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GET CREDIT (IMPUTED NEW DOLLARS) FROM STATE BANKS TO AVOID CRISES:
Ending Today's Economic Crisis Simply and Easily, in America and Globally
What Works for North Dakota Can Work for the Other States, America, and Everywhere.
Wednesday, 27 May 2009
Commercial banks hold nations hostage by making them pay interest on their own money as well as "advanc(ing) massive loans to their affiliated cartels and hedge funds, which use the money to raid competitors and manipulate markets."
Some of the best ideas are often the simplest. When applied to the global economic crisis, the solution is easier than imagined. What's hard, in fact a Gordian Knot, is the political will to embrace it. But even matters that great can be solved by a bold stoke, and according to legend, Alexander the Great's "Alexandrian solution" was achieved with one stroke of his sword, cutting the Knot in half. Applied to the global economic crisis, it means addressing it with effective policies, not ones wrecking America and other troubled nations worldwide.
Economist Michael Hudson explains that "debt leveraging is what caused our economic collapse," so piling on more ("The Recovery Plan from Hell" he calls it) makes things worse, especially the way it's done:
Which is why this article is written, inspired by the work of others. Economist Michael Hudson for one. Global Research.ca editor Michel Chossudovsky another, and noted author and writer Ellen Brown for her extraordinary book titled “Web of Debt” and her explanation of how "Cash-Starved States Need to Play the Banking Game" the same way as North Dakota.
If done at state and federal levels, it can save the economy from Wall Street's predation - by removing the debt overhang through debt write-downs as well as funding sustainable, inflation-free prosperity. It's not a pipe dream. It's real. It happened before and can again. Short of that, according to Hudson:
Eventually the economy will collapse, but Wall Street will profit hugely - aided and abetted by corrupted public officials allied with the private parasitic Federal Reserve turning America into what Hudson calls a "zombie economy" and banana republic.
What Works for North Dakota Can Work for the Other States, America, and Everywhere
On March 2, Brown explained North Dakota's "Banking Game" and asked:
On May 23, The Bismark Tribune and other state papers reported that North Dakota has the nation's lowest unemployment rate at 4%. Clearly, it has a leg up on the other states, something all their governors and legislators should note along with federal officials in Washington. What works for North Dakota can work everywhere.
The Bank of North Dakota is the only state-owned bank in the nation - established in 1919 by its legislature "to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men," according to Brown quoting management consultant Charles Fleetham in a February 2009 article published in his home state, Michigan. Brown continues:
Key though is how it operates and stays solvent when so many of the nation's banks are financially strapped and face bankruptcy. As Brown explains:
Commercial banks turn money into credit by what's called "fractional reserve banking" that magically multiplies each dollar deposited into about 10 in the form of loans or computer-generated funds.
"Certified, card-carrying bankers are allowed to do something nobody else can do....create 'credit' with accounting entries on their books." It turns money into credit by what's called "fractional reserve banking" that multiplies each dollar deposited magically into about 10 in the form of loans or computer-generated funds. It's literally money created out of thin air so that banks can re-lend it many times over, and the more deposits, the greater the amount of lending.
At issue is whether credit should be private or public, and as Brown wrote in a December 29 article titled "Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme called Fractional Reserve Banking:"
Brown and others have explained that "fractional reserve banking" dates from the 17th century, done then mainly in gold and silver coins. Early bankers soon realized it was simpler to use deposit receipts (called notes) as a means of payment. They then began creating money by making loans through promises to pay, and more could be issued than the amount of coins on hand as only enough were needed to service redemptions - today's idea of a reserve requirement.
What began earlier as notes, today are accounting entries that literally create money out of thin air. And it works the same for government as for privately-owned banks, except for the following.
As publicly-run institutions, their mandate is entirely different:
Further, they can lend to themselves and municipalities interest-free, and to businesses, farmers, and individuals at low affordable rates to create internal growth and sustainable prosperity. And the more often loans are rolled over, the more debt-free money is created - without fear of inflation.
As long as new money produces goods and services, inflation can't occur. Only imbalances cause problems - "when 'demand' (money) exceeds 'supply' (goods and services)." Price stability is assured when both increase proportionally, and that's exactly how it worked in colonial America and under Lincoln during the Civil War as Brown explained in "Web of Debt."
In 1691, Massachusetts became "the first local government to issue its own paper money...." called scrip. Other colonies followed, Pennsylvania most effectively by issuing new money without inflation or need for taxes. For over 25 years, it collected none, and at the same time, its population grew and commerce prospered. The "secret was in not issuing too much (credit), and in recycling the money back to the government in the form of principal and interest on government-issued loans."
In other words, keeping everything proportionally in balance and not having to pay interest to predatory private lenders - the very system wrecking America today and other economies run by private central banks.
Lincoln did the same thing in spite of assassination threats before his inauguration as well as "treason, insurrection, and national bankruptcy" during his first year in office. Considering what he faced, his accomplishments were remarkable, including:
He did it by nationalizing control over banking so government could print its own money - interest free without paying usurious rates that private bankers demanded, from 24 - 36%. As a result, "the economy was jump-started with a 600 percent increase in government spending and cheap credit directed at production" - done with government-issued Greenbacks. They financed the war, paid the troops, and spurred the nation's growth - free from the system wrecking the country today to let parasitic private banks prosper.
In "Web of Debt," Brown explained that early 20th century Australia operated under a publicly-run bank as well - its Commonwealth Bank that created money, made loans, and collected interest at a fraction of what private bankers charge. It worked well enough for the country to have one of the highest living standards in the world at the time. Once private bankers took over, Australia became heavily indebted, and its living standard fell to a 23rd place ranking - clearly showing the destructive power of private bank-created money and overwhelming benefits possible when governments print their own.
America today can have the same advantages instituted by:
America and world economies can be just as prosperous but only with determined effort enough to replace their corrupted systems with one that's fairest and works best .
A publicly-run banking system benefits everyone by using deposits for sustainable internal growth and government needs - at the state and local levels. And for the federal government, by printing its own money interest-free for the same purpose.
This writer and Brown believe that credit should be a public utility under a nationalized banking system, creating its own money at the federal level and with deposits into state-run banks - to serve people, not predator bankers. It would be the most equitable, sustainable, efficient and democratic system, free from parasitic lenders, and it would work equally well at the federal, state and community levels with local branches of government banks serving municipalities, their businesses, and residents at affordable costs.
Under the privately-run Federal Reserve and parasitic giant banking system, corporate monopolies run America and use "their affiliated banking trusts to generate unlimited funds to buy up competitors, the media, and the government itself, forcing truly independent private enterprise out" - the very system classical economists abhorred.
Private banks hold nations hostage by making them pay interest on their own money as well as "advanc(ing) massive loans to their affiliated cartels and hedge funds, which use the money to raid competitors and manipulate markets."
In America, it's an extreme form of Darwinism with the federal government and 46 of the 50 states insolvent - and small businesses and ordinary people faring worst. Another way is essential to keep the nation, individual states, local communities, and most people from becoming "zombies" and America transformed into Guatemala.
With federal, state, and community banks made a public utility under a nationalized banking system, consider the benefits:
Imagine the following:
Weeks back, Bloomberg and others reported that from $12 - 14 trillion in bailouts and stimulus have been allocated or spent, while the Fed can't account for $9 trillion in off-balance sheet transactions. Why? Because of unprecedented willful fraud given a wink and nod by the highest officials in Washington partnered with criminal bankers to loot the Treasury and fleece the public.
Now imagine if $1 trillion of the total looted went to publicly-run banks for productive purposes. "Fractional reserve" magic would create $10 trillion. If around half of it went there (remember already allocated or spent), an astonishing $70 trillion could be used productively, not wasted, used to buy damaged assets cheap for greater consolidation, or for speculation at the risk of a severe future inflation. Then envision a new future:
Overall, it would be nothing short of a revolutionary new America, only rhetorically addressed up to now, with all winners and no losers - except the private predator banks and their corrupted public sector partners.
And remember, newly created money isn't inflationary as long as imbalances are avoided and it's productively used for new goods and services.
That's the kind of America to work for and not quit until achieved. If not now, when? If we don't do it, who will? If not done soon enough, it may be too late. If that's not incentive enough, what is?
Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Mondays from 11AM to 1PM US Central time for cutting-edge discussions with distinguished guests on world and national topics. All programs are archived for easy listening.
Mr. Lendman's stories are republished in the Baltimore Chronicle with permission of the author.
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Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.This story was published on May 27, 2009.
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