Even though this idea is obviously cost-effective with just a few moments’ consideration of the facts, even though the idea of creating money and credit for the public good rather than for bank profit has a rich history of support from many of America’s brightest minds, and even though this is the “secret” to the state with the lowest unemployment in the nation along with a record budget surplus (it’s North Dakota, one of only two solvent states today), the idea of a state-owned bank creating its own credit is a new idea for many Americans.
Florida candidate for Governor, economist Farid Khavari, explains that a state-owned bank should replace for-profit banks to provide substantial public benefits while profiting the state. Two percent mortgages would reduce interest payments by 85%, saving $88,000 per every $100,000 borrowed. The bank would pay 5% interest on deposits, charge 6% interest on credit cards, and 3-4% on commercial and vehicle loans.
State-owned banks could operate under existing international credit-creation standards issued by the Bank for International Settlements (BIS) of an 8% capital requirement. The Federal Deposit Insurance Corporation (FDIC) has similar minimal capital requirements, called Tier 1 leverage, currently set at 4% or the ability to lend $25 for every $1 of capital. This is the so-called "stress test" leverage ratio. Prominent economists and critics argue that the stress test was designed by the banks, and in no way any signal of correction from management that caused our economic crisis.
Bruno Barreiro, County Commissioner for Miami-Dade County, is also proposing a government-managed bank at the county level.
Comments
Awesome news, Carl! I'd love to see a movement for all states to create their own banks. Thanks for your excellent reporting.
Well if North Dakota can do it, why not.
I agree with Fred Burks; it would be great to see this idea take hold in other states as well. Thanks for the interesting article.
I 100% support the creation of a state owned bank that can reduce the state budget deficit and make a big impact.
This is a shell game proposal. Government would have to subsidize the losses of their banks by raising taxes. Money would come in one door and out the other. Massive and inefficient government bureucracy would be more expensive than private enterprise. The failures of Fanny Mae and Fanny Mac prove this. The misregulation of banks to stimulate home owenership was a policy failure not from private bank failure and proves Government is not an effective administrator and does not belong in the business of banking. This proposal would also create hyperinflation that was seen in post world war 1 Germany which led to the collapse of the German economy and the rise of National Socialism. Think before you suggest ridiculous ideas.
Michael Schmitt:
You’re wrong about the numbers causing losses. Do the math.
“Massive and inefficient” only if we tolerate it. Does your local school board members tolerate that waste?
The government facilitated our economic crash; state-owned banks, if managed for the public good, structurally provide the results of 2% mortgages, 6% credit cards and 5% payment for deposits. Do the math.
80% of fraud in the subprime crisis came from lenders, according to the FBI report on the topic. Private banks need to get out of the money-creation business for their own parasitic profit. If money creation was focused for public good rather than big bank profit, we save $1 trillion every year.
You don’t know the history of Germany’s economy. Private banks managed during hyperinflation. I suggest you consider the link of what many of America’s brightest minds have thought of the idea of monetary reform before you tell anyone else to think.
I don't know who you guys are at the Examiner, but you are some seriously smart people who write the best summaries of freedom issues I know of! APPLAUSE
Yeah, but if you start state banks, how will the banking families of the federal reserve continue to steal from you, use the money fraudulently obtained to take over your corporations, install their agents and conduct false flag attacks.
Seriously now, you want to start another war of 1812?
Where is Andrew Jackson when you need him?
Sounds nice but anyone with half a brain would realize that the States being able to create credit: i.e. money , is the very definition of inflation. Having the Fed being able to create money at will has destroyed 96% of the value of the dollar. Does anyone really think that having the morons in the State Governments being able to do the same is a good thing? There's a reason why The Constitution states that only gold and silver coin is legal tender in payment of debt.
The private banks create credit every time they extend a loan. The name for it is "fractional reserve lending." Banks do NOT extend their capital of deposits when they extend credit.
"One of the immediate benefits of a state-owned bank is ending interest payments on existing debt. If California created its own bank, they could issue 0% credit to themselves to buy existing debt and save $5 billion every year that they pay in interest. To put that number in perspective, California has 20,000 laid-off teachers. All could be rehired at $70,000/year and California would still have $3.4 billion of their saved money left-over. Retiring the national debt would be different, but just as easy; saving Americans $450 billion every year in interest costs."
Jct: Yes, they could do this great idea.
Bill Jones:
I have at least half a brain, as does Farid Khavari. The issue is of inflation is creating more money than GDP. Money that’s invested in creating more GDP provides employment while decreasing prices. Morons anywhere won’t do it (and they’re criminal frauds rather than morons), but We the People demanding transparency can. I link the argument that tying money supply to commodities is an unnecessary variable when the purpose is limiting its supply.
In the US constitution the government has the responsibility to issue the Nations credit not private European bankers. The state of Florida would be doing the right thing.
Now imagine the reaction from the owners of the private Federal Reserve banks. To what end would they go to preserve their monopoly?
Great article.. Great idea.. not a new idea.. but a great idea.. All those who disagree do so because they are either grossly under-read or disingenuous.. Probably trolls being paid by the Rothchilds to counter any idea on the web that could spread and reduce their wealth.. and probably, in the end, leave them hanging.. literally..
While not as simple as private owned banks, a state owned bank in Florida or any other state would give consumers more choices that are not profit driven. This would force banks to control fees cost and other deceptive trades (i.e. changing p.o.box payments to create late payments for fees). If you want radical change, how about outlawing private or corporate contributions to election figures and creating a public funded election system? Do you think that might instill some change?
The ND chater provides that the state bank lends THROUGH existing bank entities, not IN PLACE oh them, that's a bog distinction. We dont' want another smaller, politicized Federal Reserve at the state level. To quote a good friend of mine who was the "Fist lady o Private Banking"... "The reader is expected to keep the two basic purposes of a State Bank in mind as he/she reads through the material: (1 A State Bank makes state and currency from the federal government possible; and, 2) A State Bank must be capable of standing strongly on its own without becoming dependent upon the existing federal infrastructure or the entire purpose of having a State Bank in the first place becomes meaningless". So the charter of the state bank must allow for independence from the Fed, not dependence.
Michael Schmitt has it right. Please name ONE country that uses this new panacea successfully: perhaps Cuba?, North Korea? or may be Iran? C'mon, theories of quick fixes to enduring problems should elicit some healthy skepticism. I am skeptical of conspiracy theories coupled with Utopian, kumbaya type solutions presented as social engineering schemes. And NO, I don't work for a bank. In the US, the root of our fiscal and monetary problems lies in our own proclivity to vote for ourselves more than we produce and to borrow, borrow, borrow so that we can live the American Dream NOW and pay in the future....want to wipe out the US trade deficit? look at Germany or China or the Netherlands and do as they do. Want no national debt? ask your congressman to enact a balanced budget amendment in the Constitution. But if anybody thinks for one second that the proposed "changes" in our banking system will solve our problems, then I have a bridge to sell to you...Brooklyn bridge anyone?
Victor:
The history of government-created money and/or credit begins with ancient Greece and in this country is explained beginning with Ben Franklin describing its successful use in colonial Pennsylvania. Moreover, you straw-man the argument comparing it to emotionally-laden countries, falsely change the topic to spending rather than creation, falsely conflate fiscal policy to reduce budgets with money/credit creation, and then lie about balanced budgets somehow magically paying off debt (you’re really stupid about this fundamental area of economics or you really are a bank pimp).
For those who want to pay off the national debt, I suggest googling, “Either pay the national debt with monetary reform or kiss your assets goodbye.”
You then despicably conclude your complete failure to address the evidence and ideas in the article by somehow alleging people should believe in your complete lack of evidence or else they’re being scammed.
No, Victor, your comments reek of scam.
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