The True Potential of Publicly-owned Banks

or: What if the People Owned the Banks?

North Dakota broke new ground nearly a century ago, but the true potential of publicly-owned banks remains to be explored. Nearly all of our money today is created by banks when they extend loans. (See the Chicago Federal Reserve’s “Modern Money Mechanics”, which begins, “The actual process of money creation takes place primarily in banks.”)

We the people have given away our sovereign money-creating power to private, for-profit lending institutions, which have used it to siphon wealth from the productive economy. If we were to take that power back, we could generate the credit we need to underwrite a whole cornucopia of projects that we don’t even consider because we think we lack the “money.” We have the labor and we have the materials; we just lack the “liquidity” (50% of every thing you purchase is the result of interest.) necessary to put them together to create products and services.

Money today is just a ticket, a receipt for work performed and goods delivered. We can fund the work we need done by creating our own credit. The real promise of publicly-owned banks is not that they can bail out subprime borrowers but that they can jumpstart the economy by creating real wealth. They can provide the liquidity to put labor and materials together, allowing the economy to build and grow. Our private, profit-driven banking sector has been bleeding wealth from the rest of the economy. Public-interest banks can transfuse the economy with the credit it needs to flourish and be productive once again.

This process sets up a "musical chairs" phenomenon in our country. Just like musical chairs in grade school, there will never be enough chairs for everyone. In other words, no matter how hard you work; no matter how many jobs you have, there will always be an "under" class -- people who just can't seem to make it.

Our current problem here in the US in 2010 is that the under class has grown to a point that it is swallowing a large segment of what used to be the middle class. The drain on resources has trickled up -- now, 80% of the assets of this country are controlled & owned by 5-10% of the population. Furthermore, they didn't work for those assets, they created them from imaginary activities that are called a whole variety of obscure names -- CDOs, monetized debt, credit default swaps, etc.

For more updates on the movement for publicly-owned banks, see http://www.public-banking.ccom. To sign a petition for a citizen-owned bank in California, go to http://www.change.org/actions/view/help_the_terminator_save_california.