Tuesday, October 08, 2013

A bank that works for the people

I have some interesting affiliations on Facebook. One of them is "US Uncut", an interesting source of news. I like them because they are liberal and their ideas make sense. Today, they posted a very interesting story about public banking. They shared the story of the state of North Dakota, the state with the lowest employment rate in the nation and one of the few states turning surpluses. They can thank the Bank of North Dakota for much of this success.

Turns out that when the state government deposits its revenue in the Bank of North Dakota (BND), that bank turns around and makes loans that are good for the people of the state. The BND is the only state owned public bank in the nation at the moment and many other states are looking into setting up their own bank.

The Public Banking Institute can explain it much better than I can, but from what I can see, there is no reason why we can't do what China, Japan and Germany have done for decades. Public banking can allow us to free ourselves from the tyranny of Wall Street, as other nations have found. We could do it on the state level.

it must be a great idea because even Jerry Brown, governor of California, did a pocket veto to keep a public banking bill from becoming law. That will wasn't even to create a bank, it was to do a study to see if a public bank at the state level was feasible. Banks know competition when they see it and move quick to quash it.

This brings me to an interesting question. Where does my state keep the money that it collects in revenue? What bank does it write checks from? I tried to find out with Google and could not find it. That would make it almost a secret. I will write a few innocent emails to find out and follow up later.

More to the point, though, is why should private banks be allowed to make money off of state money deposited with them, then loan the same money back to the state at high rates of interest? Why should states and counties need to raise bonds for infrastructure money? The story of BND proves that big projects can be financed without Wall Street and also proves that private banks have no business holding state money in deposit when they act like they own the country.

It's worth noting that the appeal of the BND is broad across party lines. It's not a Democrat or Republican solution. It's a solution for all residents of North Dakota.

According to the state activity list on the Public Banking Institute website, there is no activity here in Utah to investigate setting up a public bank. Utah isn't even listed. Utah culture is just dripping with "self-sufficiency", yet the financial mechanism to make the state more self-sufficient, more independent of private sources of funding, is not even on the radar.

There must be powerful banking interests at work to keep a public bank in Utah from happening.
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