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Ellen Brown: Is Cooperative Banking the Wave of the Future?

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As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In ‘New Economic Visions’, a special five-part AlterNet series edited by Economics Editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

According to both the Mayan and Hindu calendars, 2012 (or something very close) marks the transition from an age of darkness, violence and greed to one of enlightenment, justice and peace. It’s hard to see that change just yet in the events relayed in the major media, but a shift does seem to be happening behind the scenes; and this is particularly true in the once-boring world of banking.

In the dark age of Kali Yuga, money rules; and it is through banks that the moneyed interests have gotten their power. Banking in an age of greed is fraught with usury, fraud and gaming the system for private ends. But there is another way to do banking; the neighborly approach of George Bailey in the classic movie It’s a Wonderful Life. Rather than feeding off the community, banking can feed the community and the local economy.

Today, the massive too-big-to-fail banks are hardly doing George Bailey-style loans at all. They are not interested in community lending. They are doing their own proprietary trading—trading for their own accounts—which generally means speculating against local interests. They engage in high-frequency program trading that creams profits off the top-of-stock market trades; speculation in commodities that drives up commodity prices; leveraged buyouts with borrowed money that can result in mass layoffs and factory closures; and investment in foreign companies that compete against our local companies.

We can’t do much to stop them. They’ve got the power, especially at the federal level. But we can quietly set up an alternative model, and that’s what is happening on various local fronts.

Most visible are the Move Your Money and Occupy Wall Street movements. According to the Web site of the Move Your Money campaign, an estimated 10 million accounts have left the largest banks since 2010. Credit unions have enjoyed a surge in business as a result. The Credit Union National Association reported that in 2012, for the first time ever, credit union assets rose above $1 trillion. Credit unions are non-profit, community-minded organizations with fewer fees and less fine print than the big risk-taking banks, and their patrons are not just customers but owners, sharing partnership in a cooperative business.

Move “Our” Money: The Public Bank Movement

The Move Your Money campaign has been wildly successful in mobilizing people and raising awareness of the issues, but it has not made much of a dent in the reserves of Wall Street banks, which already had $1.6 trillion sitting in reserve accounts as a result of the Fed’s second round of quantitative easing in 2010. What might make a louder statement would be for local governments to divest their funds from Wall Street, and some local governments are now doing this. Local governments collectively have well over a trillion dollars deposited in Wall Street banks.

A major problem with the divestment process is finding local banks large enough to take the deposits. One proposed solution is for states, counties and cities to establish their own banks, capitalized with their own rainy day funds and funded with their own revenues as a deposit base.

Today only one state actually does this: North Dakota. North Dakota is also the only state to have escaped the credit crisis of 2008, sporting a sizeable budget surplus every year since. It has the lowest unemployment rate in the country, the lowest default rate on credit card debt, and no state government debt at all. The Bank of North Dakota (BND) has an excellent credit rating and returns a hefty dividend to the state every year.

The BND model hasn’t yet been duplicated in other states, but a movement is afoot. Since 2010, 18 states have introduced legislation of one sort or another for a state-owned bank.

Values-based Banking: Too Sustainable to Fail

Meanwhile, there is a strong movement at the local level for sustainable, “values-based” banking—conventional banks committed to responsible lending and service to the local community. These are George Bailey-style banks, which base their decisions first and foremost on the needs of people and the environment.

One of the leaders internationally is Triodos Bank, which has local offices in the Netherlands, Belgium, the United Kingdom, Spain, and Germany. Its Web site says that it makes socially responsible investments that are selected according to strict sustainability criteria and overseen by an international panel of “stakeholder” representatives representing various community, environmental, and worker interest groups. Investments include the financing of more than 1,000 organic and sustainable food production projects, more than 300 renewable energy projects, 33 fair trade agricultural exporters in 22 different countries, 85 microfinance institutions in 43 countries, and 398 cultural and arts projects.

Two U.S. banks exemplifying the model are One PacificCoast Bank and New Resource Bank. Operating in California, Oregon and Washington, One PacificCoast is comprised of a sustainable community development bank with around $300 million in assets and a non-profit foundation (One PacificCoast Foundation). Its commercial lending business focuses on such sectors as specialty agriculture, renewable energy, green building, and low-income housing. Foundation activities include programs to “help eliminate discrimination, encourage affordable housing, alleviate economic distress, stimulate community development and increase financial literacy.”

New Resource Bank is a California based B-corporation (“Benefit”) with $171 million in assets, which focuses its lending and banking services on local green and sustainable businesses. New Resource was recognized in 2012 as one of the “Best for the World” businesses, being in the top 10 percent of all certified B-Corporations and scoring more than 50 percent higher than 2,000 other sustainable businesses in overall positive social and environmental impact.

All this might be good for the world, but isn’t investing locally in a values-based bank riskier and less profitable than putting your money on Wall Street? Not according to a study commissioned by the Global Alliance for Banking on Values (GABV). The 2012 study compared the financial profiles between 2007 and 2010 of 17 values-based banks with 27 Globally Systemically Important Financial Institutions (GSIFIs)—basically the too-big-to-fail banks, including Bank of America, JPMorgan, Barclays, Citicorp and Deutsche Bank. According to the GABV report, values-based banks delivered higher financial returns than some of the world’s largest financial institutions, with a return on assets averaging above 0.50 percent, compared to just 0.33 percent for the GSIFIs; and returns on equity averaging 7.1 percent, compared to 6.6 percent for the GSIFIs. They appeared to be stronger financially, with both higher levels of and better quality capital; and they were twice as likely to invest their assets in loans.

CDFIs

Along with the values-based banks, community investment is undertaken in the United States by Community Development Financial Institutions (CDFIs), including community development banks, community development credit unions, community development loan funds, community development venture capital funds, and microenterprise loan funds. According to the CDFI Coalition, there are over 800 CDFIs certified by the CDFI Fund, operating in every state in the nation and the District of Columbia. In 2008 (the last year for which a report is available), CDFIs invested $5.53 billion “to create economic opportunity in the form of new jobs, affordable housing units, community facilities, and financial services for low-income citizens.”

Two of many interesting examples are the Alternatives Federal Credit Union and Boston Community Capital. Alternatives FCU, located in Ithaca, New York, is committed to community development and social change and is part of the Alternatives Group, which includes a non-profit corporation (Alternatives Community Ventures); a 40-year old trade association of community groups, cooperatives, worker-owned businesses and individuals (Alternatives Fund); and a not-for-profit organization that facilitates secondary capital investment in the credit union (Tomkins County Friends of Alternatives, Inc.). The credit union has over $70 million in assets and offers many innovative financial products, including individual development accounts—special savings accounts for low-income residents that offer matching deposits of two to one up to a certain amount—in addition to more traditional services such as loans for minority and women-owned businesses, and affordable mortgages. The credit union also offers small business development (classes, seminars, consultation, and networking programs), free tax preparation, and a student credit union.

Although its lending programs focus on lower-income borrowers, Alternatives FCU has had lower delinquency and charge-off rates than many major banks that avoid these types of customers. Boston Community Capital (BCC) is a CDFI that is not actually a bank but invests in projects that provide affordable housing and jobs in lower-income neighborhoods. BCC includes a loan fund, a venture fund, a mortgage lender, a real estate consultation organization, a solar energy fund, and a federal New Markets Tax Credit investment vehicle. Since 1985, it has invested over $700 million in local organizations and businesses. These funds have helped build or preserve more than 12,800 affordable housing units, as well as child care facilities for almost 9,000 children and healthcare facilities that reach 56,000 people. Their investments have helped renovate 850,000 square feet of commercial real estate, generate 5.9 million KW hours of solar energy capacity, and create more than 1,500 jobs.

Less Money for Banks and More for Workers: The Models of Germany and Japan

Values-based banks and CDFIs are a move in the right direction, but their market share in the U.S. remains small. To see the possibilities of a banking system with a mandate to serve the public, we need to look abroad.

Germany and Japan are export powerhouses, in second and third place globally for net exports. (The U.S. trails at 192nd.) One competitive advantage for both of these countries is that their companies have ready access to low-cost funding from cooperatively owned banks.

In Germany, about half the total assets of the banking system are in the public sector, while another substantial chunk is in cooperative savings banks. Germany’s strong public banking system includes 11 regional public banks (Landesbanken) and thousands of municipally owned savings banks (Sparkassen). After the Second World War, it was the publicly owned Landesbanks that helped family-run provincial companies get a foothold in world markets. The Landesbanks are key tools of German industrial policy, specializing in loans to the Mittelstand, the small-to-medium size businesses that drive the country’s export engine.

Because of the Landesbanks, small firms in Germany have as much access to capital as large firms. Workers in the small business sector earn the same wages as those in big corporations, have the same skills and training, and are just as productive. In January 2011, the net value of Germany’s exports over its imports was 7 percent of GDP, the highest of any nation. But it hasn’t had to outsource its labor force to get that result. The average hourly compensation (wages plus benefits) of German manufacturing workers is $48—a full 50 percent more than the $32 hourly average for their American counterparts.

In Japan, the banks are principally owned not by shareholders but by other companies in the same keiretsu or industrial group, in a circular arrangement in which the companies basically own each other. Even when there are nominal outside owners, corporations are managed so that the bulk of the wealth generated by the corporation flows either to the workers as income or to investment in the company, making the workers and the company the beneficial owners.

Since the 1980s, U.S. companies have focused on maximizing short-term profits at the expense of workers and longer-term goals. This trend stems in part from the fact that they are now funded largely by capital from shareholders who own the company and want simply to grow their returns. According to a 2005 report from the Center for European Policy Studies in Brussels, equity financing is more than twice as important in the U.S. as in Europe, accounting for 116 percent of GDP compared with 62 percent in Japan and 54 percent in the eurozone countries. In both Europe and Japan, the majority of corporate funding comes not from investors but from borrowing, either from banks or from the bond market.

Funding with low-interest loans from cooperatively owned banks leaves greater control of the company in the hands of employees who either own it or have much more say in its operation. Access to low-interest loans can also slash production costs. According to German researcher Margrit Kennedy, when interest charges are added up at every level of production, 40 percent of the cost of goods, on average, comes from interest.

Globally, the burgeoning movement for local, cooperatively owned and community-oriented banks is blazing the trail toward a new, sustainable form of banking. The results may not yet qualify as the Golden Age prophesied by Hindu cosmology, but they are a major step in that direction.

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103 comments

  1. Jamie Dimon's good twin

    Frankly you do not have to go far. Just go and deal with Vanguard ( a reliable Mutually owned broker & mutual fund company ) and/or TIAA CREF ( a non-profit broekrage and mutual fund company) with its new TIAA Direct Bank – which has high rates and followed the path that the old ING Direct used to, before it was bought out by Capital One.

    1. Anny

      Capital One, another dangerous, too big to fail enterprise.
      Move your money immediately, default, contact the press, representatives, everyone you know, simply don’t do business with the Virginia based rentier.

  2. F. Beard

    Credit unions engage in usury for fractional reserves too. The usury can be forgiven since it is shared among the depositors but the fractional reserves mean counterf**ting is being committed.

    Nice try Ellen but instead of abolishing the theft you merely change who benefits from it.

    You should be for 100% reserve lending, a universal bailout and (longer term) genuinely ethical money creation with coexisting government and private money supplies.

    Asset backed money is a brilliant invention but the way to implement it ethically is not with fractional reserves or other forms of money lent into existence but with common stock spent into existence.

    1. Andrew

      I’m surprised you think 100% reserve lending (so called “sound” money) will make such a huge difference to our rotting social fabric. A few elites will still control and cream off most of the productive assets. They will progressively hoard all the “sound” money in vaults while the rest of us are relentlessly deprived of income opportunities.

      I really like many of your posts F. Beard. Without changes in the way assets are governed and resources distributed ultimately your ideal is a fail. Resulting in oligarchy full of paupers. Maybe that’s what you want though.

      1. F. Beard

        Maybe that’s what you want though. Andrew

        No, I want people to play honestly. And as part of that I advocate a ban on further credit creation and a universal bailout till ALL credit debt is paid off. Likewise, I advocate we payoff the national debt as it comes due with new fiat and NEVER borrow again.

        So basically I’m in favor of a debt-free population living in a debt-free nation without disadvantaging the non-debtors and without causing suffering.

        1. Andrew

          So basically I’m in favor of a debt-free population living in a debt-free nation without disadvantaging the non-debtors and without causing suffering. F.Beard

          A debt free poulation is a major stretch for a civilized society.

          Debt is a fundamental aspect of human relationships and is entwined in the constructs of society….at least since written records began. There are many reasonable and appropriate uses for debt. Example…I have a house built in 1 year by 10 members of my society using 10 years of their labour. I in turn repay the debt by providing my society with 10 years of my labour.

          The quantum of debt payments relative to income, keeping us in relative penury is the issue. All debt is not evil. I suspect you fail to fully comprehend that all money is and always will be a debt construct. We need to make debt systems work better for the majority not just serve minority elite interests.

          Although I can support your position as a fine ideal. I am actually ambivalent towards 100% reserve lending. The process to get there would be painful but once implemented it would do no harm. My position is valid…. 100% reserve lending is not a silver bullet to resolve all suffering unless there are changes in the way assets are governed and resources distributed.

          1. F. Beard

            All debt is not evil. Andrew

            I have no objection to lending of existing money. It is lending money into existence that is evil since it is essentially counterf**ting.

            … that all money is and always will be a debt construct. Andrew

            Not always. For example, if a monetarily sovereign government sometimes spends more than it taxes and never runs a surplus then SOME government money becomes debt free. So it appears you conditioning is in error.

          2. Andrew

            Ha, my conditioning? Are you the only free thinker? Being more unique makes you more right I suppose.

            “if a monetarily sovereign government sometimes spends more than it taxes and never runs a surplus then SOME government money becomes debt free.”

            In a 100% reserve system for there to be money in circulation and saving in the private sector. The government as the sole issuer of currency cannot always tax everything it spends. There would be no money. If the government ends tommorow and there is no tax obligation the money is all debt free and worthless.

            Proverbs 18:2

            A fool takes no pleasure in understanding, but only in expressing his opinion.

          3. Andrew

            BTW

            When a bank lends money. They credit one bank account and debit another bank account. The two accounts net to zero, no money was lent into existence they was no counterfeiting.

          4. F. Beard

            If the government ends tommorow and there is no tax obligation the money is all debt free and worthless. Andrew

            Recent history contradicts you. Saddam Husein’s money continued to have value even after he was deposed. Why? Tradition, force of habit, lack of an alternative are all possibilities.

            And even in physics, an electric current can flow forever in a superconducting loop without an external source and sink.

            Also common stock is a private money form that is spent, not lent into existence. Where is the debt, pray tell, so long as the issuing company is not dissolved?

            It’s good to see you read the Bible though. Good show!

          5. F. Beard

            When a bank lends money. They credit one bank account and debit another bank account. Andrew

            If only! That would be honest lending. Nay, with banking “loans create deposits”. Thus the banks do counterf**t.

          6. Andrew

            I’m not bulling you.

            When I bought my house. The bank deposited 100k in the sellers current account and debited my loan account by 100k.

            No extra money was created in the whole system, allbeit there may be another 100k in circulation until I pay the debt off.

          7. Andrew

            Accidentally posted this down the thread.

            “Recent history contradicts you. Saddam Husein’s money continued to have value even after he was deposed. Why? Tradition, force of habit, lack of an alternative are all possibilities.”

            Not a contradiction, are they still using it? Obviously some people still had faith in the original issuer or a belief the notes would be recognised by the new regime. It could only ever be for a short term. If no taxes are to be paid in a Government fiat currency it will lose value and cease to be used as a medium of exchange.

          8. F. Beard

            No extra money was created in the whole system, Andrew

            The money was created when your loan was made. The bank simply entered $100,000 at a computer terminal and voilà! you have $100,000 added to your account. Later, if necessary, the bank will borrow whatever reserves it needs from other banks or from the Fed itself. Reserves serve to balance accounts between banks. So long as people keep their money in the banks and not the mattress or their wallets, the banks can be confident that they’ll be able to borrow the reserves they need. Heck, the FED stands ready to provide reserves too if all else fails.

          9. F. Beard

            It could only ever be for a short term. Andrew

            Not necessarily. One reason given for them maintaining value was that people knew there would be no more of them issued. US Silver Certificates trade for a private premium for that same reason – no more are being issued.

            Taxation is certainly sufficient to give fiat value but it is a mistake to think that it is necessary as was proven when US Notes were issued in excess of taxation.

            The money=debt mantra is emphasized so religiously that I can only think it originates with the banks. Common stock as money requires no debt but it does something that is anathema to a banker – it shares wealth and power.

          10. Andrew

            You appear to be deliberately missing the point.

            Voila the bank presses a button and +ve balance appears in one account. At the same time they say abracadabra and a -ve balance appears in another account. Maybe you missed the negative numbers bit at school. But when you add both accounts together they equal zero. NO NET FINANCIAL ASSETS have been added to the system. The money you so adamantly believe has been “created out of nothing” is an illusion. Loans are just +ve numbers with a -ve counterpart. When the two meet they disappear in a puff of smoke. Modern money is an account of debt and no wishfull thinking of yours will change that.

            Yes. The banking system as a whole Is never reserve constrained when new loans are issued. The loan is credited to the reserves of one bank or another so these reserves are always available for the issuing bank to borrow and make payment. Provided the bank is considered credit worthy and meets regulatory reserve ratios.

            Sounds like your hearts desire is to have tangible commodity money or a monetary system with a fixed quantum of transferrable financial assets. Good luck with that, at least we know the obvious problems associated with such a system.

          11. F. Beard

            Voila the bank presses a button and +ve balance appears in one account. At the same time they say abracadabra and a -ve balance appears in another account. Maybe you missed the negative numbers bit at school. But when you add both accounts together they equal zero. Andrew

            So what? That’s mere sophistry dressed up in mathematics. The bank creates money in exchange for your promise to repay that money. That’s no different from a counterfeiter except the money is lent, not spent into existence.

            So why don’t banks spend their money into existence? Because no one would take it! Why should they? But by loaning what is essentially worthless, value is added to the worthless item since the loan must be repaid.

            Sounds like your hearts desire is to have tangible commodity money or a monetary system with a fixed quantum of transferrable financial assets. Andrew

            It sounds like you don’t know what you are talking about. My preference for private money is common stock. Common stock “shares” wealth and power rather than reaps and concentrates them.

          12. WarrenCelli

            F Baird says; “And even in physics, an electric current can flow forever in a superconducting loop without an external source and sink.”

            That is amazing — without an external source and sink? How does that work?

            Deception is the strongest political force on the planet?

          13. WarrenCelli

            F Baird says; “An electric current flowing in a loop of superconducting wire can persist indefinitely with no power source.[1] from http://en.wikipedia.org/wiki/Superconductivity

            And what “external source”, what “power”, puts the wire in a superconducting state so as to allow the indefinite persistence of current flow?

            What “external source”, what “power”, allows the few bankers to have an indefinite supply of credit flow?

            Deception is the strongest political force on the planet.

          14. F. Beard

            What “external source”, what “power”, allows the few bankers to have an indefinite supply of credit flow? WarrenCelli

            Government privileges:

            1) Government deposit insurance and lack of a government provided risk-free fiat storage and transaction service outside the banking system that makes no loans.
            2) Borrowing by monetarily sovereign governments.
            3) A lender of last resort.
            4) Legal tender laws for private debts.
            5) The suppression of genuine private currency alternatives for the payment of private debts.
            6) other?

          15. WarrenCelli

            I repeat; “And what “external source”, what “power”, puts the wire in a superconducting state so as to allow the indefinite persistence of current flow?”

            You constantly break context Baird. You put everything in evasive isolation. The present crisis is not an economic crisis limited to economics, it is a moral crisis of aggregate humanity. You don’t seem to see the oneness at play here. To borrow a bit from Andrew it is, “the way assets are governed and resources distributed”, that is the key.

            That is a problem that first requires creating a government that is responsive to the will of the people. There can be no “superconducting” without first creating the conditions for superconducting.

            Deception is the strongest political force on the planet.

          16. F. Beard

            Give me a break! Even the Commies couldn’t make credit creation work properly. Will you? The West has had the greatest success with credit creation since it is decentralized here but even the West can’t make credit creation work properly. Why? Because it is theft!

            But the Left has never had a real problem with theft so long as it was in charge.

      2. F. Beard

        I’m surprised you think 100% reserve lending (so called “sound” money) Andrew

        I never call it that. I call it honest lending of existing money – not counterf**ting by lending.

        1. Andrew

          You are advocating something pretty similar to Bill Still and the Masters of the Universe brigade. They often refer to sound money. You know what I meant.

          1. F. Beard

            “Sound money” is often used (erroneously) by gold-bugs.

            Bill Still and I have our differences but he is at least partially correct.

        2. EconCCX

          >>I’m surprised you think 100% reserve lending (so called “sound” money) Andrew
          >>I never call it that. I call it honest lending of existing money – not counterf**ting by lending. FB

          “100% reserve lending” is an impossibility anyway. (Like “Cultivated Wild Rice” — available for sale nonetheless.) The Chicago Plan called for 100% reserves on checking accounts, with banks still able to lend pre-existing government-issued money deposited in long-term savings accounts.

          1. F. Beard

            What I mean by 100% reserve lending is that ALL demand deposits be truly available on demand without borrowing from the Fed or other banks.

          2. EconCCX

            >>What I mean by 100% reserve lending is that ALL demand deposits be truly available on demand without borrowing from the Fed or other banks. FB<<

            In which case none can be loaned, hence the contradiction in the terminology. I'd probably just call this proposal "100% reserve requirement on demand deposits."

          3. F. Beard

            In which case none can be loaned, EconCCX

            Wrong. If I buy a CD for 6 months then my money is not on demand till AFTER 6 months.

          4. F. Beard

            OK, I spoke to hastily. Sorry about that.

            Correct, demand deposits should not be loaned out.

        3. steelhead23

          Perhaps you and Andy are have a personal argument, but I wish to add one little tidbit to your tirade. Power. Here’s the deal – the current problem with fractional reserve banking is not so much the usury, fraud, etc. – those are symptoms of a larger problem – power. They hold both financial power and political power due to their wealth. They use that power to corrupt government, to everyone’s detriment. Hence, by reducing profits (through community banking), we reduce the power of the TBTFs. Don’t ignore the elephant in the room.

        4. JD

          An unlimited amount of money can be distributed for production of human value. When human beings support the value of what is created with the credit (and we want the Constitutional valid citizen owned Credit System not the private owned Debt System) extended the only limit is the number and ability of every borrower to turn it into something Real. Human beings with their Faith, Labor Power, Creative Power BACK our currency. Insofar as this is not the case today, the Nation goes backward.

          Contrast money, as at present, mostly printed for speculative purposes. Of course such a financial system is time limited. The Banks are sitting on a total of somewhere around $500 Trillion and counting, of hot derivative paper, paper that is NOT BACKED BY ANYTHING OF HUMAN VALUE. The present Big Bank speculation Financial System must and will come down or the whole People will be brought down. And, then it will come down in an even more dramatic way, of course. REVOLUTION.

    2. JD

      You are very assertive for someone who doesn’t have full economic knowledge. I will not say anything instructive to you. But, I would hope that Ben Franklin, “A Modest Inquiry Into the Nature and Necessity of a Paper Currency” would be someone you might listen to…Founding Father, and all…

      1. F. Beard

        Who do you think you are talking to? Some gold-bug? I am all for inexpensive fiat for government money.

        But thanks for the Franklin link!

        1. JD

          Yes, I did think you were a Gold Bug or worse. Sorry. I should have read closer, perhaps. You are very welcome to the Franklin link. And, I will go a bit further if you would like…

          Franklin was widely recognized as the greatest economic thinker of his time and Marx rightly credits the Labor Value Theory to Franklin, not himself.

          America is at the end of a very long Political Economy Road, starting with Socrates, Plato, Olympia, Alexander, the early Roman Republicans, Florence, France under Frances I, Henry VIII, Elisabeth I and Cromwell who gave England a Republic for 2.5 years. There is of course Colbert and Louis XVI, whom Franklin called the most pure Soul walking upon the Earth’s surface. Surprising in the light of the smears against XVI, eh?

          Then we have the Americans, Franklin, Hamilton, the Carey’s, Q.Adams, Crockett (accidentally killed at the Alamo and no friend of the Texas Slavers), Lincoln, Garfield, FDR, Eisenhower, Kennedy and lastly LBJ and G. Ford.

          1. F. Beard

            What could be worse than a gold-bug except a 100% reserve gold bug so we are all forced to be slaves to them with the gold?

            But the solution to the money problem was implied nearly 2000 years in Matthew 22:16-22 – Caesar must be paid with Caesar’s money. Private monies including but hopefully not limited to primitive PMs are for private debts only. My favorite private money is common stock. It seems ideal for many reasons.

  3. sunny129

    “In the dark age of Kali Yuga, money rules; and it is through banks that the moneyed interests have gotten their power”

    Among Hindus, the belief is that we are in ‘KALI YUGA’ right now. Yuga can last more than couple of centuries. Lord KALI will be re-incarnated to take care of ‘baddies’ akin to 2nd coming or rapture!

    First, rationality, logical and critical thinking should take over current prevailing thought of creationism and scientific illetracy, not only among masses but also in our ‘so called’ leaders and policy makers.

    Bottom line:

    Long way to go before the age of enlightenment!

  4. Maju

    Definitely if a community bank would be created here, I’d move everything in there in a matter of days.

    Why? Because the savings bank I have them in, which used to be controlled by semi-democractic representation in a public-ownership frame has become just another nasty bank controlled in behalf of the rich, not reinvesting its benefits, as it used to, in the community anymore and being the main actor of foreclosures and class war against the poor.

    But I have no alternatives as of now: all other banks are even more elitist and charge even higher commissions just for breathing, so to say.

    1. Andrew

      What Country are you in? There are mutual banks in all major English speaking countries. If its any consolation, the mega corporate bank mania will be short lived in the grander scheme of things.

      It only took about 10 years to see the disaster that ensued after most UK mutual building societies were de-mutualised and sucked into the vampire squids drooling maw.

      It has only been 20 years since the Commonwealth bank of Australia was privatized, the foundations of the Australian banking system are rapidly crumbling.

      The fools who created the monster are blinded by their own conceit. They worship the false idol of free markets, they are soaked in economic religiosity and dogma. Their reign cannot last long.

  5. Dr Ox

    I’ve read Brown, and come away with the impression of folksy patriotism, deliberately without rocking the boat, and ‘oh man’ if only the masses were able to pay for their shelter, education by using the North Dakota model, instead of GE, GMAC and the other mafia predators. Everyone is for a new model, but if you ask the owner/ruler class 0about their institutions they’ll list all of the values based reasons above with a straight, serious face, or with millions in advertising.

    1. Dr Ox

      However this is a great piece that clearly addresses the needs for change and workable alternatives.

  6. Mansoor H. Khan

    Community lending is a start. But we must also deal with global resource allocation (allocation of crude oil for example). Modern banking causes unfair share of global resources to allocate to the reserve currency issuer because producers and owners of natural resources tend to save in the reserve currency for safety.

    Here is how the bankers’ game works:

    http://aquinums-razor.blogspot.com/2011/11/here-is-how-bankers-game-works.html

    F. Beard’s plan of currency freedom does not deal well with this global resource allocation issue. If his plan was implemented probably global savers will still try to accumulate 100% reserve fiat dollars.

    mansoor h. khan

    1. F. Beard

      If his plan was implemented probably global savers will still try to accumulate 100% reserve fiat dollars. Mansoor H. Khan

      Well, I am a US citizen. Let other countries follow suit if they wish to keep up. May the most ethical country win!

      1. Mansoor H. Khan

        F. Beard said:

        “May the most ethical country win!’

        Certainly I agree with the above statement. But may the most ethical country re-distribute (globally) any money it has received because global savers are accumulating its currency. It is only fair!

        mansoor h. khan

        1. Andrew

          The countries that accumulate US dollars should be buying US goods and services for the benefit their own citizens. Otherwise they shouldn’t bother giving away their own valuable resources for little bits of American paper.

          1. Mansoor H. Khan

            Andrew said:

            “Otherwise they shouldn’t bother giving away their own valuable resources for little bits of American paper.”

            Agreed. But is there no corrective action we can take since they are accumulating far too much currency without buying american goods?

            mansoor h. khan

          2. F. Beard

            But is there no corrective action we can take since they are accumulating far too much currency without buying american goods? Mansoor

            Sure. Quit selling them US Treasuries.

          3. Andrew

            You Americans…….. You should be happy with the preferential terms of trade. Real goods exchanged for treasury notes. Enjoy it for as long as the counter parties are willing.

            It’s your currency, and others consider it valuable….what do you fear?

          4. F. Beard

            Enjoy it for as long as the counter parties are willing. Andrew

            A monetary sovereign, like the US and the UK, has no business borrowing money in the first place. That’s “corporate welfare” according to Bill Mitchell:

            The US government issues its own currency and, in intrinsic terms, never needs to fund its own spending in US dollars. The issuing of public debt is an entirely voluntary act by the US government and provides the bond markets with “corporate welfare”. Just imagine what the uproar would be from the bond markets and investment banks if the US government announced it was cutting off this source of corporate welfare.

            It happened in 2001 in Australia when the Australian government had virtually caused the official bond markets to dry up when it used the surpluses it was running to run down outstanding debt. The Sydney Futures Exchange led the charge and demanded that the Government continue issuing debt, which gave the game way – if debt-issuance was to fund net government spending (deficits) then why would they be issuing debt when they were running surpluses?

            Answer: it was patently obvious that the outstanding debt was private wealth and its risk-free nature allowed the private investment institutions to price other risky assets and maintain a safe haven when uncertainty rose (by holding bonds). from http://bilbo.economicoutlook.n… [emphasis added]

          5. F. Beard

            It’s your currency, and others consider it valuable….what do you fear? Andrew

            That it will be destroyed by and for the counterf**ting cartel, the banks.

    2. They didn't leave me a choice

      I’m actually pretty happy that USA is getting most of the oil. It keeps them fat, ignorant and happy until the drug runs out. All the while the rest of us have been busy switching to a sustainable energy production system due to simply not having been able to afford to indulge in the sweet embrace of the self-destructive, addictive toxin as much. Thus punishment is meted out to those who most richly deserve it.

  7. joebhed

    Cooperative banking is no doubt going to grow in the evolution to real economic democracy.

    The things that go together are the consumer-ownership of the assets and the personal control available to individual depositors, acting collectively of course, to establish the lending policies of the bank they own.
    The latter is important because with widespread consumer ownership of their banking system, the actual potential exists to drive the ultimate results of the investment decisions of the banks.
    So, depositors rule.

    F. Beard has correctly pointed out the fallacy of expecting a holistic integration between money users and the money system when the vehicle for advancing their potential is based on ‘fractional reserve banking’, a.k.a. debt-based money.

    The fact that credit unions and co-op banks operate on this pro-cyclical, wealth-concentrating, private money creation methodology is more by circumstance and tradition than by democratic decision.

    I am a cu member and have managed a thousands-member consumer-owned cooperative that borrowed many millions from cooperative banks.

    Were the money system conducive to what we call ‘full-reserve’ banking, or better yet, non-reserve banking, I am absolutely certain that the lot would support a change to a more stable, and sound, system of lending and investment, one that could lead to the sustainability of both our resources and our institutions.

    Time to end reserve-based banking.
    http://youtu.be/geQdFxrnWHE

    I agree again with Beard that far more is to be gained by correcting the fallacy behind the debt-based system of money, but what we call fractional-reserve banking, than we will ever gain by expanding the more democratic of the private institutions that use either one.

    For the Money System Common.

    1. Andrew

      Whatever currency you adopt whether it be fiat money or seashells. Possesion of that currency is acknowledgment of a debt. Currency has no intrinsic value or we would be conducting business in items of utility like sheep, goats or oil. Which is not practical and has its own obvious problems.

      Posession of Government fiat money is essentially an acknowledgment of a service provided to the state and is an advance payment for future taxes.

      When Seashells were traded for coconuts it is an acknowledgment of the debt. The seashells will likely be redeemed for the borrowers personal coconuts if he don’t eventually provide something in return for the seashells.

      Get over it. This debt free money dream is counterproductive in solving the real inequity issues.

      1. joebhed

        Andrew,
        On getting over it……

        I use the debt-free money model of the Chicago School economists who advised FDR to adopt such a plan, The Chicago Plan for Monetary Reform – engaged in the US Congress as the Monetary Control Act of 1934.

        I use the debt-free money model of the six prominent economists who authored the 1939 Program for Monetary Reform, every one of which now has an honorary chair in academia.
        Their 1939 Program for Monetary Reform – for DEBT-FREE MONEY – was publicly supported by over 400 economists at the time.

        I use the debt-free money model proposed by noted monetary historian Milton Friedman in his “Fiscal and Monetary Framework for Economic Stability”, and also in his “A Program for Monetary Stability”.

        I use the debt-free money model of Nobelist Dr. Frederick Soddy as he wrote in his book on The Role of Money.

        But, thanks a lot for reminding me about the seashells.

      2. F. Beard

        Get over it. This debt free money dream is counterproductive in solving the real inequity issues. Andrew

        Call it debt if you like but a monetary sovereign has NO need to borrow money before it can deficit spend.

        Do you deny that? That’s the point Joe is trying to make.

        1. Andrew

          No I’m a go go boy for the Government ability as the sovereign currency issuer to deficit spend without recourse to bond markets and without the illusion of spending tax payers money.

          My point is Government money is still in principle an account of debt. It says so on the notes.

          I am against the sheep who baa. ALL DEBT BAD….NO DEBT GOOD. A sentiment which too easily gets abused by the small gubbermint crowd and the gold standard mob.

          1. EconCCX

            >>My point is Government money is still in principle an account of debt. It says so on the notes. <<

            Those are Federal Reserve promissory notes. Issued by a private bank consortium, not the nominal government. Those notes can be redeemed in constitutional money issued by the US Treasury, positive money which nowhere indicates it is a note or a debt.

            I'd also distinguish between money that represents the ISSUER's obligation, like a bridge token and a forever stamp, and money that represents a BORROWER's obligation, like bank money. Because the repayment of compounding interest can be achieved only through new borrowing, debt-based money is a ponzi scheme that enslaves the community's producers, unless the debt is repudiated. Whereas service-backed money, which represents an interest-free obligation of the issuer, is redeemed through vital services and industrial employment, and is BARTERED, not lent, into existence. You can call the underlying obligation a debt, but there's no lending, no scourge of societal indebtness, but rather, services contracted for and delivered by the issuer.

          2. Leverage

            Yeah, they promise you to pay you an equivalent unit of account. What a conundrum!

            “If you give me this pound I promise to pay you a pound in exchange!”

        2. skippy

          Theres that word again…. monetary sovereign.

          Could you describe the act[s that make it possible for a sovereign to do as such? By what mechanisms is it able to do so?

          Skippy… what is your definition or your mobs, of sovereign. Saying stuff does not make it so…eh.

          1. Andrew

            Talking to me skippy?

            The Government instructs it’s bank to credit the accounts of its payees as per normal procedure. Then it instructs the central bank to establish the desired interest rate without issuance of governments bonds in a ratio of 1 to 1 against the deficit. Simple as.

          2. skippy

            Nope, I agree with your observations. Thanks for taking the time to comment.

            I was asking beardo if he understood what Sovereign means. Him and Co think its a magic word or something, by just saying it… magic happens.

            Skippy… please carry on, I’m quite enjoying it.

          3. joebhed

            skippy -
            I didn’t use the term ‘monetary sovereignty’, but it is often bantered about here on NC without the proper founding construct of national monetary systems.

            This is primarily because MMT proponents use the term in error, actually ‘defining’ “monetary sovereignty” as the qualities that are, in fact ‘monetary autonomy”.

            So I agree that saying what ‘sovereign’ IS doesn’t make it so.

            A nation-state MUST have sovereignty in all things, including money, before you can have autonomy and independence in the operation of the monetary system.

            In his book: “Monetary Sovereignty: The Politics of Central Banking…”, economist John B. Goodman makes the following accurate distinction:
            “”Sovereign” refers to the legal and political authority that makes the state supreme in its domain. “Monetary autonomy” means that a state is able to set and maintain a monetary policy which is not driven by international markets or exchange rate regimes. “Monetary independence” describes the degree of freedom enjoyed by the central bank in relation to its government.”

            So, again, EVERY nation IS monetarily sovereign and capable of having monetary autonomy.
            Most nations enjoy monetary autonomy today – EMU nations being the exception.
            And CB independence is all over the map.

            Thanks.

      3. They didn't leave me a choice

        Ah, I think I now understand the fallacy that you operate under. You think that all money is debt because it can be traded in for real goods or services, right? You do realise this has two major problems, don’t you?

        1) Nobody is actually forced to take the particular money you try to trade for.

        2) Nobody has to take /any/ money from you at all, perioid, nobody is entitled to demand things from others simply by having money.

        If money was actually always debt both of those truths would be false under most circumstances.

  8. Spice Girl

    “We can’t do much to stop them. They’ve got the power, especially at the federal level. But we can quietly set up an alternative model”

    Since we generally understand that TBTF is supported with the cooperative efforts of the Federal Gov’mint at the expense of jobs, houses and lives. Wouldn’t they have a keen interest in preventing any alternative? They already robosgined, planted fraudulent documents and then hide behind so-called National Security (Fannie Mae) and got away clean. This kind of citizen entrapment and official deceit is stunning, and being completely non-conspiratorial , Banking is a big part of “Nat’l Security”. Perhaps seccession preceeds a working alternative.

  9. Andrew

    Recent history contradicts you. Saddam Husein’s money continued to have value even after he was deposed. Why? Tradition, force of habit, lack of an alternative are all possibilities.

    Obviously some people still had faith in the original issuer or a belief the notes would be recognised by the new regime. It could only ever be for a short term. If no taxes are to be paid in a Gpvernment fiat currency it will lose value and cease to be used as a medium of exchange.

  10. DiamondJammies

    The issue is not the banking system per se. The issue is a system in which social production and distribution is controlled by private actors for private purposes.

    “Co-operative banking” in a world in which these private interests have the power to decide what to produce, how to produce and how to distribute what is produced is just putting lipstick on a pig.

    Those who bring all those shiny things we see on store shelves into existence, i.e. the workers, must not be deceived into believing that the answer to their exploitation, oppression and powerlessness is a gussied up version of what is essentially the same thing.

    And this is the real problem with liberal solutions like the kind proposed here: whether unwittingly or otherwise they hide the true source of misery. (The same is true with funny money theories and their proponents.) They try to tweak the rules of the masters’ game instead of abolishing the game and sweeping away the masters. They don’t deal with things at a root level.

    It’s not that these public banking/co-operative banking schemes are inherently horrible. They’re marginally better than what we have now. The problem comes when they’re presented as “the solution.” They’re not a solution, but a prefigurative placeholder for what is to be done.

    1. Andrew

      Sigh… The humble, meek, kind, disadvantaged and powerless need protection from the machinations of the aggressive, greedy, selfish and powerful.

      We don’t vote for them but they still get to pull all the strings of our elected dopes.

      Modern social systems must be properly designed and hard wired to minimize the negative aspects of selfish, egotistical human behavior. Smart as we think we are, we repeat the same negative behaviors over and over. We are very predictable as a species and slow to learn from our mistakes. The precedents have been around since the dawn of civilization.

    2. John Duda

      You should have a look at the other articles in the series; I’d definitely agree that cooperative & public banking are pieces of the puzzle: we need community and public control over finance, community and worker and public control over corporations, community control over land, and so on: none of these things in isolation is “the solution”—but if we build up as many as possible with an eye towards how they can help each other grow (i.e. democratized credit unions that lend to co-ops etc.), we get a lot farther towards constructing an effective alternative to TBTF neoliberalism.

  11. scraping_by

    However, there are more banking services to note.

    I have all my money with a credit union and mutual investment funds, but I have to deal with a bank to get a safety deposit box. Bastards are wringing it out of me, but there’s no safe place in my house for a passport, deed, birth certificates, etc.

    Now, if the bastards fail and put that branch on the market…

  12. Trash Surfer

    “I had no safe place, the only safe place is the bank, is the bank, is the bank” Wow, that is blistering propaganda. How by scraping do you get enough to pay for a bank locker? Most folk can’t count the number of items they would never hold in ‘the Bank’, and yes – that’s because you can’t ultimately trust them. Gov paperwork is ok though.

  13. Andrew

    “Common stock as money requires no debt but it does something that is anathema to a banker – it shares wealth and power.”

    I’ve heard this being bantered around. So common stock is purchased with labour credits or in exchange for other economic assets. Don’t see how well it operates as a debt free currency though. I work, I am paid in common stock. The company is in debt to me the stockholder. I can redeem my common stock (debt note) for goods and services. If the company cannot honor the debt (e.g. The value of its products and services has declined) my debt note is worthless. Can’t see it flying really.

    The wealth is hardly likely to be shared equally and fairly without good governance.

    1. skippy

      Seconded.

      Its just rebranding of the same shite we have now, sans banks.

      Skippy… the distribution of power within relationships is quite similar, if not unchanged.

      1. F. Beard

        the distribution of power within relationships is quite similar, if not unchanged. skippy

        You neglect that a universal bailout with new, full legal tender fiat would leave the population debt-free and GREATLY reduced wealth disparity.

        Example: Rich has $100,000 and Poor has only $1000. Rich has 100 times the money as Poor. Now give each $100,000. Rich now has $200,000 and Poor has $101,000. The ratio is now only 1.98 to 1.

        So it appears you are against reducing wealth disparity too.

        1. skippy

          It appears you make stuff up to conform to your bias… see spreading skys conversation. The linguistics are irrefutable, yet, you use a modren interpretation that is heavly biased, NASB. Same, same for the Sovereign interpretation… magic words, belive me words.

          “So it appears you are against reducing wealth disparity too.”… beardo.

          Skip here… Nice style you got there, although a desperate one. Just because I don’t belive you or trust you, it does not mean what you infer. Quite the opposite, if you read the years of comments I’ve made here.

          Skippy… ideologs always remind me of rats trapped, in a cement pipe, endlessly chewing to get out (proven correct), before their incisors (ideology)… completly lobotomize them.

        2. F. Beard

          see spreading skys conversation. skippy

          That one still rattles you I see.

          The Bible says what it says. Like it or not, early English translations of the Bible (long before Hubble) support the Big Bang theory.

          It appears to me that your idea is to reduce the human population. I’m sure the bankers and other rich are grateful to you for caring their water for them. The poor? Not so much as it is them you would eliminate.

          1. skippy

            Beard the linguistics are irrefutable. You choose too ignore this, the original meaning is as it was first written and it precludeds your assertion by thousands of years.

            I actualy showed you the actual work out (its not an english translation), you site the NASB without any evidence to support it, save, it said so and that all you have to do… is belive it. Where is your evidence? The Bible says what it says, after how many translations?

            BTW its the new AMERICAN standard bible and not the new standard bible. The american part is a bit of grandiose grand standing don’t you think, you know indicitive of influence? Like all the translations gone before.

            And to top off the comment your back too… “It appears to me that your idea is to reduce the human population. I’m sure the bankers and other rich are grateful to you for caring their water for them. The poor? Not so much as it is them you would eliminate.”… beardo.

            Skip here… how rat shit crazy are you? Seriously. I said above that you could look through the years of comments and resolve that question for your self, with out influence, you decided not to. Instead you just keep projecting. why?

            Skippy… Always going for the lame old religious shtick of painting your detractors as the bad guys. Try this on for size… you don’t give a crap either way, how ever it works out. You and yours are going to his house and those that don’t share your delusion are going to burn. The best is you and yours belive you’ve read the final chapter of a history that has not occured yet. And set your agenda according to it, a self fulfilling prophecy. This prophecy is one of ultimate destruction, followed by a thousand years of good times (how many wack jobs have said that….eh), followed by a final journy to his house.

            And I’m the one carrying the water? Personally I find you deeply disturbed and anyone like you, having any control in how humanity moves forward, is akin to having an insane person with a death wish drive a bus full of kids down a mountain. History backs that up.

            PS. why anyone gives this guy a pass on anything is beyond me. He ignores empirical evidence and claims to have a BS in sciance… ffs.

          2. F. Beard

            Actually, I should not slander all the bankers and the rich. Some of the rich, for example, genuinely care for the poor. Perhaps that is why they are rich? Because they can be trusted with wealth?

            The generous man will be prosperous, and he who waters will himself be watered. Proverbs 11:25

          3. skippy

            You have not proven your assertion, provided evidence to support it, but, withdrawn into the fog.

            Skippy… what a joke.

          4. psychohistorian

            Skippy,

            Thanks for the ongoing “clarification” of Beard’s faith based idiocy. It is amazing that some people still take that leap of faith and stop thinking rationally. I wonder what the precipitating life event was for Beard? To give up ones humanity for the chance to live in a pre-Enlightenment mentality amazes me.

            Thankfully, kinda, I was filled full of faith based crap at an early age and learned clearly how bankrupt and stultifying those trains of “human thought” really are.

          5. F. Beard

            You choose too ignore this, the original meaning is as it was first written and it precludeds your assertion by thousands of years. skippy

            Ah, so it’s just an accident that the King James anticipated Hubble by centuries by “mistranslating” the Bible? Well, the Bible says this about itself:

            For the word of God is living and active and sharper than any two-edged sword, and piercing as far as the division of soul and spirit, of both joints and marrow, and able to judge the thoughts and intentions of the heart. Hebrews 4:12 [emphasis added]

            Get it? The Word of God is living. Both the translator and the ordinary reader are guided by God to a proper understanding:

            “I have many more things to say to you, but you cannot bear them now. But when He, the Spirit of truth, comes, He will guide you into all the truth; for He will not speak on His own initiative, but whatever He hears, He will speak; and He will disclose to you what is to come. He will glorify Me, for He will take of Mine and will disclose it to you.” John 16:12-14 New American Standard Bible (NASB) [emphasis added]

            But I’m not here to convert anyone but to argue for a universal bailout from ALL debt and ethical money creation thereafter.

            But continue on if you please. The responsibility will not be mine if the world blows up again as it did in WW II. And as you noted, I’ve got my ticket off planet before TSHTF.

          6. skippy

            More gibberish. Go back and look at what empirical evidence was put under your nose. The state of the skys is not refrenced as constantly moving, but, had moved and then stopped.

            Furthermore this particular tale is actualy attributed to older religions within the region and was incorperated into the foundation myth of proto judisam, and finally christanity. Your faith is not even the original author!

            Now you fall back on that last refuge, living word BS. Cough… we can rewrite and interpret any thing when confronted with uncomfortable new facts in order to remain valid ((see flat earth).

            Guided by God to a proper understanding? Or do you mean surrendering your self to someone’s delusions in order to resolve inherent conflicts within their psychotic musings, by stiching together strings of verse that assuage the horrors sitting along side.

            Skippy… get off your lazy ass and serach the blog for that comment (not my job). Then provide factual evidence to the contrary or shut the fk up. Retreating into the fog is a deceptive ploy used by someone that can’t refute.

            PS. The poor and religion, yeah lot of evidence of that relationship historically too. All you want is the right to issue money… full stop and use any excuse to get it.

          7. F. Beard

            All you want is the right to issue money… full stop and use any excuse to get it. skippy

            The banks already issue money in the form of loans and cheat everyone thereby. I would abolish that in favor of ethical money creation.

          8. skippy

            What a dolt! Can you stick to the point, at all? Is beyond your ablity?

            The point was spreding skys, remember. Your inablity to refute it with factual evidance. The bit about private money was only to highlight your manic thought processes.

            Skippy… same as your replys to warren, a complet inablity to grok the question. Always fliting off into some vagery that has nothing to do with what the original point was about. Constantly trying to re frame the subject in your favor with a plethora of biblical assertions and never, never a straight answer to the qestion asked. Mine at this moment is… how do you ignore the actual meaning imbued in the original text for a, over, a thousands years later NASB interpretaion or as now you proffer the king james interpretion, in an attempt to save your self.

            PS… this is why I find you have a completly upside down understanding of power relationships and how they actualy work. Hence your view point about how to resolve disparity via money. Money is an artifact of the state, an autonomous state. If the condition of the state is not adressed first (whom owns it), then everything else is folly. Bloody late, goodnight beardo.

    2. F. Beard

      The company is in debt to me the stockholder. Andrew

      You become a co-owner of the company. The company owes you nothing.

      I can redeem my common stock (debt note) for goods and services. Andrew

      Correct. By using the common stock itself as money, no borrowing of a “foreign” currency is needed.

      If the company cannot honor the debt (e.g. The value of its products and services has declined) my debt note is worthless. Andrew

      Correction: “worth less”, not “worthless”. And since there is no debt but merely an opportunity to spend the common stock then it cannot be said that the company “cannot honor the debt”. Example: An amusement park sells tickets. Depending on the line wait those tickets have varying value. Yet the amusement park cannot be accused of not honoring the debt so long as you eventually get to ride (before the park closes that day).

      Can’t see it flying really. Andrew

      Yet Skippy below is terrified it would work. Still, people could choose to use good ole fiat for all debts if they chose, not just government ones.

      But credit creation, private counterfeiting, has to go or at least all government support for it eliminated such as sovereign borrowing, a lender of last resort, deposit insurance, and legal tender laws for private debts.

      1. skippy

        “Yet Skippy below is terrified it would work”… beardo

        Beardo, you really should get help with that projection problem.

        Look if you can remember, I have a problem with large corporations and religious mobs printing or issuing any thing that could be called money / currency, or would compete with government currency (on any level). I have also provided historical context / fact as, to why, I see this as a completly bat shit ideal.

        Your complete inablity to countenance any factual evidence is a great concern, as is your incessant insistence that your way is fool proof. Absolutly with out its own dire consequences and truth be told, anyone that bases their model of humanity on biblical history is completly blinded of historical fact – by – faith. A faith that has only one preordained out come.

        Skippy… fundamentalism and their proponents… fundamentalists… have too be and have been… the most limiting factor to humanity and life in general this world has seen… of which you are one.

        1. F. Beard

          Look if you can remember, I have a problem with large corporations and religious mobs printing or issuing any thing that could be called money / currency, or would compete with government currency (on any level). skippy

          Fiat is backed by the taxation authority and power of government. Private monies would not be. Instead private monies would have to offer genuine value in order for them to be accepted unless of course fiat was so badly managed that almost anything was preferable.

          1. skippy

            Sorry to break it too ya beardo, but, our problems are way past fiddleing with projects like yours. Seriously, If you and yours want to jump an asteroid and play games for a few generations, then report back, it would be something to discuss.

            Skippy… the problem with power relationships will not be solved by giving the malfactors more of it. Freemarket fundamentalism is rife with the same delusions that all belifes have… delusions spawned from armchairs break down when the laws of the Univerce apply themselves. Every single time and its getting damn right repetitive… see history. Not to worry thou, this time its the hole world and not just some region marching of the cliff of “we are great”. Goodnight beardo. BTW remember the term “Well drag them kickning and screming into the 20th century” it might just be our epitaph. Sweet dreams.

          2. F. Beard

            but, our problems are way past fiddleing with projects like yours. skippy

            You think it’s fiddling; I think it’s fundamental.

            But it is a great spectacle watching an inherently dishonest system destroy itself. Sad for the population though.

  14. Daniel de Paris

    “Today, the massive too-big-to-fail banks are hardly doing George Bailey-style loans at all. They are not interested in community lending.”

    Sure. But most American – and most OCED countries as well by the way – are missing one thing. George Bayley times were a time of thrift and savings. Certainly not pathogically-consumption-driven blokes with pockets filled with plastic credit instruments.

    Our countries – taken as a whole – are now massively broke. Your new banks will be filled with cheap credits. Not with old mums trying to save…

    The issue is not about getting proper banks alone. Sure it is. But even more so get a decent level of thrift into the collective psyche.

    We are alas getting near in the US and Southern Europe. Once you get to this stage, all kinds of cooperative banking will surface.

    I am sorry to say that they may not fit the nostalgia with “George Bailey-style” of organisations. They will be Internet-based and will require a decent fiscal environment, tax-wise. And possibly some degree of some money soundness.

    Again, I am sorry to add. We are getting near. But there is a competition between the move to thrift and the destruction of the money system.

    All bets are open. But I am sorry to say that at this stage being a USD/EUR/GBP saver is still a losing proposition. Even worse in Asia by the way.

    Not a chance to have a working banking environment in such a situation. Not one single chance. George Bailey will not help.

    1. Gil Gamesh

      Workers would save if their wages rose with productivity and the Fed stopped ZIRP. Those happenstances are hardly matters of psyche but rather the managed outcomes of the vicious US industrial policy.

    2. Ernie Messerschmidt

      Not true at all that there are no savings in OECD countries, and indeed they are often in just the type of bank the article describes. Germany’s Sparkassen — local publicly-owned savings banks — are such, and they fund the small and medium-sized enterprises that make up most of prosperous Germany’s economy. Would that we could do the same! The public banking movement described in this article is working as we speak on helping cities, counties, states set up such banks so they can enjoy the efficiency and flexibility of borrowing from their own banks. owe This article wakes people up to perhaps the central problem of our society: we are being had by the banks! And it shows the solution — done successfully around the world and in N.D.

  15. Alexandra Lomakin

    The grass is greener….
    Community based banking is a viable alternative- but it is part of a complex answer to a very complex issue. Bigger banks have some social advantages: there is a host of products that enable the lower middle borrowers to access credit at lower interest rates – Let’s not forget than in the onset structured products were developed, and were successful in that goal – the demise of those products lay in that success, which attracted greedy unscrupulous players.
    Community based banks are subject to that thread as well – let’s not forget the saving and loan frauds in the past. As for comparing with Germany and Japan – Landesbanks have almost 100% financial guarantees from the state governments – and have been bailout with help of the bigger banks several times – Following Einstien’s quote on the use of explosives – “the problem is not the banks it is the human heart”.

  16. Wrathchild

    Hmm, nobody referred to David Graeber’s Debt, the First 5,000 Years where he mentions that (community) credit lasts but money goes in and out of favor in tandem with large standing armies. The banking function needs to be, but we can do better than having Big Brudder, or Big Jamie taking the skim and puppeting our so called government.

    Problem is there is too much hot money and too little, ‘little money’ and the physical economy is concentrating it because of robots, amazons physical leveraging. Ellen’s state bank idea is to see at least that some local folk get the skim.

    But the Rat wing asks, ‘Do you want govenment choosing the winners and losers?’ To which I reply… Do we choose between them and Jamie?

    When it comes to creating alternative banking, checks and balances are key, not just to keep a club of good ol boys from being the choosers, but also to keep the war guys…. who are doing pretty good at creating stable demand, out.

  17. Nalliah Thayabharan

    “Competition is a sin”
    John D. Rockefeller

    Several people assume that the Wall Street is equal to capitalism. Real capitalism requires a looser. The establishing your own business needs resources that others already own. It’s a race to own.
    But Wall Street thinks differently. For Wall street competition is a sin.

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