Courtesy of Ellen Brown at her “Web of Debt” website we get a good reason for states to have their own state banks. http://webofdebt.wordpress.com/2011/01/12/the-fed-has-spoken-no-bailout-for-main-street/ She says in the article that Fed Chairman Bernanke told Congress that the Fed won’t or can’t bail the states out of their budget deficits. Why? The Fed gave *$12.3 trillion in almost interest free credit to the too big to fail (TBTF) banks and other financial entities to get them out of their credit crisis. But the Fed won’t give the same kind of credit to the states. It’s not because it doesn’t have the money. The total budget deficit of the states is projected at $140 billion. That’s chickenfeed compared to the almost $13 Trillion Bernanke handed out to our banks, foreign banks, and multinational corporations. Bernanke says it is because the Fed can’t loan to states, municipalities, or commercial interests just to its exclusive club of private banks.
But it wasn’t always that way. In 1934, Congress revised the Federal Reserve Act to allow it to “make credit available for the purpose of supplying working capital to established industrial and commercial businesses.” But this was repealed in 1958. The Bank of North Dakota (BND) is the only state bank left and it continues in the tradition of that 1934 revision of the Federal Reserve Act. It takes in state revenues and then makes low interest loans to businesses, farms, and students. With the interest it makes, it circulates the money back into the state. It is similar to the highly successful colonial bank in Pennsylvania. The interest there was used to build roads, bridges, help farmers, build schools, and other important needs of the colony.
Congress is dead set on screwing the states probably because its bankster masters want to keep milking the states and cities. So it won’t revisit the 1934 revision which would force the Fed to extend low interest credit to the states. In light of that, Ellen Brown says
“the states could take matters into their own hands and set up their own state-owned banks based on the BND’s model…rather than spending or selling off valuable public assets or hoarding them in massive rainy day funds made necessary by the lack of ready credit, states could leverage their assets into a very strong and abundant local credit system..”
Sounds like a good plan. Would any state senator takes this up or should we work on a ballot initiative?
Note: Brilliant book of hers. Buy it. She makes all this complicated money manipulation and fractional banking easy to understand and fun to read. She writes it within the context of the Wizard of Oz. She quotes another very readable book on the subject , Stephen Zarlenga’s “The Lost Science of Money”. It’s a huge book of over 700 pages, but worth it
Filed under: Politics | Tagged: Bank of North Dakota, Ben Bernanke, debt, Ellen Brown, Federal Reserve, state deficits, Web of Debt | Leave a comment »
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