money moves the world and banking moves money welcome to the public bank solution conversations about an emerging new american institution a publicly owned partnership banks able to rebalance the scales of monetary control in service of the public interest and our common wealth brought to you by the public banking institute and its national association of partners and organizations below and welcome back we hope to the public bank solution we did a previous session about what a state bank of new jersey would look like some of the aspects of how it would serve and so forth and and this is the second version or the second edition of the public bank institute what is a public back briefly for those of you who didn't catch or earlier description make a very brief it's a bank that's owned by the people the people are the stakeholders of were the shareholders if you will it's a bank that doesn't do business with the public like a normal bank in other words you don't get car loans or mortgages or a t m zor go to your branches there's it's not retail banking it's a bankers bank a partnership bank with the with for government purposes it's basically a depository for the money that comes into the state through taxes and other revenues and it's held in a state owned bank now the state owns it but the state doesn't operate it per se we can talk about that you know moment but the idea is transformative there are public banks all over the world about almost forty percent of the world's assets are held by public banks little countries like japan and china and russia and brazil and india all have public banks so they're all over the place and they're very successful in fact  germany the public banks there which are now two hundred years old drove in and stabilize that economy to make it the powerhouse that it is through local lending through banks that are not not owned by the government but are owned by the people we call them and little savings banks the our public bank idea here is modeled rather on that idea that the people can control their own money better when they keep it at home and invest it in themselves resoundingly logic to that a common sense to that that it's hard to fight you know the logic of spending your own money instead of borrowing it from your neighbor at some expense which is what we do know because municipalities and states don't have all the money they need to improve and invest in in their infrastructure and in their needs but we find ourselves stuck in a reliance on private capital which is basically wall street banks and we know that wall street banks have other agendas beside the public interest it is by and we can't blame them it's a capitalist society their purse purpose is to make profits while a public banks public bank is we envision it is makes profits as well but small ones that are only meant to sustain and encourage and nurture the success of the bank whose purpose it is to lend credit into the local economy whether it's local municipalities or the state so and that's the transformative notion that we're talking about here because it breaks the cycle of our dependency on private capital of borrowing more money going further into debt having to raise taxes what the public banking opportunity alternative provides is to create money create credit from the banking franchise to create it to invest in our in our assets and that backdrop we want to take a look at some of the issues that are around creating a state bank in new jersey the segment we're calling banking on new jersey which by the way is the name of the organization the statewide organization that is is supporting having a state bank and i would just throw in one other additional political side bar this is not a political presentation but it is important to remember that our neighbors all have different positions on how public policy should emerge who should be responsible for it and in the case of public banking around the country one of the cool things is is that it appeals to both sides so you have progressive democrats and progressive green party people and then you have tea party republicans and conservatives who really like it is well for very strong reason that it requires some reliance on yourself independence from washington and wall street and away a predomina public interest over private interests so it's really making that sort of a significant shift in public for public policy and ministration which now the jersey is fortunately position to pursue because there was such strong support for it by our political candidates and of course with a growing number of municipal and officials and elected and then appointed a policy people as well so it's an exciting time to be in new jersey because we've broken ground here around the country thanks to this to this level of interest well our guest today again is ellen brown from the public banking institute chair founder of the movement as i mentioned and l you know your travels around the country you've seen these initiatives start what are some of the cities and places where this is under way now new jersey not the only one well experts went were actually invited to speak to a number of legislators and where they were the four senators there and a couple of people from the treasury treasurer's office and somebody from in a room full of officials who were really behind it and they really wanted to get it done that was it was really impressive to me it was heartwarming because quite often when you have a group of legislators there arguing about it they're saying oh we can't care for this reason or that reason but these people were really they had made up their mind this is what they wanted to do and they were looking for how they could do it and there they're very sharp and by now after that many years six years we know what we're up against what the robot acts are and we've got ways around them so this is like the second wave and then there's sort of an elevated elevation  public awareness or public understanding of why we need it what it can do how it works why it's actually good for this country that has been picked up because of the recent repeat the criminal  big banks wells fargo being one los angeles and seattle and state of california and it's not the only bank that has a has a bad rap sheet but people want alternatives to that in this they're looking to public banks so i angeles and and portland and colorado and arizona new mexico there's quite a number of activities around the state of this movement to adopt this sort of the weirdness  really the socialist associations that it used to have even though north dakota is a very red state operates this that's starting to fade as people start to focus on hey we're getting taken advantage of we're stuck in a private capitalization system objections that we get is is what about the corruption here in new jersey and it's new jersey's not the only state or you know government that has that attached to it but people are really concerned that this bank would have could immediately be compromised by by the many private interests and political shenanigans that might develop what do you what do you say to that how do these banks escape that well you have full transparency and full accountability so it's all in how you set up here your charter but you have various ways that i did in the bank you set up a bank as a separate institution it not actually controlled by by politicians it's controlled by bankers with oversight and now today i mean it's true that like thirty or forty years ago in third world countries it was quite easy for government for presidents or dictators or whatever to use their use their banks for their own purposes but now we have it coming on line we have blocked chain for example we have digital ways of making things totally secure totally immutable you can't change it totally transparency can see what's going on and if you make it into your charter that it's going to be fully accountable of countable to the people it's got they don't depository bank in california we have a number of states have infrastructure bank but they're not what we're talking about here we're talking about a depository bank that can actually create money by leveraging right there capital and that's that's the key by the way the ability to leverage capital allows let's let's say you have a five billion dollar capitalization for state bank for infrastructure under a depository you're able to multiply that ten times in being able to issue credit based on the banking franchise that's just how it works it's a beautiful beautiful thing you have you have the ability to create money and of course when you're lending the money to yourself  risks change dramatically from being out in the world lending to into variety of other financial vehicles now these banks would have a mission what is the bank of the mission of the back of north  dakota they would want broad overview they had their mission is to serve local communities but they have certain sectors that they support and one is agriculture one is energy for there's another  student and yeah business so so they make one percent loans to start a business start up farmers so so they support certain sectors and that's written right in their charter people so these are our elected officials that's another and another argument is would you rather have your elected officials managing your money or would you rather have wall street bankers who are going to have no  responsibility i mean even if you and see what they're doing you can't stop them because they're within their right it's right it it's an interesting point of law that i learned from you that when you give the bank your money or a bank your money they own it they actually have own it so they have no obligation well they have a they have any green with you to give it back to you when you call on demand but if they're not able to do that if they've gone down as they have as we've see them do you're stuck in of course the insurance system the f b i see has serious limitations but and so when you look at the precariousness of the global financial cartel building paper on top of paper you know go across house of cards and we have our state money in there and we have our municipal money in there it is at risk even though they say it's collateralized with what you know with your with your digits you know there is so so we really are beholden to that system of control which also controls when and how much we can borrow so that so for example the stakeholder interests that we that we want to talk about include infrastructure and we touched a bit on this last time but through the private capital funding of of infrastructure we pay twice as much that we i mean most of our most of our expenses for capital expenses are for infrastructure or go to  right and just an ordinary loan safe or well an infrastructure loan is like a mortgage you're going to pay as much again in interest as you pay in principal that doubles your crossed right there so if you're in the bank you get that interest back so there that's a fifty percent reduction in crime right there and you're you're putting you know on your own you're determining where the money goes and that you have control over this loan yeah and it can be the most important feature of owning your own bank why people don't understand where you know what i'm always a hard thing that is that banks actually create our money so if you want to expand your money supply in your local community you need to borrow and borrowing is a good thing and if you're borrowing from yourself you get the interest back at them when they cross it so stakeholder concerns that and as we in the next several months we're hoping to have many more people around their jersey get aware of this but also get on board to support their own respective stakeholder interests whether it's supporting the environment or small businesses affordable housing  jobs you know the there's a long list of public needs that this bank could help serve how would for example how would this bank how could this bank help with let's say affordable housing how would that front line agents as they have always been for local lending and in this day and age as we look at building local economies we need to have a financial agency and an arm that we can trust and that is able to serve these growing needs bank can stand with them in supporting lines of lending student lending for example as they do in north dakota that would make it a lot more cost effective i saw a figure here earlier about that the  a large a high levels of debt for new jersey graduates the average graduate have ever chip about thirty billion dollars in total debt that's enormous and unsustainable and undermines community economic development and that will always be the case unless we get something new going here some new source of credit and that's what the state bank can do through the community banks which are are on the ropes financially too but i really like the idea of how we could maybe revive their role in communities hopefully maybe even making more of them live in some of them to stay in their communities and using them as as the vehicles for for moving on  community municipalities to they have shortages for infrastructure funding and i think that's one of the the ideas of how the state bank could expedite that the infrastructure issues are  deep all over the country the public banks are are enormous really adept at being able to generate that wouldn't you say i mean that when you're lending to yourself or infrastructure is there a difference there you know raising the question do do we does the state really need this i think we can easily say that the state needs it because of our super high levels of debt there's an enormous amount of overhead that we serve and that the priorities of public policy are always subservient to being able to pay the debt so that's another one of those transformative aspects of this of this it's it is a instead of a scarcity b and credit model once you understand that banks create our money then you need does things to generate the credit to get the money out there to get the materials in the workforce together to build other things that you've got the resources to build you just don't have the money well what is the money if money is merely credit created by a bank if you set up your own bank which has lots of has all the things it needs to generate credit which is deposits and capital then you can get new money into your community literally new money that didn't exist until it was generated in the form of loans that's why we now know that money is not the banks are not merely intermediaries this is what the bank of england confirmed they don't merely take in deposits and lend them out again they actually create money every time they make a loan and that's all you want we took mine to generate credit for our own communities for their own purposes not to give way to wall street to generate credit for their speculative purposes that don't don't serve our communit then you can feel quite three one on the banks we the people sit on the bank yeah it's really interesting i mean if once you realize that you have the resources you can start to take on those projects that have been sitting on the shelves of public policy opportunities that could have never been funded they just sit there and collect dust because it will never have the money for that but doesn't look like we're going to have it any time soon but there are some really critical thing is the need to be addressed education being one but we've mentioned several others but you know the for school boards around the state who are looking to improve their school structures their bond debt is significant and of course drives local taxation  north dakota again the idea that you could get a two percent loan for twenty or thirty years you know without the bombing overhead and all of that stuff it would be a huge boost and boon for  communities who are now beset with a growing student populations diminishing school resources so that's something that that also becomes part of a systemic shift and improvement for new jersey and how we can rebuild  ourselves with these new resources yeah you mentioned small business lending you know we realize that that's dried up and that these lines of credit could be generated as part of the state banks commitment for for in truth here big banks aren't interested in those loans and the local banks that are interested in those loans and they have so many restrictions on them now that they're having problems making one of building the momentum of the public involvement with moving the state bank idea into reality because here in new jersey we're very early in the process we're fortunate to have a couple of candidates for governor who who really like this idea and we think that that will be followed through but it won't be followed through successfully unless the people engage it so so what we're doing here of course is not only doing basic education but inviting participation by all of you who see the promise here the idea that we could have by that we can create our money to meet public needs without losing our shirt and our futures that we can actually that there's serious work that needs to be done and so we'd like to certainly invite all of you listening that would at watching that would have a personal or or professional interest in realizing this to participate with banking on new jersey where you can come to the website of banking under jersey dot org we are looking to create a citizen's alliance for creating a state bank so the regardless of what the concern is whether it's inner city needs which are multiple and growing or agricultural needs because new jersey is a garden state that wide range of meat is something that this bank could really address in an entirely new way and i think as you travel around the country island you're going to be seen of a variety of these needs expressed what are some can you come to think of any ones that are on the top of your head that that aren't usually addressed in by by by the bond market for example i mean well in california we have this rat problem with the school district have suckered for these capital appreciation bonds where i thought it was one where over  high finance looking at wall street lending to municipalities and states exposing the enormous extraction and predation of these banks on our communities  here we have a stand that's been taken in new jersey to create a state bank that's a stand that the people need to embrace if we're going to pull it off our elected politicians whoever gets chosen will need will need backup that this is going to be something that the the people we're going to have to stand for it's a look we know this bank works we know we can get it and we're going to have to you know work with our our freeholders our assemblyman our state senators and certainly with the governor's office to say it's time for new jersey to have a public bank we know we can do it we can and we can and will start to meet and create opportunities to learn more about that in the coming months so i'd like to we're just out of time so i just have to wrap up by saying first of all thank you ellen for joining us once again on this on the public bank solution by the way she wrote the book the public bank solution if you are looking to learn more about how this works  her book the web of debt which was a best seller is a great way to get grounded in the realities of how the banking system evolved and how we got stuck or trapped or how where we find ourselves in wrapped in this  of control of our future and our resources that we really can break through and break free of but it will take your education and participation so once again come join us to the go to banking on new jersey dot org for more information about that if you like to have more information about public banking generally go to public banking institute dot org and that will have an assortment of very fine educational materials that you can learn on we'd love to hear from you