[Pen-l] How Cash Starved States can Create their Own Credit

[Charles Brown <cdb1003@xxxxxxxxxxx>]

Playing the Banking Game
How Cash Starved States can Create their Own Credit 

by Ellen Brown


http://www.globalresearch.ca/index.php?context=viewArticle&code=BRO20090303&articleId=12522

-clip-

"North Dakota is a sparsely populated state of less 
than 700,000, known
for cold weather, isolated farmers and a hit movie - Fargo. Yet, for
some reason it defies the real estate cliche of 
location, location,
location. Since 2000, the state's GNP has grown 56%, personal income has
grown 43%, and wages have grown 34%. 
This year the state has a budget
surplus of $1.2 billion!"

What does the State of North Dakota have
 that other states don't? The
answer seems to be: its own bank. In fact, North Dakota has the only
state-owned bank in the nation. The 
state legislature established the
Bank of North Dakota in 1919. Fleetham writes that the bank was set up
to free farmers and small businessmen 
from the clutches of out-of-state
bankers and railroad men. By law, the state must deposit all its funds
in the bank, and the state guarantees
 its deposits. Three elected
officials oversee the bank: the governor, the attorney general, and the
commissioner of agriculture. 
The bank's stated mission is to deliver
sound financial services that 
promote agriculture, commerce and industry
in North Dakota. The bank operates
 as a bankers' bank, partnering with
private banks to loan money to farmers, real estate developers, schools
and small businesses. It loans 
money to students (over 184,000
outstanding loans), and it purchases municipal bonds from public
institutions.

-clip-
Some experts insist that we must tighten our
 belts and start saving
again, in order to rebuild the "capital" necessary for functioning
markets; but our markets actually functioned
 quite well so long as the
credit system was working. We have the same real assets (raw materials,
oil, technical knowledge, productive capacity,
 labor force, et cetera)
that we had before the crisis began. Our workers and factories are
sitting idle because the private credit 
system has failed.

A system of public credit could put them
 back to work again. The notion
that "money" is something that has to be "saved" before it can be
"borrowed" misconstrues the nature of 
money and credit. Credit is merely
a legal agreement, a "monetization" of future proceeds, a promise to pay
later from the fruits of the advance. 
Banks have created credit on their
books for hundreds of years, and this system would have worked quite
well had it not been for the enormous 
tribute siphoned off to private
coffers in the form of interest. A public banking system could overcome
that problem by returning the interest 
to the public purse. This is the
sort of banking system that was
 pioneered in the colony of Pennsylvania,
where it worked brilliantly well.
_______________________________________________
pen-l mailing list
pen-l@xxxxxxxxxxxxxxxxxx
https://lists.csuchico.edu/mailman/listinfo/pen-l