a population greater than 2,000. These loans have a 2% fixed interest rate and a term of up to 30 years. The proceeds can be used for the new construction of water and treatment plants, sewer and water lines, transportation infrastructure and other infrastructure needs to support new growth in a community.

If the Trump $1 trillion infrastructure plan were funded at 2% over 10 years, the interest tab would come to only $200 billion, nearly $1 trillion less than the $1.18 trillion expected by private equity investors. Not only could residents save $1 trillion over 10 years on tolls and fees, but they could save on taxes, since the interest would return to the government, which owned the bank. In effect, the loans would be nearly interest-free to the government.

New Money for Local Economies

Legislators in cash-strapped communities are likely to object, “We can’t afford to lend our revenues. We need them for our budget.” But banks do not lend their deposits. They actually create new money in the form of bank credit when they make loans. That means borrowing from its own bank is not just interest-free to the local government but actually creates new money for the local economy.

As economists at the Bank of England acknowledged in a March 2014 report titled “Money Creation in the Modern Economy”, the vast majority of the money supply is now created by banks when they make loans. The authors wrote:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. . . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money. [Emphasis added.]

Money is not fixed and scarce. It is “elastic”: it is created when loans are made and extinguished when they are paid off. The BOE report said that private banks now create nearly 97 percent of the money supply in this way.

Richard Werner, Chair of International Banking at the University of Southampton in the UK, argues that to get much-needed new money into local economies, rather than borrowing from private investors who cannot create the money they lend, governments should borrow from banks, which create money in the form of deposits when they make loans. And to get that money interest-free, a government should borrow from its own bank, which returns the interest to the government.

Besides North Dakota, many other states and cities are now exploring the public bank option. Feasibility studies done at both state and local levels show that small businesses, employment, low-cost student loans, affordable housing and greater economic stability will result from keeping local public dollars out of the global banking casinos and in the local community. Legislation for public banks is actively being pursued in Washington State, Michigan, Arizona, Philadelphia, Santa Fe, and elsewhere. Phil Murphy, the front-running Democratic candidate for New Jersey governor, is basing his platform on a state-owned bank, which he says could fund much-needed infrastructure and other projects.

New Money for a Federal Infrastructure Program

What about funding a federal infrastructure program with interest-free money? Tim Canova, Professor of Law and Public Finance at Nova Southeastern University, argues that the Federal Reserve could capitalize a national infrastructure bank with money generated on its books as “quantitative easing.” (Canova calls it “qualitative easing” – central bank-generated money that actually gets into the real economy.) The Federal Reserve could purchase shares, whether as common stock, preferred stock or debt, either in a national infrastructure bank or in a system of state-owned banks that funded infrastructure in their states. This could be done, says Canova, without increasing taxes, adding to the federal debt or hyperinflating prices.

Another alternative was proposed in 2013 by US Sen. Bernie Sanders and US Rep. Peter DeFazio. They called for a national infrastructure bank funded by the US Postal Service (which did provide basic banking services from 1911 to 1967). With post offices in nearly every community, the USPS has the physical infrastructure for a system of national public banks. In the Sanders/DeFazio plan, deposits would be invested in government securities used to finance infrastructure projects. Besides financing infrastructure without raising taxes, the plan could save the embattled USPS itself, while providing banking services for the one in four households that are unbanked or under-banked.

Reliance on costly private capital for financing public needs has limited municipal growth and reduced public services, while strapping future generations with unsustainable debt. By eliminating the unnecessary expense of turning public dollars into profits for private equity interests, publicly-owned banks can allow the public to retain ownership of its infrastructure while cutting costs nearly in half.

___________

Ellen Brown is the founder of the Public Banking Institute and a Fellow at the Democracy Collaborative. She is the author of a dozen books including the best-selling Web of Debt, on how the power to create money was usurped by a private banking cartel, and The Public Bank Solution, on how the people can reclaim that power through a network of publicly-owned banks.

 

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  • Josh Stern

    The article discusses several different ideas to lower costs for municipal infrastructure. Some of the proposed ideas focus on getting a better borrowing rate for the municipalities vis-a-vis the purchasers of their debt. Other ideas focus on lowering their debt with Federal assistance as both an aid to the muncipalities and a method of fiscal stimulus for the projects. On that playing field, I will throw out another kind of possibility which is in the second camp, but might pragmatically appeal to a broader class of political constituents outside the govt. while taking less new govt. resources to set up & run because it makes use of existing Wall Street tools: step 1) the U.S. govt. puts out a call for proposals that specifies the type of projects it wants to stimulate, the minimum credit rating required for a proposal to be included, and the minimum/maximum size of the loan, 2) the U.S. govt. takes it’s basket & negotiates a cheap basket rate for a muni-bond rater to assess the projects on the list individually and to come up with an overall rating for the bonds based on the basket – which should be very good, because it’s a basket of pretty secure individual, relatively uncorrelated elements 3) Let Wall Street firms bid for lowest cost on selling securities based on the basket and servicing the debt. All of those elements are built out of activities that are already common and routine except for the govt. collecting the list and doing a simple negotiation, and those are pretty trivial. If the U.S. govt. makes those securities free from Federal and State tax, then the resulting product might be sold at even lower rates than T-bills. So it would be a fiscal stimulus.

    • diogenes

      Yes, by all means let’s “Make use of Wall Street tools.” Lets stop nazis by joining nazis. Good idea! We certainly wouldn’t want the robber barons to be deprived of their bloodsucking toll. And then, let Wall Street take care of our business. What the fuck do you think has been going on for the last 150 years? Good idea, Josh. Who put you up to it, I wonder.

      • Josh Stern

        What I’m talking about above is a low profit margin, generic type of activity that can be awarded to the low cost bidder – when many private companies are already set up to do that, and the govt. is not, then it saves money all around to solicit bids and give the biz the lowest cost, competent bidder. Conceptually it’s like building a road – you can have the Army Corps of Engineers do it, or you can bid it out to the lowest cost competent private contractor. This particular biz happens to be a kind of core thing that Wall Street does. Asphalt pavers build roads…and “Wall Street” firms sell and service bonds – if the low cost competent bidder is not “Wall Street” and happens to be, say, a farm co-op from timbuktu that buyers trust- that would okay too….You express a sort of religious belief that all of Wall Street is evil and therefore they should never get any biz in the say way you want to avoid people who ran concentration camps. I don’t share that sort of judgement. But in any case, try to keep the criticism focused on the concrete issues.

        • Carl_Herman

          Hi Josh,
          The central proposal of public banking is to have creation of credit a public service, rather than private. This by far minimizes public costs of credit. For example, if the state of California had its own bank with 5% mortgage and credit card, that revenue would abundantly replace all state taxes.

          Here’s my best essay to walk people through the ideas of public banking and monetary reform: http://www.washingtonsblog.com/2016/09/labor-day-2016-obvious-benefits-monetary-reform-public-banking-include-full-employment-optimize-infrastructure-also-causes-lower-overall-prices-infrastructure-improves-total-eco.html

          • Josh Stern

            I’m in favor of public banking in the sense you mean, but that concept isn’t relevant to what I wrote above. In the case of a small loan from a bank – any bank, public or private – the cost of the loan to the borrower is a function of the fees that the bank charge up front and the interest rate that the bank is willing to give for that particular loan. In some cases, the bank will hold the loan, collect the interest, and service the loan. In other cases – what normally happens nowadays with a mortgage – the bank or loan broker quickly sells the loan and the service contract to some other parties that pool it together with a lot of other loans, and sell a kind of composite package of that credit pool to some other investors. In the case of a muni-bond, a municipality is selling directly to investors, and usually gets a decent interest rate – especially because of tax free interest on the debt – but is still paying a lot of up front costs to a credit agency that assesses the credit worthiness of the loan and to the Wall Street people that market shares of it to other investors at an auction.

            What I am trying to propose is to have the Fed. govt. step in to take most of those costs away from Municipality while getting the Municipality a better interest rate. The idea, in your terms, is to have the Fed act as the “public mortage broker” for all the municpalities in the nation and use that market clout to get absolute rock bottom rates on all of those cost components – credit assessment, loan servicing, and the interest rate – which is based on risk assessment, and is lower for large, uncorrelated, debt pools. The private or “Wall Street” part of it only comes into the auction selling of the pools to investors. If the Fed wanted though, it could take over that part to and perform like a T-bill auction. However it would have to do more than a T-bill auction in terms of advertising the debt, and the auctions and explaining it to investors. This would involve hiring people, etc. My assessment is that the cost would be higher than getting a low cost Wall Street bid where the bidding firms would be okay with very low margin due to the high volume.

          • diogenes

            You’re in favor of public banking as long as it’s privatized. You want public funds to pay dividends to private investors. That’s who your proposal serves, and NOT the public interest. Whether it’s from ignorance or deceit doesn’t matter. It’s still a proposal to replace the same old poison with the same old poison in a new bottle. It is part of the problem, not part of the solution.

          • Josh Stern

            No, you are not reading carefully. I take the topic here to be “Proposing better alternatives to what is currently done with Municipal Bonds” for large projects and sometimes with bank loans for small projects where a broader bond isn’t covering the needed category. The goal is to lower costs for municipalities and to encourage them to undertake *more* projects than they otherwise would because of lower cost, less effort for them, and better access to credit. That topic is not about who runs stand-alone banks. It is about putting together most attractive package for the municipality. If the Fed helps organize a nationwide solution that combines low costs for underwriting (credit assessment), servicing, securitization, auctioning, and loan insurance this can get the best prices and the best convenience for the municipalities, so they can end up understaking more projects, getting more done, employing more people, and helping the economy. I care not at all about whether the contract for underwriting, servicing, securitization, auctioning, and insurance goes to non-profit, govt., or private. I observe that in practice, there are fiercely competitive private markets for all those things and if the Fed decided to do that, and solicited bids it could get GREAT prices. I am saying that “Wall Street” are “good guys”? No. If the Fed held meetings about whether it should do that then Wall Street would send bigwigs to argue against it for various noise reasons, with the true reason being that they would worry about it cannabilizing their higher margin individual client municipal bond machine. This omnibus solution would cut out a lot of their profit margin that you are so worried about.

          • diogenes

            It’s you who’s not reading carefully. You’re pushing the same old cause of the pillage and calling it a solution because you dressed it up different.

          • Josh Stern

            Hello…anybody home? “Pillage”???? We’re talking about getting cheaper, more available loans…

          • Carl_Herman

            Josh, I don’t think you understand the fundamental shift of making credit public rather than private.

            The cheapest credit for infrastructure is “at cost” and “in house.”

            The most available credit for infrastructure is to prioritize choices with the only real limits of resources and labor. To the extent infrastructure produces long-term economic benefits, we should fully fund these projects to get game-changing triple benefits:
            1. upgraded infrastructure,
            2. employment (the only policy for full employment),
            3. falling prices (historically, infrastructure does this).

            Josh, do you see any benefits of private credit given this data? Those of us who have worked on this idea and presented to academic conferences do not. Creating credit is as simple as entering digits into an account.

            If it’s any comfort, AP Econ teachers find this one concept of what credit is and how it’s created the single most difficult to teach. It’s almost as if this idea is programmed to evoke confusion among people.

          • Josh Stern

            There are several different concepts here being mixed together in non-standard ways: 1) Money supply in the overall economy, 2) fiscal stimulus (i.e. the govt. spending more and taking on more debt for some targeted period of time), 3) The interest rate at which the Fed lends to banks (or to another Fed program), 4) The interest rate of US treasury bills at various durations, 5) The interest rate for a borrower with a given credit profile to borrow a sum of money for a given length of time 6) the upfront costs for arranging the loan. This list is a standard way of understanding these things, and breaking them into orthogonal categories. By going on about “public” vs. “private” as this fundamental paradigm shift, it’s not clear which vague things are being thrown around together, as if they were a unity. All of those things above 1)-6) can vary independently of one another. Debt from govts., corporations (including banks and others, foreign & domestic), and individuals (foreign & domestic) are all contributing to the flow of credit. You can’t get more credit into the system by saying “We’ll just focus on using govt. debt” instead of borrowing at auction from the combined class of investors. Most all of the debt the govt. can handle is already in the market somewhere. Saying “I’m going to stop using private investors” just makes credit a lot tighter – it can’t possibly solve or improve a credit shortage.

          • Carl_Herman

            Ok, I think I see the issue now, Josh. Points 1-6 are not under consideration in this topic of public banking. More importantly, do you understand that credit is created out of nothing?

            It’s literally entering digits into an account. This is the point we AP Econ teachers find most difficult to communicate to even our brightest people.

            So: do you, or do you not understand this point that credit is created out of nothing?

            Creating credit is a legal “gift” to private banks under current policy. Shifting it to a public service is what this topic is about. Here’s a paper I was asked to contribute to a Claremont Colleges conference: http://www.washingtonsblog.com/2015/05/bankster-looting-fundamental-fraud-that-debt-is-money-5-of-7.html

          • Josh Stern

            The parent post motivated concern with the issue/current events/political topic of increasing municipal infrastructure projects by making credit easier and cheaper. I made it clear, originally, and in several followups that I was speaking to that topic and offering a different idea, that is more practically well motivated. The ‘word’ credit can be used in different ways – including a particular line of credit, potential access to loans, and a safety rating given to a particular loan proposal. It is true, in a literal sense, that any lender can give a line of credit based on any artibtrary criteria, perhaps not even referencing the ability to be paid back. But it is not true that any lender – even the U.S. govt. can do that systematically, as a general way of operating. It is not true that the U.S. govt. gives a pure gift to banks. They do demand repayment. However the current U.S. system does include the U.S. govt. lending short term to certain banks at a very low interest rate. I did not understand the topic to be about replacing that with some other way of doing things. That seems like a different topic. Is there some existing country using a different system, without that feature, that you see as a good model?

          • diogenes

            You’re wrong all up and down the line. You’re a parrot chattering the line of lies the banksters have been telling for decades, even after the Bank of England has admitted that they’re lies. Whether you know it or not, and no matter how much you chatter, you’re ignorant, and your ignorance is toxic. Moreover, to all appearances you’re ineducable. Stop wasting time and polluting discussion with this canned, stale, toxic drivel.

          • Josh Stern

            Troll.

          • diogenes

            Why don’t you say “witch” or “commie” or “anarchist”? It’s more traditional.

            People keep pointing you to sources where you can learn what you obviously don’t know, and unlearn what you think you do. And you respond with more of the same drivel and when you get tired of that, you resort to namecalling.

            Namecalling is no reply. It brands the namecaller for what he plainly is.

          • Josh Stern

            Diogenes, I make a solemn vow, here & now: I will waste no more time responding to your vile blather. You may go on posting insults and incoherent stupidities after every comment I make, and I will not reply. Finished and done.

          • Carl_Herman

            Yes, making credit “easier and cheaper”: in banking, “creating credit” has just one meaning and is the core of what they do: create out of nothing a debt that the “borrower” must repay.

            Do you understand this is created out of nothing?

            There are historical models, but none current that aren’t captured by privately-owned oligarch banks.

          • Josh Stern

            You & some others are claiming that only private banks create the true amount of credit and money supply that matters to the economy. Mainstream economists do not believe or agree with that. I am more than happy to listen to ideas that challenge/depart from the mainstream, but they need to be carefully detailed, explained, and thought through. I don’t find that in the docs I looked at. The starting :”definitions” used at the beginning of claims do not match standard ones used in Econ. The claim that they would somehow be better model of what “ease of credit” or “velocity of money” feels like to regular people also doesn’t seem well founded. The works you cite read long a long list of asssertions rather than a tight argument for real alternative system that you agree has never been tried. When an architect proposes a grand new building they first create a model to scale. The model isn’t complete – it just gives an appearance. I don’t see even a model in the docs I read. You say you are abolishing private debt/lending/credit but what are you replacing it with. You say “public debt”. So that sounds like if a person or a biz wants to get a loan or make a savings investment then they have to do that through a govt. office. That would be a broken totalitarian system. Already, the incomplete, never tried partial model – looks broken.

          • Carl_Herman

            Last chance and 4th time asking, Josh: do you understand bank credit is created out of nothing?

            And you missed this part of what I wrote: we have plenty of historical models of monetary reform and public banking, beginning with Benjamin Franklin’s documentation in this country.

            You also missed that I’m a National Board Certified Teacher in this subject field, regularly work with ~2,000 AP Econ teachers to help them understand these concepts, and my research has twice been invited for international academic conferences at the Claremont Colleges BECAUSE Ellen and my writing is as clear as currently found.

            So, you might want to reconsider all your points given what you’ve missed.

            And again, so I’m satisfied I’ve offered you full choice of learning, do you understand that bank credit is created out of nothing? This is taught in every econ course that addresses how we create what is used for money.

          • Josh Stern

            Credit creation by either a Bank of a govt. is not arbitrary – there are long term consequences to the system of decisions that they use; they self-destruct if they don’t follow a sufficiently sound system. Are you denying that? I asked you a few times – who makes loan & investment decisions in your proposed system with no private lending? Is it only the government? If so, where are the details of how the govt. would do that? Have you written them somewhere? Is there some reason to believe it all works out? Are you using an unintersting statement about how credit is not a physical material to try and argue that it is all arbitrary so the details don’t matter?

          • Carl_Herman

            Ok, Bro, I’m done: I’ve asked four times.

            You missed the points you’re asking about. We’re only talking about infrastructure here, Josh, so this is only a public question of funding. The state of North Dakota already does this, and is the only state with increasing budget surpluses.

            You won’t allow me to walk you through this by answering a simple question, so you’re going to have to figure this out without my help. I’ve offered two papers. You then close with an insult to my help (“uninteresting statement”), which makes it easy for me to wish you well without further time from me.

          • Josh Stern

            The Bank of North Dakota is a state run bank. The State of North Dakota deposits its funds in the Bank. This is held up as an example of Public Banking. This I support, as I said from the beinning of this thread. Is it primarily responsible for North Dakota’s current economy? No, it’s been around since the 1920s. The current North Dakota economy is being driven by the domestic U.S. oil and gas production boom brought on by new drilling technologies. Is the State of North Dakota abolishing exist currency or issuing its own? No. Is it abolishing private debt or credit? No. Are it’s fees and credit evaluation procedures a lot different in their effect on the consumer than other private banks in North Dakota? I really don’t know…I’m interested in the answer. Either way, I don’t see the logic of claiming it supports your proposal to abolish private credit/lending/banks and institute a new form of U.S. currency/money.

          • Carl_Herman

            “your proposal to abolish private credit/lending/banks and institute a new form of U.S. currency/money” is a proposal I’ve never made. You should read a paper and quote from it.

          • Josh Stern

            I read the link you gave before, earlier in the thread, which you provide again: http://www.washingtonsblog.com/2016/09/labor-day-2016-obvious-benefits-monetary-reform-public-banking-include-full-employment-optimize-infrastructure-also-causes-lower-overall-prices-infrastructure-improves-total-eco.html

            There you propose the benefits of monetary reform to create “debt free money”. WHAT IS DEBT FREE MONEY?

            Can it be deposited in a bank? They the bank has a debt to pay it back when withdrawn, so I would have thought the answer is “No”. In related proposals there, you say the new scheme will (instantly?) abolish the national debt and let everyone benefit from not having to pay interest to it – what happens to the people with savings in the T-bills, money markets hold T-bils, banks holding T-bills, etc. is not at all clear. Maybe the idea is they get “new money” but that money will inevitably be worth less and they will not get the interest. What would they do with the new money? Buy gold and put it in their personal vault??

            I’ve repeated many times here that I support lowering fees with coops or state owned banks, though I caution that just being owned or run by a coop or a state is not an automatic route to lowering fees. The reverse could happen in some cases too. In any case, the simple version of that, like Bank of North of Dakota – or a more completely public version of that – requires no special understanding to comprehend. I said “good” to that from the start…surely you and the others have something else in mind when you keep claiming that I completely miss your revolutionary idea and how it is a complete break from the current economic system and all its ills….

          • Carl_Herman

            Debt-free money (monetary reform) is government directly paying for public goods and services by creating the digits in those accounts. When you understand that credit is created out of nothing, then it’s easy to see the same could be done for money.

            Paying the national debt this way was what Milton Friedman said was his most important policy proposal for the greatest economic benefits. Read the link in that article to see how Friedman designed this to prevent inflation.

            I claim ~$1,000,000 in benefits per average US household with monetary reform and public banking. You’ve missed that, Josh. It’s the title of the article you said you read, and the point of these two benefits.

          • Josh Stern

            Public banking as Ms. Brown describes it, is not about the government directly paying for public good and services except, in a way, for providing the service of a not-for-private-profit money center bank. So you must have some additional schemes in mind, but I’m not clear on what they are. Nor am I clear on how you propose that they eliminate the national debt. I didn’t miss the assertion – I missed any explanation for how it happens.

          • Carl_Herman

            You need to understand we’re talking about two proposals, Josh:
            1. Public banking for in-house and at-cost credit (so-called “loans”).
            2. Monetary reform for government direct payment of public goods and services (debt-free money).

            What we currently have is creating what we use for money as debt owed to private banks. This is like adding negative numbers forever, and why aggregate debt only and always increases. The two reforms would empower creating what is used for money as positive and negative numbers to best manage its supply (inflation).

            And again, these have been advocated since Ben Franklin “discovered” their use allows government to operate without taxes. These are not “schemes”, but the second most-discussed policy idea in US history after the topic of slavery. You haven’t heard of it since the “masters” behind the Federal Reserve system purchased editorial control of US media 100 years ago.

            The article you said you read has a link with the assertion of how to use monetary reform to pay the national debt. You missed that, and here it is: http://www.washingtonsblog.com/2015/03/debt-damned-economics-either-learn-monetary-reform-kiss-assets-goodbye-7-7.html

          • Josh Stern

            The main article was about advocacy for the creation of Public Banks, which is not hard to understand. In the process of talking about that, you and 2 other people denounced me for having no understanding, not knowing what I was talking about, and not being aboard your political train calling for the abolition of private banking or private lending. Now, it seems, *I* “need to understand” – the obviouis – that those are different ideas. Yes, I understood that, and I don’t agree with some key parts of those ideas. I pointed out some clear problems with them that you didn’t respond to.

            There is an intersection between the topics called “Monetary Reform” and the topics called “Regulation of Banking” where people with otherwise divergent opinions find a common agenda in the call for regulation of money center banks – a set of proposals to restrict the kinds of risk-taking and the kinds of profit-making activities they get to engage in. There are many gradations there, but carried out to its fullest, it could abolish private money-center banks (not all private banks of private lending, or conglomeration of banking per se). By itself, that wouldn’t imply any change to who was funding or profiting from loans for municipal infrastructure. Lending by to municipal or private or individual clients by a publicly owned bank, is, a different issue, not part of that intersection.

            Summary: it was my critics in this thread who were muddling together and overgeneralizing distinct topics – support for public banks, restricting the activities including ownership/profit taking of private money center banks, finance activities for municipal infrastructure, printing money to pay off govt. debt (mostly a bad idea, but a different topic), and other aspects of “monetary reform” are all distinct topics. In fact, there is no sense in which one needs to support major change on any of those other areas to support public banking, and consideration of improved schemes to support municipal finance with some private elements is not related to support or opposition to “Public Banking” as that term is generally understood.

          • Carl_Herman

            Again, I have no “political train” to abolish private banking or private lending; that is a straw man argument. If you want to state my positions, please quote my work.

            Ellen’s article is about cutting infrastructure costs in half with in-house and at-cost creation of credit. Credit is not a “loan” of something, but created out of nothing under legal authority to private banks. From your comments, as a professional educator of college-level economics, you didn’t seem to understand this essential point that credit is created out of nothing.

            Therefore, when credit is created out of nothing is fully appreciated, two insights emerge:
            1. We could do this with a public bank to cut current costs in half.
            2. We could create debt-free money out of nothing to directly pay for infrastructure.

            After 20 years of personal academic and professional work on this idea, I factually assert ~$1,000,000 per average US household benefits of monetary reform and public banking. To date, those of us working on these reforms have received zero, zip, nada for attempts of refutation.

            Thank you for engaging in these important ideas, Josh. You are, of course, free to believe whatever you wish.

          • Josh Stern

            Refuation? I refute this argument: Premise 1) Private equity, on avg. earns huge returns – something in excess of 11$ compounded annually; Premise 2) Public banking and monetary reform would save all of that return for the public instead of giving it to rich bankers and investors; Conclusion 3) Therefore public banking is a benefit of some gargantuan amount of money, on average to each citizen. Both of those premises are false and the relationship to the conclusion is also incorrect. Private equity on avg. does not generate anywhere near such high returns. In individual cases, investors can generate high returns by taking on risk in various ways, implying they can also go bust and lose it all. Private equity is not earning most of those returns on relatively safe investments like loans to municipalities for infrastructure. Higher returns come from riskier, more innovative projects (or winning big risky bets with leverage or some other tactics, which are not relevant to public banking). When the range of projects that gets funded changes in different ways then it changes the entire economy, meaning that net results are very difficult to predict. Government institutions are not historically great at turning profits or at delivering any profits they return back to the common people.

          • Carl_Herman

            Your “refutation” is not to my argument of ~$1,000,000 per average US household of benefits. For you to address my argument, you’d have to read then cite my evidence. You’re not doing that. You’re making up an argument, then addressing it.

            You’re a smart guy, Josh. But clearly you’re wasting our time when you’ve twice invented straw man arguments about my work, and now making up your own arguments claiming to refute my work. Again, and obviously, you’d have to cite my work to address it.

            I’m not even going to read anymore of what you have to write here. I look forward to considering your comments on other articles.

            The documentation of these game-changing and embarrassing riches: http://www.washingtonsblog.com/2016/09/labor-day-2016-obvious-benefits-monetary-reform-public-banking-include-full-employment-optimize-infrastructure-also-causes-lower-overall-prices-infrastructure-improves-total-eco.html

          • Josh Stern

            I DID NOT cite your $1,000,000 figure above.

            I understood that you plan to wipe out the national debt by printing money, and other things like that go into that this “~$1,000,000 per average household” (afterwards, $1,000,000 might be worth a lot less then, but whatever….). I understood you to argue that eliminating private money center banks was something you DO claim saves the general public a lot of money and that you are connecting that to a (misstated) measure of return on private investment in related activities. The pseudo-argument I listed above summarizes the logic of that claim.

          • diogenes

            Nice try, Carl, and exemplary patience. He should probably start with Michael Hudson, J Is For Junk Economics, but he seems to be so muddled and so much a true believer in Junk Economics (which is produced by hirelings of the Fed — an established fact referenced in Hudson’s book) — that I don’t think he is capable of thought or of education. Certainly everything he writes here suggests it. He’s good at confusion and namecalling, though. Maybe he should go into politics. Or maybe he’s already in it.

          • Josh Stern

            When the bank makes a conventional loan – where the money is tranferred up front and then repaid over time – they deduct the loan amount from their cash balance in their assets and add the principal owed to the loan balance in their asssets. The duration of the loan is established and, by standard calculation of amortization of interest, the borrower and lender know in advance which the component of each payment that is towards principal and what is towards interst – the borrower can normally pay principal back faster and change that schedule if they wish – the way it changes is determined by the same standard calculation. When a payment is received, the principal part of the payment is deducted from the loan balance and goes to cash balance. The interest part of the payment goes to cash balance and also to the income tally, without changing the loan balance. These things are all credit tallies on ledgers, but the way they change is determined by standard laws. They are not changed arbitrarily and new entries are not created out of “nothing” – they are transformation of the prior ledgers. The bank is not free to implenent any transformation, and in practice, it cannot survive making any sort of loan. “Out of nothing” is not correct in terms of the economic system and the types of entities it describes. It is true that these entities are not physical. In that sense, there necessary physical material involved beyond what is needed to keep the ledgers safe. Calling it “nothing” in that sense is not an interesting point. There is no reason to take that observation as a personal attack.

          • diogenes

            Programmed is the right word. Exhibit A: (see following post and all posts by this commenter).

          • Josh Stern

            Double troll.

          • diogenes

            O! I am struck! I am wounded!! I bleed all over my keyboard!!!

            LOL

          • David Schultz

            Your really not getting it at all. The purpose of this is to print money without the paying some organization or bond holder a fee.The idea is not to jump through those banking hoops. It is they same thing as the sovereign money supply that the libertarians talk about; just different window dressing. We understand that our current systems was designed to prevent government from over printing money such that the interest rates become unbearable. The problem is that the amount of real currency M0 and M1 is ridiculously low for the amount of liquidity needed in the economy. Since US currency is a reserve currency were are talking about a world economy. The American tax payers cannot afford to pay interests on funds to support the world currency. The current money system is strangling America to death.

          • Josh Stern

            Lowering “fees” & eliminating private credit/debt/lending entirely are widely different things. That much is clear. I don’t agree with any of the claims above about the relationship of currency to liquidity. Can you site a real paper anywhere that makes the argument for that more explicit so I can point out the problems with the details? Also, try to imagine what actually happens in a system with no “fees” of any kind. A new “loan” can always be taken out to repay the old “loan” at no cost. No work is required to generate the capital to replay – I just take another loan. How can an economy function like that?

          • David Schultz

            There is really no point arguing with neo-classic economics. Your response of no connection between currency and liquidity is the core precept of neo-liberal economic thought. I was not expecting such a pure answer from you! From our point of view you can’t see the forest for the trees. There is a movement back to more classic economic theory (anti neo-classical as it were) and it won’t make any sense to you at all. The views are so divergent that either you are in one camp or the other. What is important is that we see neo-classical economic environments as good for billionaires and bad for common people.

          • Josh Stern

            Naked, stand alone assertion isn’t an argument. Believing something, just because, is a religious exercise rather than an analytical or empitical one. When you advocate a system that’s never been tried there is an extra burden of argument to convince that it is even a system at all – rather than a broken design that would fall apart in practice – and then to convince that it is GOOD system. All around the world, saving, borrowing, and using credit is important to people from all modern cultures and something they seek. Assserting that it’s no good and everyone should switch to some other vaguely described way of existing is an odd stance. Then you say something like “In this economic system, people have become plutocrats and I don’t like that, so we need something different” – that is also not an argument. It’s logically equivalent to saying “In the system of eating food every day, people die, and some of them die in ways that are related to the type of quantity of food they ate. I don’t like that, so I propose getting rid of food.” That logical form is obviously defective. So you need a lot more focus on how the change you propose fixes the specific problems you don’t like why not creating bigger problems.

          • David Schultz

            Well at least we are getting down to the bottom of the argument. Macro economics is hardly an exact science and does incur a level of “belief” at the fundamental levels. Unfortunately being that this science is so arcane it can have devastating effects on our lives and it deserves our full attention! I hate to use Steve Keen as the end-all example of “post-modern” progressive economics but I add the link for your viewing pleasure.

            https://www.youtube.com/watch?v=U6kUl_NW-nU

            My position there are whole worlds of economics beyond Keen but I use him as an example since he specifically make the anti neo-classic argument at technical levels.

          • Josh Stern

            A lot of Ph.D. economists criticize large parts of mainstream “economic theory”. They don’t even agree on the boundaries of what counts as mainstream economic theory. I’m lost about how the link above continues your argument. I see 3 things in the air here: 1) “Public banking” – where some people cite the existing Bank of North Dakota as an example of a public bank; 2) Carl’s claim that the existing monetary system should be ended and all private lending should be eliminated, replaced with something that’s completely unspecified, 3) a video above by an academic economist criticizing variouis elements of some economic theories. I have said that 1) sounds like a good idea I support, 2) sounds wrongheaded, and here I say that 3) seems mostly off topic – though invite you to direct my attention to some bit you think is especially relevant. To the extent that you are championing some version of 2), it would be more relevant to point at something you think gives the right details about how that could and should work.

          • David Schultz

            My personal view is a couple steps more progressive than Keen but I’m in his camp. I think Diogenes and others are arguing a few more steps towards socialist theory than that. Public owned banks is completely an M1 argument and I don’t think it is too off topic. Once we start talking about M1 the neo-classic folks start dividing from the socialists on fundamental levels. A person can get lost in the technicals on this so we always need to come back to point. This is about who gets to print the money and who has to pay rent on that money.

          • Josh Stern

            How does Bank of North Dakota affect M1 differently than a private bank??

          • David Schultz

            The Bank of North Dakota doesn’t differ from Citigroup on face value. Only when it starts to lend to itself do things get hairy. That is what exactly what our socialist friends want to do. I bite my tough at this point knowing that I am not all in on this but not wanting to throw water on the fire. My constitutionalist hairs start to bristle on the back of my neck when I think of the State of California having a state owned back as precarious as Bank of America. But then the whole idea of fractional reserve banking looks insane to me. Nothing really matters until one of these monsters over extends itself and has to be bailed out by the tax payers. Modest and heavily regulated State owned banks could still be a safe way to generate interest free capital for infrastructure. Even if this increased M1 and was slightly inflationary it could be a reasonable part of the solution.

          • Josh Stern

            Looking at their annual report – I don’t think that they are significantly lending to State govt. (which would not make sense). They are purchasing and holding some loands for some municipal in-state infrastructure, mostly public school projects.

          • David Schultz

            Nobody cares because they are modest about it. Obviously entities like it could be gamed. The argument is whether you use it to get around the constitutional provision preventing State issues fiat currency.

          • Josh Stern

            They don’t operate as a slush fund or a credit card, and State depts. don’t normally take out conventional loans. So I’m not clear on what the circumstances would have been when the bank would have been a lender to a dept. of State govt. Maybe it happened somewhere in the history. But it’s not a significant component or a standard thing, and definitely isn’t changing the nations money supply or economics as we know it.

          • David Schultz

            Only in those few loans for building schools and such. I believe the author is talking about expanding it to States that are drowning in private debt. Self lending on much larger scale such that it has actual economic impact.

          • diogenes

            Right, but it means that the state doesn’t pay an interest or dividend toll on every dollar it spends on the general welfare, and the 0.1% predator investor class hates that. And since they rule America, it’s out of the question.

          • Josh Stern

            They appear to do a significant amount of lending to public schools and other in-state infrastructure, but that is not self-lending. School districts and local municipalities have their own budgets, balances, expenses, and revenue collection. They are just geographically and mission affiliated.

          • David Schultz

            If a school district pays interest on loans back to the State owned bank it is debt neutral. There is typically State aid to school districts such that there is not a firm distinction at a macroeconomic level. In other words raising the interest rate on such a loan just makes more money available for school district aid.

          • diogenes

            A bank, like anything, can be well-managed or poorly managed, managed for public benefit or for private benefit or for the benefit of the managers. And “socialism” has nothing to do with it. It’s just witch-hunt language and it sullies the user.

          • diogenes

            David, the public banking solutions under discussion here are not “socialist” in origin — Ben Franklin predates socialism by many decades, for instance. And most socialist governments — self-described socialist governments — have not employed public finance. I think when you start talking about “socialism” here you are confusing the issue. I wish you would withdrawn this comment. It is inaccurate and counterproductive. Otherwise, you are quite right that those of us arguing for public credit etc. are several steps back before and behind and above the assumptions of mainstream Wall Street Federal Reserve “neocon” finance.

            Michael Hudson’s J Is For Junk Economics is an excellent discussion of this issue and of the history of the rise of mainstream capitalist financial theory, and of the demonstrable corruption of its academic advocates.

          • David Schultz

            No intention to mislabel, I apologize. It is difficult to find political language in the “me” generation that is meaningful. “Socialist” as in state run and invoking income redistribution. I would talk about Ben Franklin more as a populist argument involving nationalism and fiat currency. Is Micheal Hudson a socialist or a populist! Are you ready to go down that rabbit hole? I think we will lose everyone else on this thread.

          • David Schultz

            I just found out Michael Hudson passed away last May. That is very sad. You will have to carry on his views on his behalf.

            https://www.youtube.com/watch?v=mH8FWrbzxEs

          • diogenes

            his website michael-hudson.com is still active and he appears to be still alive. I think you’re mistaken. I certainly hope so.

          • diogenes

            Josh doesn’t want that. He wants that money to keep flowing into the pockets of the 0.1%, the investor oligarchs of Wall Street.

          • Josh Stern

            Diogenes stalks me, only on this site, posting bizarre, non-sensical accusations that have nothing to do with me & are not supported by anything I wrote. As I already explained to you – municipalities are currently giving money to “Wall Street” via the fees they incur when they sell municipal bonds. I describe a method for them to get much lower fees, and you accuse me of being some sort of undercover investment banker spy, while showing that you have no actual insight into the topic area.

          • diogenes

            Yes, and Ellen Brown describes a method — well tried for hundreds of years, and proven effective — of dispensing with their predatory fees entirely, which are the source of the problem and the reason why municipalites are mired in debt. And your proposal is to apply more of the same poison, but maybe in smaller doses, rather than dispense with the poison. And when someone tries to reason with you, they’re “stalking” you and they’re “trolls.” And evidently you expect people to respect this stuff????

          • Josh Stern

            Diogenes, every posting you directed at me so far on this site has been a combination of raw insults, baseless insinuation from left field, incoherent ranting, and vague references to completely irrelevant literature that has nothing to do with the topic.

            I don’t agree with Ms. Brown’s economic theories or claims, but I still support her general project it is includes things like publicly owned co-ops with the power of money centered banks and perhaps even more direct lending (then we see with student loans that borrowing from the govt. is no panacea…). I hope everyone here is actually clear, when you hear that money center banks get to borrow from the Fed’s discount window – that means borrow for a few days or a month at a special low rate and then pay back, making them less likely to have a run on the bank. It isn’t really free money in any sense.

            Another example – 19thC railroad barrons were a big problem, so in 21th Century where we have Amtrak for National commuter rail without competition, it is hardly a great solution for everyone. Amtrak is not cheap and mostly not super convenient unless you are traveling between NYC and Wash DC. So that’s another example where a govt. subsidized market without private competition is not a great cure all.

          • diogenes

            Not only do you “not agree” with Ellen Brown’s “economic theories or claims,” you don’t understand them, as evidenced by your comments throughout.

            Similarly, your third paragraph shows that you haven’t got a clue about the history of railroads or their problems.

            Every time you post, you make a fool of yourself. But go right ahead. Every circus needs a clown, no matter how inept.

          • David Schultz

            Perhaps you should go to National Review where your views might fit in better.

          • David Schultz

            Your argument undercuts the whole purpose of the article. If you don’t have basic common ground on the issue it is hard to discuss.The author promotes through sovereignty a State can produce its own money via a State owned bank. This is nothing new in America and agreed it certainly has its dangers. The alternatively we are running in a system where money is generated by corporations and government must borrow that money. We are living with a system that is quite insane and doomed to failure.

          • Josh Stern

            Sort of. I didn’t see anything in the article that implied getting rid of all private lending/debt and the current U.S. system of money and replacing it with a radical new form of totalitarian economy that has never been tried before in any country. The article only talks about adding new, additional mechanisms of lending and fiscal stimulus. So I did indeed *miss* what you and some others claim it says. You can help out by pointing out the clue trail from the article to that much more radical proposal.

          • diogenes

            Yes. But either Josh is OK with that or he can’t tell the difference. All the evidence — available in his copious vacuous comments — points to the latter conclusion.

          • David Schultz

            I can understand anybody coming out of a 21st Century MBA program having those view. It is all my way or the highway now from what I gather; no dissent, no discussion. Fortunately back in the 70’s some of professors were still broad minded Keynesians. Also come from the school of anthropological economics which looks at this all very differently. The break from neo-classic economic theory is a huge issue for the Democratic party. What I’m seeing here is a gulf of basic political economics. How can we ever have compromise candidates or political positions when we don’t even know what that would be like? We talk about banksterism and the neo-classic MBAs have no clue what we are talking about!

  • diogenes

    Yes, this is it, exactly. Ellen Brown’s own book, the Web of Debt, which everyone who cares about our poor mangled country should read, shows that this is the solution that worked to create our country in the first place and the primary reason why Britain tried to suppress the colonies. We could do much better than the Bank of North Dakota, but it shows what is possible.

    Just as the Bank of England wanted what Ben Franklin’s Pennsylvania, and other colonies were doing, HALTED IMMEDIATELY, the primary opponent of this proposal is of course, Wall Street, because it threatens Wall Street’s corruptly legalized predatory practice of taking a toll on public credit.

    This proposal was before Congress in 1937 as a bill by Jerry Voorhis with 173 cosigners. The Democratic Party saw that it died in committee. Until we end the dominion of Wall Street traitors in Congress, America is doomed to continue collapsing into a brokendown thirdworld wageslave plantation. With a hereditary oligarchy of 0.1% holding all the money and all the power and murdering millions and starving millions from their headquarters in Manhattan. And throwing BIG parties and speewing lies and hate in all directions.

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  • jamesoneill

    According to a presentation made in Hong Kong on the eve of the Davos meeting, the US actually needs more like $8 trillion dollars spent on infrastructure, just to being the exisiting infrastructure up to standard, let alone making investments in new projects. That is way more than the $3 trillion Ms Brown is suggesting and even more than Trump’s promised $1 trillion.

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  • Carl_Herman

    Powerful work, Ellen; thank you. I’ve shared these ideas with ~2,000 AP Econ teachers, and at two academic conferences with Ellen at the Claremont Colleges. To date, we have zero, zip, nada refutations of the mechanics we point to. That is, as far as we know, we’re absolutely correct in the data.

    Here’s my best article to document ~$1,000,000 per average US household benefits of public banking and monetary reform: http://www.washingtonsblog.com/2016/09/labor-day-2016-obvious-benefits-monetary-reform-public-banking-include-full-employment-optimize-infrastructure-also-causes-lower-overall-prices-infrastructure-improves-total-eco.html

    • Josh Stern

      Carl, I took a look. Honestly, I think what you propose would end up being totalitarian. You don’t mean it that way, but it kind of follows. How is it decided who gets to build a new house or buy equipment for a new business? What about the person who was saving for some big future purchase and now finds that it is much more expensive because all of the savings/debts have been devalued by a new currency? Without meaning to, you are proposing to put all sorts of crazy power in this govt/public bank because private parties can no longer do those transactions/deals in your imagined system. I can see it working out okay within a small communal tribe of people, but it’s hard to imagine the enormity of problems on a national scale. There is a kind of collective intelligence in having all sorts of private parties making decisions about the financial transactions that are most important to them. Replacing decisions about future investment & savings & consumption with a government intermediary is an approach that is bound to run into terrible problems when it tries to scale up to nation size.

  • David Schultz

    Wow! What a good idea. Why didn’t the Democrats run with this on their platform?

    • diogenes

      Because the Democrats (like the Republicans) are owned by Wall Street and the owners of the Federal Reserve and this undermines a primary source of their pillage.

  • jadan

    Ellen Brown’s Bank of North Dakota is a “public/private partnership” in which the public pays all the dues and the private bankers take all the profit. The BND is a scheme to capitalize the private banking system using public assets & revenues. The bankers say to the public: capitalize us with everything you own and earn and we’ll loan you back some of your money at 2% in our special infrastructure deal. A genuine public bank would charge 0% interest for such loans.

    This is not “public banking” friends & neighbors, this is the triumph of the privatized banking system put in place by fun-lovng Alex Hamilton. This is a violation of the Constitution, Article 1, Section 8 and an abdication of responsibility by congress. Like Christianity, our Constitution is a basically good idea that has never been tried. Ellen Brown is not an advocate of Ben Franklin’s concept; she is a defender of the Federal Reserve System. Her books talk about public banking and the history of public banking, but her proposal has nothing at all to do with public banking because the money power remains in the hands of the private CABAL of wealth owners.

    • diogenes

      Thank you for this clarification. What needs to stay on the table is public banking with public credit. Who do you see as an effective exponent of this?

      • jadan

        I’m not familiar with the Voorhis legislation of the 30’s, but in our latter day, Dennis Kucinich proposed legislation called the NEED Act, “national emergency employment defense” act, or HR 2990, sponsored by John Conyers et al, in 2011. This bill was based on the model put forward by the American Monetary Institute, called the “American Monetary Act.”

        Stephan Zarlenga is the chief intelligence behind the AMI in his book “The Lost Science of Money”, which is a better explication of what public banking is than Ellen Brown’s often turgid prose. Ms Brown tends to illuminate banking in terms of what’s happening today, and because she was learning her subject by writing about it, the readers tends to learn along with her. She’s a good teacher. I don’t want to disparage her contribution, but if public banking means “sovereign money”, the monetary authority cannot be a private entity.

        “Federal Reserve Notes” are a private fiat money for which the US government pays a user’s fee.. “Greenbacks” on the other hand are Treasury Notes, to use an example of a fiat money issued by Lincoln’s government in the 1860’s. The government can, and should, print and deploy its own money by right as a sovereign entity. It need not borrow from the wealthy owners of the Fed or other elite members of the 1% to fund whatever it deems worth funding, which was the mode of the American colonies before 1763. No need to pay the rich for the privilege of using their fucking money.

        This is not what Ellen Brown is talking about and the Bank of North Dakota is a perversion spawned by the Populist movement that lay down and died there in that frozen wilderness after 1896. Ellen tends to talk out of both sides of her mouth, as politicians are wont to do. She was originally a member of the AMI, but went her own way and founded the Public Banking Institute which uses this phony BND as a model of public banking. She likes the Fed because it’s the status quo, whereas the AMI proposes to eliminate it as an autonomous entity. The NEED Act would merge the Fed into the Treasury. We would finally have our own sovereign money after 228 years and Hamilton playing kissy-butt with British financiers.. Check it out.

        • diogenes

          I will try to have a look at Zarlenga, although I don’t really think I need further explanations on this subject. It’s the Bank of North Dakota I’m not familiar with in detail, and in any case I don’t propose it as a model but as an example of the kind of thing that might be done.

          As I said above, there are TWO subjects here, and TWO mutually compatible initiatives which can be pursued and implemented independently. One involves removing the power to create currency and credit, illicitly granted by a corrupt Congress (1913) to the Federal Reserve, and restoring it to our federal government, where the Constitution places it. This is what Lincoln was doing with his Greenback and what Kennedy started to do with silver certificates, but both of them only used this mode of finance on a small scale, and did not make it exclusive, as it needs to be. And both died by an assassin’s bullet. Funny how that works.

          Voorhis’s bill proposed a “greenback” solution and a specific way to end the Federal Reserve — to whit (quoting my essay mentioned above):

          Voorhis of Ventura, a leading younger congressional progressive and a prominent advocate for financial reform. His book Out Of Debt, Out Of Danger: Proposals For War Finance and Tomorrow’s Money (1943), made him a special target, as did his promise. He also antagonized Wall Street by investigating Sullivan & Cromwell’s business contacts with Nazi Germany. In 1939 Voorhis introduced a bill (H.R. 4931) proposing to buy out the private owners of the Federal Reserve with Treasury-issued money and liquidate the national debt by purchasing the Reserve’s holdings of Treasury bonds as they mature “in the same manner in which the banks bought the bonds originally — namely with newly created money.” Although “150 congressmen were pledged to vote for it,” it was referred to committee and left to die there when the term of the 76th Congress expired.

          Voorhis was later defeated after six terms in Congress by Richard Nixon in 1946 with overwhelming financial backing from Wall Street, including the father of Bush I, and an arsenal of unbelievable dirty tricks — including actors hired to go around door to door posing as Russians campaigning for Voorhis and distributing literature stolen from his offices (really — this is reported in the memoirs of Supreme Court Justice William O Douglas). Funny how that works.

          The other subject, the other proposed initiative, is public finance of public works and public utilities — which would be somewhat easier to effect because it can be enacted at the state level — in California, it could be enacted by a ballot initiative, for instance — which would require considerable organization and public education to have a chance against the billions the investor predator class would spend to defeat it. But an informed alert citizenry could do it, unquestionably, in a matter of four years, with concerted intelligent effort.

          Am I clear now, jadan?

        • Bev

          Links: The American Monetary Institute http://www.monetary.org/
          http://www.monetary.org/wp-content/uploads/2013/01/HR-2990.pdf
          http://www.monetary.org/2017-ami-monetary-reform-conference

          The American Monetary Institute proudly announces its 13th Annual
          AMI Monetary Reform Conference, September 14 – 17, 2017
          Register by phone at 224-805-2200
          Register by e-mail at ami@taconic.net
          Mail registrations to The American Monetary Institute
          P.O. Box 601, Valatie, NY 12184

          The National Emergency Employment Defense Act
          The “NEED” Act HR 2990 solves the problem with 3 actions
          1) The Federal Reserve is dismantled and good parts are placed into the US Treasury. A Monetary Authority is created which avoids an inflationary or deflationary money supply.

          2) Accounting rule changes prohibit the banks from creating what we
          use for money- from using debt for money – what’s known as fractional reserve banking is decisively ended.

          3) The Congress originates (creates) new US Money and spends it into circulation, for infrastructure, health care and education; starting for example with the $2.2 trillion the engineers tell us is needed for infrastructure over the next 5 years. Later the human infrastructure of health care and education is added. This is estimated to create over 7 million good jobs quickly.

          Additionally the NEED Act, HR 2990:
          * Pays off the national debt as it comes due, if necessary by creating the money to pay for Bonds coming due, rather than rolling them over with new borrowing
          * Limits interest rates to 8% including all fees; Historically this is a high interest rate
          * Ends compound interest; with the rule that total interest may never exceed the principle, except on mortgages
          * Lets the 50 states decide where 25% of the new money goes each year through per capita federal grants. Some general areas can be specified – infrastructure, health, education. Unfunded federal mandates, pensions. This is a big deal – no way that any local actions (e.g. mythical local currencies) can be as powerful in solving local crises.
          * 2990 Contains a tax free dividend for every citizen. Imagine if the bailout went to all our citizens. Say 3 trillion to the citizens instead of to the banks. With 300 million citizens that $10,000 to every man, woman and child. $40,000 to a family of four. The depression/recession would be over! Banks could have competed for these deposits.

          THE YAMAGUCHI STUDY (World expert in predictive economic modeling process) concluded that HR 2990: ( http://monetary.org/wp-content/uploads/2011/11/DesignOpenMacro.pdf )

          • Pays off the national debt as it comes due

          • Provides the funding for infrastructure (which solves the unemployment problem)

          • Does these things without inflation! Friends please re-read, and forward this page to your entire email list. Please send any questions to
          ami@taconic.net . We will answer! Thank you!

          • diogenes

            This sounds a lot like Voorhis’s proposal referenced below. Can we have more details about how 1) is accomplished under this plan please?

    • Josh Stern

      I just took a peak at their annual report. It looks like what BND does is special in these ways a) state owned, b) all state funds deposited there, c) they agree to buy loans for local in-state infrastructure projects (under some unspecified set of conditions). So they do eliminate some private/profit centers – bank ownership and securitization for in-state infrastructure that falls within their purview.

      • diogenes

        And instead of donating deposits of its funds to the predatory operations of private banks the state runs a positive balance rather than a deficit. So even if it’s not ideal, the BND model is still vastly superior to California’s $600 BILLION welfare for bankers program and constant deficits.

      • jadan

        The BND scheme is a means to subsidize private banking. There are more
        banks per capita in the state of ND (pop < 1 million) than any other
        state. The BND is not a retail bank. You're going to pay your vig to
        your local bankster. Said another way, the BND guarantees private bank
        profits by "participating" in loans, which is not unlike the government
        participating in NINJA loans of securitizing fraudsters through TARP.
        I'm not saying it does not offer some benefits. It's not as bad as Wall
        Street and it's better than a poke in the eye. II am saying it is not
        public banking and Ms. Brown should stop selling it as such.

        • Josh Stern

          Yes, there are a bunch of different things that banks do, there is, in principle, a “Public Banking” way to do any of those things, and BND implements a subset of those in a public way. A couple of notes: Ms. Brown describes her focus with Public Banking being mostly about money center banks – in fact BND is in between a direct lender and a money center – it does some of both, but not all of both, and not all in a public banking way. “Participating” could mean sharing in the ownership of loans or it could mean letting others originate and then purchasing the loan. I saw in the docs that BND does a bunch of the latter. I didn’t happen to catch a description of the former in my quick perusal, but it might be there too.

  • Josh Stern

    I find this video with Ellen Brown speaking to be very clear wrt to what she is advocating and why – https://youtu.be/3eu9-AqbB-8 She lays out the empirical case the State run banks are performing well on a worldwide basis, and that they tend to be efficient and fiscally conservative in the role of money center banks. Again, one can support her project & think it is a good idea without endorsing all of the unusual theories and loose sale pitches that sometimes alongside it. The biggest problems she mentions with some large commercial banks – risky speculation with publicly insured money, huge bonuses for CEOS, divergences between what’s good for the public and what feels safe for shareholders in financial downturns – are issues of finance and corporate governance rather than monetary issues. In any case, it’s a good speech, and works as a clear, constructive approach to the topic of this thread.

  • Southern

    10 years is a long time, try 3 years by slashing annual aid to Israel.