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Restoring Economic Sovereignty: The Push for State-Owned Banks

Posted on February 16, 2011 by Ellen Brown

“It is time to declare economic sovereignty from the multinational banks that are responsible for much of our current economic crisis. Every year we ship over a billion dollars in Oregon taxpayer dollars to out-of-state and multinational banks in the form of deposits, only to see that money invested elsewhere. It’s time to put our money to work for Oregonians.”

—Bill Bradbury, former Oregon Senate President and Secretary of State, quoted in The Nation

Responding to an unfilled need for credit for local government, local businesses and consumers, three states in the last month have introduced bills for state-owned banks — Oregon, Washington and Maryland – joining Illinois, Virginia, Massachusetts and Hawaii to bring the total number to seven.

While Wall Street is reporting record profits, local banks are floundering, credit for small businesses and consumers remains tight, and local governments are teetering on bankruptcy. There is even talk of allowing state governments to file for bankruptcy, something current legislation forbids. The federal government and Federal Reserve have managed to find trillions of dollars to prop up the Wall Street banks that precipitated the credit crisis, but they have not extended this largesse to the taxpayers and local governments that have been forced to pick up the tab.

In January, Federal Reserve Chairman Ben Bernanke announced that the Fed had ruled out a central bank bailout for state and local governments. The collective state budget deficit for 2011 is projected at $140 billion, a mere 1% of the $12.3 trillion the Fed managed to come up with in liquidity, short-term loans, and other financial arrangements to bail out Wall Street. But Chairman Bernanke said the Fed is limited by statute to buying municipal government debt with maturities of six months or less that is directly backed by tax or other assured revenue, a form of debt that makes up less than 2% of the overall muni market. State and municipal governments, it seems, are on their own.


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Government banks all bad

I do not want any states, "United" or not, to have a bank! The private sector can handle banking just fine, thank you very much.

There is a huge impediment of course. As long as FRN's are legal tender, and as long as FRN's are required for paying taxes, we are screwed. Those laws give ordinary banks the legal right to inflate the a money supply that everyone must use. Then there is the matter of the FDIC, which must be abolished.

The free-banking system worked pretty well. It would work much better now. Back in the day, it was not easy for someone to make a decision when offered a note from a bank he was not familiar with. It says, "The Bank of East Hogwollop promises to pay the bearer $20 in gold coin on demand." So the question would be, how sound is the BoEH? Today it would be easy to trade all kinds of money. Markets would spring up for exchanging bank notes as well as gold and silver. They would be available 24/7 on the internet.

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"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln


"The Private Sector" cannot handle banking just fine.

The private sector controls The Fed right now--are you fine with the way they handle money and debt creation?

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End the Fed

End the Fed

Yes, end the Fed

but don't create 50 more, one for each state.

50 State Ponzi Scheme

Sounds like a great idea. Let's have each state setup a state bank which can print as much money as it needs, instead of just the "private" Federal Reserve printing money. We shall have many states printing money for us the citizens. Now, I totally understand what's wrong with the Fed!! Once the monopoly of the Fed is unlocked, each state will be free to print as much as it needs. Now, who is a little confused?

Study it; perhaps it is you

Study it; perhaps it is you who are confused.

Check out North Dakota: the only state with a state-chartered bank and the only state to NOT run a deficit.

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Let me throw out a few items

Let me throw out a few items here:

* North Dakota is a rural state with a very small population of what I would guess to be hardy, self-sufficient citizens. This alone would help it not run a deficit.
* The "states" printed their own money during the colonial period running deficits and all that goes with that, including draconian tender laws. This was one catalyst for the Constitutional Convention and the whole only gold and silver are to be legal tender.
* There could be legitimate legal challenges to this
* At the end of the day it is just another central bank in bed with government, just because it is not Federal does not make it any less dangerous.

Overall it is the system and concept that is a failure here. Moving it to a different center of power will not solve the overall problem.