Tuesday, May 25, 2010

Would Government Banks Be a Good Thing?

Ellen Brown makes a persuasive case for state government banks, in an article published over at Seeking Alpha.


Her essential point: the state has billions of dollars in savings, which are deposited in private banks. Why not charter a state government bank and deposit state funds there instead?

In our current system, public money is deposited with private banks, and private bank owners pocket the profits. If that same money is deposited with a government bank, the profit would be used to balance the budget or lower taxes.

The main question she is answering is "Who shall benefit?" Right now, private banks get all the profit. We have no say in their policy, nor do we receive any advantage from it.

Why should the parasitic banking class receive all the benefit from the fractional reserve money power?

If a governmental body ran a bank, the people would have some influence on policy and receive some advantage from the interest income. The state, meaning the people, would gain the power and advantages of fractional reserve credit.

Private bankers do it, and profits go in their parasitic pockets. If states do it, profits go to reduce government spending and budgets. What is wrong with that?

The hyperinflation argument is a distraction, a red herring, not a real objection. The macro economic effect of a state bank would be no different than a private bank. The money is already being leveraged somewhere, the only question is "Who benefits?"

1 comment:

wraft said...

Max Keiser refers to the "war between savers and speculators". The Fed inflationary low interest policy has driven pension funds into speculative investments.

In Michigan, the teacher's retirement fund lost $18 billion between 2007 and 2009.

A state bank in Michigan would be a good idea.