i'm going to argue that my my capsule summary is that we need public banks because all of our money today virtually all of it is created by banks and we've given that sovereign power away to a private part and if we want that power back we have to have our own banks which create money the way they do most people think that money is created by the government we've all seen these pictures that the printing presses and that and the this is the bureau of engraving and printing which is in fact a government agency but the bureau of engraving and printing is just the printer the customer is the federal reserve and they put in the order for the bills and they get them for six cents or roughly cents six bill no matter what the face amount is so if it's a hundred dollar bill they get it for six cents that they did not contrary to these pictures you see of the helicopter flying you know helicopter been dropping dropping dollars on the economy they do not give them away you know they don't give them to us and they don't give them to the government they lend them so even the dollars that come into existence from the federal reserve are lent into the economy and they're lent to other banks which then lend them to individuals corporations and the government had interest it's not just the federal reserve but all banks that create money in this way with accounting entries there are many authorities to that have said this but when there are like particularly well because the  sulated it well with robert b enderson who is treasury secretary under eyes and her and he said when a bank makes a loan it's simply adds to the borrowers deposit account in the bank by the amount of the loan the money is not taken from anyone else's deposit it was not previously paid into the bank by anyone it's new money created by the bank for the use of the borrower so this is the textbook model of how money comes into existence  you start with one hundred dollars deposit you're supposed to hold back ten percent if there's a ten percent reserve requirement so then you're allowed to make a ninety dollars loan and then that ninety dollars will become a deposit in the virus account which becomes a check which goes into another bank now the next so that bank now has ninety dollars it holds back nine dollars and writes and eighty one dollar check which goes into the next bank and it holds back ten percent so over twenty iterations one hundred dollars becomes a thousand dollars or ten thousand dollars in this chart from the federal reserve in modern money mechanics ten thousand dollars becomes one hundred thousand dollars but what's interesting about this chart is that you can see that the ten thousand dollars is still there it never left the bank so you never go to the bank and they say i'm sorry we just think your money out to mr smith come back in thirty years when the loan is paid off it you can always get your money because they have basically double counted the deposits and that's how money is created  to england in the seventeenth century and they would take people to keep people's gold for safe keeping and they would issue these little paper receipts that became bank notes and everybody liked the bank notes better than the than the gold i mean they didn't want to carry around this heavy gold because it's heavy and you could steal it so so some people wanted to borrow the gold but they too preferred the little paper receipts so the early on discovered that they could lend as much as ten times as many notes as they had gold and nobody would notice and so so they and they charged interest of course on that so they were multiplying their their profits in this way although even today i mean all through the system that's the way it's been but bankers themselves will tell you they don't create money i mean it's so obscured what they're doing all they were doing was just making loans of people asked for you know from their point of view they were just making a little profit here as best they could but in fact you can see that they were creating money so today virtually all of our money is created by banks that what the government creates  is which is one billion dollars worth roughly which is about one ten thousandth of the money supply or less so on this chart the bottom or blue is m one that's coins dollar bills to even if you count dollar bills as being issued by the government which obviously is a question of off that money is only about halfway up the little blue mark and then all of the rest where does that come from it comes from bank bank created credit this chart only goes up to two thousand and six because that's when the fed quit reporting m three which is that yellow black at the top they quit reporting it because they didn't really know where to cut it off once once they got into derivatives it's like money and near money you can see em too is close substitutes well derivatives are now over a quadrillion dollars you know something like one and a half quadrillion dollars so the chart with you know it would be too obvious what's going on if they put that in the chart so now they stop him too but anyway you can see that most if  of the money except for the coins is created by banks the problem with the system money reforms argue about this but i'm going to say the problem with the system is that is the interest because the banks always want more money back than they put out there and so they don't create that money and they create the principal they don't create the interest whereas the interest that come from somebody somewhere has to take out another loan to create that interest and so what you wind up with is a pyramid scheme like this or ponzi scheme so over the last three hundred years the debt has gone around the world and we managed to trap the third world into debt and then when the that source was exhausted the paris when the parasites food source globally was exhausted they came back to the homeowners and then when they went through their homeowners now they're on to the students so so essentially they've run out of the parasite  so what is the alternative we actually had a sustainable system this is the original american system developed by the colonists sort of by accident because they they didn't have gold and silver and so it started in sixty ninety one which was three days to three years before the bank of england was founded the governor of massachusetts was fighting a local war and he was trying to pay his soldiers and he couldn't find anybody to borrow the money from so he got this idea that he would just issue these little receipts and say you know these are little receipts acknowledging that you have delivered service to the to the colony and then you can go out and spend those receipts and in the colony acknowledges that you've done service for them and so you're entitled to spend the receipts and goods and services and then the little notes circulated in the community and that system well some colonies it was more sustainable than others the northern colonies tended to just print and print and it did become inflationary eventually inflated regular made the prices go up this is to my sustainable in the sense that the government could print the interest as well as so the government did create the interest along with the principle so let's say the government created one hundred five dollars they could lend one hundred dollars and then they could spend the five dollars on government budget and so you would have one hundred five dollars out there would all come back as principal and interest they could lend the same hundred dollars spend the same five dollars and they could do that over and over and over they wouldn't have to expand the money supply so during that period there were no taxes except for excise taxes on liquor the prices did not inflate and there was no government that  worked very well but probably too well and king george said the colonies could no longer issue new issues of money they were getting complaints from the merchants and when the bank of england well it was actually benjamin franklin he spoke a little too highly of the system he went to england to defend it and said said that this is working really well for us that this is the reason that the colonies are so abundant and things are going so well in the end and the bank of england people said that was not the point of a colony of the colony was there to serve the mother country and so they cut off this source and made them pay their taxes in gold recalled so we had to borrow from the british bankers who issued these little paper receipt supposedly back right and so that put us in debt to the british bankers and it contract with the money supply there was a big depression and the colonists rebelled issued that issued money anyway and that was considered an act of rebellion so that prompted the american revolution so it is said by some sources so we won the war but we lost the power to create our own money we wound up with big war debts the british came in and counterfeited the script so they actually printed more of this paper script than the communists did and it did hyper inflate and lost its value and the founding fathers were then so afraid of the paper money that they just left it out of the constitution and they had to come up with something rather quickly you know they were like riots outside this little room where they were putting this all together so they couldn't agree and whether to allow the congress the power to issue paper money so they just left it out they didn't say who could do it they said congress shall have the power to coin money and regulate the value there of and that was that and we've been arguing about that i mean there have been lawsuits you know legal opinions about it for two hundred years about what exactly that meant so alexander hamilton was faced with these big debts like particularly the french wanted to get paid in goal of they weren't going to take this paper script anyway and  so he said he did set up a bank like the bank of england which was authorized to lend money to the government with back pay back by their gold so the government what it called the government had which put in this first u s bank and then they issued a lot of paper receipts supposedly backed by gold but this allowed them to expand the money supply to many multiples of what they really had they paid off the french they paid off all their debts and got the economy going and it worked really well the problem was that it started this spiral of debt so lincoln actually went back to that system during the civil war when again who is fac g huge war debts serious interest rates were being charged by the bank of england so he was advised by one of his advisors that he could just issue money the economists had done it he could do it himself he had the power to  issue us notes or greenbacks which he did and won the war and also did a lot of development during those four years and it was an amazingly productive period where they did put the railroad across all the way across the country and so forth but of course who is assassinated in that program was discontinued so so today we are back to banker issued money  one problem with that is you would have these waves of defaults and depressions and money contractions the bankers would call in the loans and take people's real estate would go into default and then the bankers would get their real estate so basically what it was was this great big shell game and because the piece weren't under the show and people kept figuring that out the federal reserve was devised to to invent pieces necessary and to hundred thirty four at the end we went through a great depression supposedly the federal reserve was set up to prevent depression but obviously it didn't work because we had the biggest depression ever twenty years later so one thousand nine hundred thirty four robert hemphill was credit manager of the federal reserve bank of atlanta he said we are completely dependent on the commercial banks someone has to borrow every dollar we have in circulation thing in fact our debt is our money supply and so all this concern about the federal debt and we have this horrible debt that's going to kill us is misguided misplaced the debt is a good thing if we didn't have any debt we wouldn't have any money because private debt skip paid off and so you don't have a stable money supply only the public that can grow in proportion to the g d p and stay there so you have a stable money supply and when that private debt shrinks as it did after two thousand and eight you need the public debt to grow as it did it went up by fifty percent since two thousand and eight the only problem with the system is the interest because the interest takes out more and more of our tax money but if you could eliminate the interest the debt itself is not a problem and you can eliminate the interest if you borrow from your own central bank which is what the japanese do and that's why they have a two hundred twenty six percent debt to g d p ratio the worst in the world and they still have the third or fourth largest economy in them in the world i mean they're doing actually very well not counting the tsunami but with their economy works very well considering this huge debt the reason is the debt is to themselves they owe it to the bank of japan and the japan post bank which is also publicly and so in order to eliminate the interest problem you can either do interest free banking islamic banking it's a good good theory but they haven't the the islamic banks as currently practice are really into it's called interest by another name you know the critics say that it's you serious by another name because they're still charging a fee of some sort or you could have complimentary currencies this is where you eliminate the banker so today we have all these community currencies that are basically on line systems where it's just sort of a community of you know community exchanges but you can't really do huge infrastructure loans or the types of things that a state could do because you can only deal with the people within the club and if if there's nobody in the club that makes steel or copper or all those cement or whatever all those big things that you need then you're not going to be able to do your project or the third alternative is a publicly owned bank if we had our own bank we could do many things if the state had its own beings or right now state local governments are borrowing at five percent or so and the wall street bank borrowing from each other almost nothing they're borrowing at the fund the fed funds rate which is zero point two percent so if we were a bank we too could borrow at zero point two percent and cut our interest rate way way down  the state could take its own deposits in its own capital and turn them into credit the first thing people say when you talk about public banks first they'll say well i don't trust government and i you know i don't don't want more government and the second thing they'll say is why do we need more banks we have plenty of banks but that in fact the reason we need our bank is that banks don't just take money and issue checks and you know make loans like people think banks actually create money or create credit money in the form or credit and if we want to take back that sovereign power we have to have or they can do that as well so the state bank can partner with local bank to help them with their coupler permits that's one reason businesses can't get loans today is that the local banks can't make the loans they don't have the capital base for it that the regulators have increased their requirements and so in california i know the biggest complaint small business the reason they're not hiring is because they can't get the old credit lines that they used to get nothing has changed in their business but they instead of an eight percent credit line they're now paying sixteen percent on credit cards and they can't afford that so we could restore all of that we now have fourteen states with legislation of one form or another that's been introduced in california and my state that the legislature just both houses passed the bill but the governor didn't sign it all of those states are looking at north dakota which is the only state that has its own bank north dakota is also the only state that escaped the credit crisis totally in fact they've had their biggest budget surpluses ever they've had a budget surplus every year since two thousand and eight  y had this bank since one nine hundred nineteen when you saw that little movie that the farmers were in a similar situation to what we have now they were losing their bring their farms to the wall street bankers the the  banks and the railroads and the grain aris were all one cartel and the grain reason weren't taking their grain and so they were losing their farms when they realized that there was actually sort of a plot to get their farmers they banded together formed at what  called the nonpartisan league very surely a very republican red state but to them it's not a socialist issue it's a sovereignty issue it's get our money back in this state and leverage it for our own purposes instead of giving it away so north dakota has the lowest unemployment rate in the country the lowest the rate the most local banks per capita and it hasn't lost a single bank in over ten years the bank of north dakota has a captive deposit base because all of the state's revenues are by law deposited in the bank and the state is the largest deposit or so they don't have f d i c insurance for a reason f d i c insurance only covers two hundred fifty thousand dollars and obviously the state has a lot more money than that so if they if they were part of the f d i c they would have to it's very expensive they'd be paying for us to bail out other states basically and they'd be giving the c the power to put them into receivership i mean what if the f d i c decided they just didn't like this model because they are largely private banker driven so if they saw this is competitive and decided to find some reason why they didn't like what the bank was up to they could put it into receivership bigger threat or face is a thirty million dollars a year roughly in dividends and it's one tenth the size of washington so you could assume say a three hundred the california pension funds the largest pension funds in the world they had a return on equity they they lost twenty five percent and thirty percent in the two years following the two thousand and eight important thing that they have it or one of the most important things that they provide a direct credit line to the state to the municipal governments if they have an emergency they can just they go right to the bank of north dakota and the bank just gives a loan when when they had a big flood the bank first of all they froze they froze foreclosures in the city where there's this lead and they they helped with mortgages i mean they they helped with they didn't need to call and fema or wait for fema they they had their emergency relief right there it's sort of family style and they they take care of whatever needs to be taken care of the partners at the local banks etc guarantees a low interest rate so consider what you could do the same model in washington state bank of north dakota has a population of about one tenth washington they have a deposit base of two point seven billion in the bank america and they have loans outstanding they have deposits per capita of four thousand dollars and they have loans a standing of about the same amount so if you if washington state had four thousand dollars per capita in its own state bank it could have a deposit base of twenty seven billion on the same scale they could have loaned twenty six billion so that's twenty six billion in credit that they can do whatever they want with they can buy things or find infrastructure but just to show how much money you're giving away by not doing this let's say you did this simple thing actually the bank of north dakota used to do this by  aspersions but they later discovered there were more interesting things they could do with their money but at one point they did do it this way where you could take your twenty six billion in credit power by that much in municipal bonds at five percent so the interest would be one point three four billion per year so that's money you're just giving away you're giving that away to wall street and it's it's essential a free money you're taking your your deposits and your capital and your leverag and what you could do since it's since the debt itself is not really a problem it's only the interest that one point three billion would support twenty six billion more in debt so you could go the state could go further in debt i mean there might be some sort of constitutional issue and that but it wouldn't hurt the state off to take on a lot more debt because now you can service a you know in two thousand when everybody says if i said that the federal debt hasn't  hundred thirty five everybody says what about when clinton balanced the budget in two thousand well what balance the budget means is that you paid the interest in other words it's like if you paid the minimum on your credit card and you  balance my budget so you can if you service your debt you've essentially taken care of your debt from the point of view of a state budget studies to show that if you cut out interest you reduce the cost of public projects by fifty percent on average so that so you could find that many things that now seem on affordable like green energy development or public transportation the low cost housing there are a lot of things that if you cut the cost in half model that makes the old model obsolete for free and i went to law school for six hundred dollars a year and that was tuitions it is now thirty five thousand dollars a year this is a state school but if we put kids all the way through high school we should put him through college what why do we stop at a high school you it's not an expenditure it's an investment as the g i bill proved the g i bill was one of the most lucrative investments the government ever made it returned two hundred percent just in taxes in other words they got back twice as much in taxes as they put out there and it returned six hundred percent in terms of stimulating the economy the possibility of the american dream for young people who instead of getting out of school with this huge debt burden on the back of their backs would actually have the possibility of getting a job and doing you know science and arts and all the things that that we should be investing in