How To Sign New Jersey Banking IOU

How to industry sign banking new jersey iou

the idea that we the people should own the banks is not a new idea and it's not an untested idea in fact globally up until the 1990s 40% of banks were publicly owned they were largely in the BRIC countries Brazil Russia India and China which also escaped the credit crisis at least through the first few years of course now we have a global economy and it's all the countries haven't gotten infected and even China so today 25 percent of banks are globally owned and the largest banks globally are publicly owned including the two largest banks by market capitalization which are in China the largest bank by deposits which is Japan Post Bank they sold that for 11 percent of their stock in November but they're still majority owned by the government the largest bank by number of branches the State Bank of India at the largest Development Bank which is in China and the 7 safest banks led by kfw which is the German public Development League it's also in banks with sorry states with strong public banking sectors that we've seen economic miracles where they've gone from abject poverty to quite profitable economies including China Korea Taiwan Singapore Hong Kong post-war Germany in Japan Brazil and Argentina China is the leader that's this red line that just cuts through everything else they grew by 10% a year for 30 years which was unbelievable they're slipping now but they're still growing at that last year they great six point nine percent so they're still doing remarkably well and they have a very strong public banking sector Korea is another economic miracle according to Hodgins chang who wrote a book called bad Samaritans he's a Korean economist per-capita income increased 14 fold in 40 years something that took that in two centuries in the u.s. one and a half centuries to do and he says in his book his book is basically all about how it was not actually capitalism there was responsible for this remarkable growth he attributes it to the fact that the government owned all the banks so it could direct the lifeblood of business which is credit so that's the key it seems to me why we need banks in the first place and why they should be publicly owned today banks create credit but they manipulate this for their own ends and they don't just create credit like issuing loans they actually create money so they create the vast majority of the money supply you can tell that from this chart the blue line is coins and dollar bills so that's what's created by the government but very little of it is actually created by the government and all the rest of that red line MT the circulating money supply comes from banks when they make loans money reformers have been sitting that for decades but the Bank of England just came out so now it's official if the Bank of England says it contrary to popular belief banks do not actually lend their deposits they create money in the form of bank deposits when they make new loans so what's wrong with this model first of all if all money is created as debt in order to pay back these loans all that money has to be repaid into the circulating economy in some way in order for the debts to be repaid but it isn't for one thing more money is always owed back than was issued in the first place so over the course of a 30-year loan you're gonna owe twice as much as was created in the original loan there are people who calculate this out and say well it's still possible to pay it back if the lenders pay all the money that they get every month back into the system or give it back to the borrowers but that just doesn't happen the money is some people save money they don't spend it back into the system it goes into offshore tax havens it goes into more money making money schemes so what you wind up with is debt grows exponentially while the real economy grows linearly which is an unsustainable situation that the financial growth ultimately hits a wall when they when you run out of borrowers we went around the world first week basically exploited the third world and now we're back it exploiting our own homeowners etc so when you run out of debtors then the whole thing collapses second of all the fact that private bakers have control of where the who gets the money and on what terms when you put your money in the bank legally it becomes the property of the bank all you have is an IOU legally they can do what they want with this money we used to have in the u.s. we had the glass-steagall Act which ever since the 1930s banks were required to keep their deposits separate from their investing so they couldn't gamble with your deposits but under President Clinton that it was repealed and so now they can do their derivatives they can buy oil that they're buying all sorts of things with our deposits they can determine who gets loans and on what terms so they can make loans to their cronies very cheaply or they can you know lend to each other at the what they do do is lend to each other at the Fed Funds rate which is currently 0.35 percent and then they lend to us at whatever up to 16 or 18 percent on credit cards and they cannot lend at all which creates booms and busts and third is risk they have managed to persuade us that if under capitalism course if they're a bankrupt bank they should just go out of business but if you're a big bank you get bailed out by the taxpayers and when government's got tired of bailing them out or in 2010 in the u.s. we had the dodd-frank Act which supposedly said no more bailouts but the reason the way they avoided bailouts was with bail-ins so banks are mandated to it's not just legal but they're actually required to take their creditors money to recapitalize themselves which means that the money of the stockholders the bondholders and the depositors the largest class of creditor of any bank and we saw the effect in Cyprus which was the first of these bailouts but there have been a lot of aliens in Europe last year and more are expected starting in January in the EU there's they're actually supposed to take the depositors money theoretically you're protected by deposit insurance but you're limited by whatever deposit insurance group you you have covering you in the US we have the FDIC but it only has 67 billion dollars in it to cover six and a half trillion in deposits so some money reform is I mean it's a very I'm sure you've had presentations here it's a very popular idea that we should therefore eliminate the ability of banks to create money and give that power solely to the government but the problem with that is you're then going to eliminate everything between the blue line and the top of the red line all that money which is created by banks when those loans get paid off you have to replace that money in some way either you're gonna have a radical shrinking of the money supply or you're going to have a monetary authority that has to issue in the US would be like 10 trillion dollars worth of money to fill the gap and how would you it'd be very disruptive it's you know kind of a radical change in the system and it seems just unlikely to happen but the easier alternative is to continue to allow banks to create money but make the banks be public utilities owned by the people acting on behalf of the people in the public interest it seems to me the ideal model was in colonial Pennsylvania in Benjamin Franklin's day for 50 years they paid no taxes except for an excise tax on liquor there was no inflation caused by you know extra money there was some prices inflated because of shortages and there was no government debt so it was a totally sustainable perfect money system that what they did was all the colonies at that time issued paper script but in Pennsylvania they issued most of it in the form of loans they had it what was called the land banks so they made loans to the farmers there's just my hypothetical model model but let's say you started with 105 dollars you could lend a hundred dollars at five percent interest and then you could spend the five percent the $5 into the economy for your budget roads and bridges and so forth and then the whole 105 would come back just principle and interest and then you could lend a hundred again spend the five it Auckland's back this principle and interest so the money is out there so you don't have a continual need for growth in the u.s. today we have one state-owned depository Bank and that's in North Dakota so at first there were four states still in the black all the rest had gone in the red and then there were three and then there was two and then there was one and it was North Dakota so I just started investigating and writing about it and then I got so much interest in it that well in the end we formed an institute to to try to promote this idea it seemed like a good idea they also have the nation's lowest unemployment rate they still do even though the oil has crashed the last year and a half they were one of the lowest foreclosure rates they have the lowest default rate on student debt the lowest default rate on credit card debt the bank itself was set up in 1919 it was not actually a socialist engine that North Dakota is a very conservative Republican state but what they were trying to do was to keep their money in the state for the benefit of North Dakotans so it was a sovereignty issue not not as socialism issue at the time that the farmers were losing their farms to the Wall Street bankers that it was a cartel at rockefeller Bank connected to a rockefeller railroad connected to a rockefeller granary and the the granary was taking their grain by the time they sold the grain they had such high costs for this whole system that they made no profits and therefore they couldn't pay their mortgages and they were losing their farms and they could see that this was unfair so they set up the bank on the model of all of the state's revenues by law are deposited into the bank and then they do what all banks do which is leverage those deposits into loans for state purposes for public purposes in the last ten years they've returned 40 million dollars annually to the state so that's for a state of six hundred and seventy thousand people that's a quite nice return and they've had an average return on witty between 17 and 20 26 % there was an article in The Wall Street Journal in November of 2014 that said that the Bank of North Dakota was actually more profitable than JPMorgan Chase and Goldman Sachs we're two of our most profitable banks so quite remarkable that Bank from North Dakota had a return on equity of eighteen point 56% about seventy percent higher than Goldman Sachs and JP Morgan of course that was November 2014 and some people say well it's all about oil they've got oil but first of all the oil boom did not hit until 2010 if you look at a chart and second of all the oil has collapsed since the summer of 2014 and every year in the last 12 years they've had record profits like more profits than they had the year before and they had their highest profits ever reported December 2015 so the bank's profits are not the state's profits the bank is making profits for another reason and the reason appears to be that they just have a better business model they have lower costs they don't pay bonuses fees or commissions they have no high paid CEOs the president is the highest paid person and he makes about two hundred sixty thousand dollars a year compared to the president well Fargo for example who makes twenty million dollars a year no private shareholders who are taking dividends the dividend so I'll go back to the state they don't need to advertise because they had this giant captive deposit base 97% of their deposits are from the state itself and they don't advertise for borrowers either they their model is that they partner with the local bank so the part the local bank is like kind of like the front office where they go out and find the loans they take in the deposits deal with the customers and then the big from North Dakota is a sort of a wholesale bank which comes in and buys down the loan helps with capitalization basically they guarantee the loan so they don't need capital helps with liquidity so they allow the local banks to make much larger loans than they would have been able to otherwise so these are loans that either would have had to go to a Wall Street bank or they just wouldn't have gotten made at all like local developments etcetera they don't speculate by right in their Charter they have a mandate to serve the public so everything they do has to be in the public interest they don't have branches they just have the one office in the state capitol they're not really catering to individuals but they figured well we're a public bank we should probably make it available to individuals but they don't make it easy and lest that would seem to be a unique example we also have the example of the German savings banks to spark chosen which have been around for 200 years and they too came out with their report in January 2015 showing that they were more profitable than the commercial banks that would include Deutsche Bank and the other big commercial banks in Germany this part doesn't have 40% of the market by assets so they're quite big hears that they're at a number of charts in this report but here's one of the charts that showed that spark chosen are the orange so you can see they've done stellar ly well since the collapse before the credit crisis the baby-blue are the commercial banks they were doing fine and then they totally crashed and now they're barely squeezing by the green are the credit unions so they're also doing quite well but so this part just sparked as a model like the Bank of North Dakota model is just more efficient it used to be that public banking banks were sort of the black sheep of the banking industry but every time there's a crisis people flood back to the public banks because they're safer for one thing so in 1997-98 they sort of saved the day in India and other countries and in 2008-2009 they saved the day so there's been some recent studies showing that public banks are safer they're less corrupt contrary to popular belief more efficient and more profitable they're better for local governments and better for local economies so one reason they're good for the economy is that they lend counter cyclical e these are latin-american countries with strong public banking sectors the baby blue is the lending of the public banks during the crisis September from December 2008 to September 2009 and then the orange or yellow is the private banks so the private banks were pulling in their lending and the public banks were filling the gap by making yet more loans if if you are a state and you borrow from yourself from your own bank you can also save 50% on the cost of infrastructure because 50% of the cost of infrastructure is financing so for example these are just two examples from California where I'm from they recently redid the Bay Bridge they did a whole section of it and it was supposed to be six billion dollars but by the time you add an interest it'll be 12 billion so how did they funded that through their own state-owned Bank which I'm working on they could have saved the six billion the bullet train is the same California bullet train they haven't done it yet I mean they're just started on it so they've got it there was the voters approved a ten billion dollar initial outlay and by the time you factor an interest it will be another nearly ten billion then there's the issue of corruption everybody says you don't want to give the government a bank because the the politicians will use it for their cronies etc you know they'll misuse it but this can be avoided as is seen with the Bank of North Dakota and with the Sparta's and banks I just did a presentation in Iceland with a man from Germany from the spark dozen bank and he said it's not that we're more ethical than a than the other bankers were you know we're not more moral he said we just have rules it's in their Charter they can only do certain things so they don't gamble no speculation no bonuses fees commissions they are fully accountable to the community that owns them and it seems to me that today we can do something that we never could do before which is have 100% transparency like you can put all your boo s up on the Internet and for everyone to see I mean corruption could be seen and if it's in violation of a rule a suit of them or you of those those people and put honest people in you