Will establishing citizen-owned state banks be the first step to ending the private Federal Reserve?
Congressman Ron Paul, author of End The Fed, has been trying to educate the public about the private Federal Reserve Bank system for his whole career. And indeed, many terrific books like The Creature from Jekyll Island, and movies like The Money Masters, also have exposed the flaws in allowing private globalist bankers to print the nation’s currency.
Consequently, the increased awareness is the reason for the growing movement calling to end the Federal Reserve Bank. However, our Congress, with their paltry 11% approval rating, showed their true colors when they gutted the Audit the Fed provision in the recently-passed financial reform bill which actually gives the Federal Reserve even more power. Reuters reported on this expansion of power:
The Federal Reserve would take on a greatly expanded role in financial regulation under new legislation unveiled on Monday by a top Senate Democrat, in a push to move ahead with the regulatory reform that has been a top priority of President Barack Obama.
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The bill by Senator Christopher Dodd would give the Fed the power to break up big firms that could threaten the stability of the financial system if they suffered serious problems.
The Fed would also gain authority over the nation’s largest bank-holding companies and become the home to a new consumer watchdog with oversight on mortgage-related businesses and some large non-bank financial firms, such as insurers.
So, it seems that making a change to the banking system will not likely occur on a national level anytime soon. But there’s hope at the state level to establish citizen-owned banks to directly invest in local economic development. Due to the abnormally sound economy of North Dakota, which many attribute to their state-run bank, many fresh candidates in the Midwest are now running on a state-bank platform. Ellen Brown, author of Web of Debt, recently reported on the growing movement:
Virg Bernero, the mayor of Lansing, Michigan, just won the Democratic nomination for governor of his state, making a state-owned Bank of Michigan a real possibility. Bernero is one of at least a dozen candidates promoting that solution to the states’ economic woes. It is an innovative idea, with little precedent in the United States. North Dakota, currently the only state owning its own bank, also happens to be the only state sporting a budget surplus, and it has the lowest unemployment rate in the country
Bernero, if elected, faces enormous economic challenges due to the free-trade destruction of manufacturing jobs and internal and external debts owed to private bankers. Michigan, like other Midwest states, has been disproportionately affected by the economic downturn where social services, teachers, and police are being cut to ease debt burdens. Michigan may be the state most primed for a radical banking change as there are reports that “alternative currencies” are already being accepted in pockets of the state. Bernero promotes the idea of establishing a state bank in Michigan on his website as part of the solution:
Bernero’s proposal to establish a state-operated bank that can make direct loans to businesses in emerging, job-creating industries will do just that. It has worked in North Dakota, and we can make it work here.
State banks can take advantage of the fractional reserve lending system, which allows banks to lend ten times the amount of their reserve deposits. In other words, if a bank lends the entirety of its reserves at 6%, the banks actually make over 1000% interest on those original deposits. It has been argued that this is money creation without the approval of Congress; however, this system of lending is unlikely to end despite the obvious inflationary nature of the scheme.
Sure, the Bank of North Dakota and these other proposed state banks are still at the mercy of the Federal Reserve printing presses, but the difference lies in where the profits are allocated. The profits at the Bank of North Dakota are public and reinvested in local property and businesses, while the profits at the Federal Reserve remain in private hands.
The candidates who are now promoting establishing state banks will surely make this argument on the campaign trail, and the debate alone will further expose the true nature of the Federal Reserve to the masses. It would behoove us to support candidates who promote establishing state banks even if we disagree with them on other issues — our economic freedom should be that important.
The continued success and expansion of citizen-owned banks will surely beg the obvious question, Why not do this at the Federal level? Why not print money right out of the Treasury to only benefit the country’s economy? Bye, bye Fed . . . .