Solution to the Economic Crisis? North Dakota’s Economic “Miracle”—It’s Not Oil | 10Abr2012 17:17:32
State owned bank devoted to the principle that State money should serve the public interest instead of serving the interests of the large New-York money center banks.
The Still Report # 27
State Bank of California
September 18, 2011
Good morning from Washington. I’m Still, reporting on the economy.
Wow, big news on the state owned banking front. Both the upper and lower house of the California state assembly, in a surprise move, swiftly passed a bill to establish a blue ribbon commission to study the idea of California owning it’s own bank, along the model of the bank of North Dakota. Called California assembly bill 750.
Proponents of the measure had feared it was dead for this year. However, in an astounding reversal, within two days it passed both houses and was sent to governor Jerry Brown for his signature. If governor Brown signs the bill it will be the first time, since the bank of North Dakota founding in 1919, that a state bank has been considered.
Voters of California need to write or call the governor’s office to ask him to sign AB750.
So, what’s this all about?
Until national monetary reform is politically possible in the US, there is something we can do to help the financial situation of the 50 individual states. So let’s start at the bottom and work our way up.
Although most people don’t know it, there are 2 ways to get a bank going: 1- By getting permission from the Federal Reserve System, or 2 - By getting permission from your local state legislature.
In fact, state charter banks were an American tradition more than a century before the creation of the Federal Reserve System.
But even better, is a state owned bank devoted to the principle that state money should serve the public interest. Instead of serving the interests of the large New York money centered banks.
When a state charters it’s own bank, it deposits 100% of it’s money and tax receipts, then when you add-in the value of the state physical assets - all the roads, bridges and buildings, built-up over hundreds of years - that makes a state owned bank more financially solid than any commercial bank in the world.
But the state bank is a real bank, and can immediately start making loans to any state agency, any commercial in-state bank or even individuals if the state charter allows it.
When loaning to itself, the state would pay 0 interest, when loaning to others for projects generally though to be in the public interest, it would only charge very low interests rates.
Another benefit is that a state no longer has to pay any interests for infrastructure projects. Imagine the costs involved when the state borrows millions or billions of dollars in the case to California, for major infrastructure projects.
Think of your house mortgage, we all know that large loans payed over 30 years time, doubles or triples the original amount borrowed. All that interest goes away when a state borrows from it’s own state bank.
For example, the former chairman of the budget committee of the Missouri house of representatives, Allen Icet, told me during a recent visit to the Missouri state capital, that according to their calculations a newly formed state bank of Missouri could cut the state budget deficit in half.
In California’s case, that would mean an additional 5 billion dollars, that would not have to be collected in taxes.
So this is just an interesting theory, right? No, this is no theory.
There’s one state in the nation that has a state charted, state owned bank, North Dakota founded in 1919. So, how is that being working out? North Dakota is the only state to keep a budget surplus since the banking crisis began in 2008.
North Dakota has the lowest unemployment rate, the lowest credit card default rate and one of the lowest tax rates in the nation and it hasn’t had a bank failure in over a decade.
So the local banks must hate the bank of North Dakota, right? Not.
The local banking establishment loves the BND. They know BND helps keep everyone’s taxes low. BND helps keep the foreclosure rate the lowest in the nation. And BND does not compete with local banks, but partners with them by acting as a sort of mini FED, by providing short term money when needed at low interests rates.
And on top of that, BND has given over 3 hundred million dollars in profits in the last decade back to the state treasury.
By contrast, when California’s too large state pensions funds lost 170 billion dollars in the financial crash, BND was making record profits for the citizens of North Dakota.
The bottom line is, a state owned bank is a common sense way to make state money bolster the state economy.
Money must be a public utility and banks must provide a competitive profit-making environment for borrowing and lending. Again, the state bank takes nothing away from the state commercial banking sector.
The state owned bank puts the state’s money on the hands of we the people instead of the hands of the big new york banks. It’s a great example of decentralization of power. It claws back the money power from the big banks.
We urge everyone in California to contact governor Jerry Brown’s office.
Jerry, I know your staff ordered 3 copies of the secret of oz during your campaign, please sign this bill it will go down as the best thing you’ll ever do for humanity.
Hey, here’s a shout out to my new friends Ted, Alberto at Porto Rico, Kevin from Kenya and a big thanks to Simon of Australia. And a special round of applause to my old friend Ellen Brown who has working tirelessly to push trough AB750.
I’m Still reporting from Washington, good morning.
North Dakota Expecting $700M Budget Surplus!