Insightful and educational article by Ellen Brown on our banking system, and why North Dakota has a model well worth emulating in the rest of the country. Highly recommended for those interested in better understanding our current financial situation, and for some real-world, workable public interest solutions to effectively solving them.

Pouring money into the private banking system has only fixed the economy for bankers and the wealthy; it has not done much to address either the fundamental problem of unemployment or the debt trap so many Americans find themselves in.

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In this dark firmament, however, one bright star shines. The sole state to actually gain jobs is an unlikely candidate for the distinction: North Dakota. North Dakota is also one of only two states expected to meet their budgets in 2010. (The other is Montana.) North Dakota is a sparsely populated state of less than 700,000 people, largely located in cold and isolated farming communities. Yet, since 2000, the state’s GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent. The state not only has no funding problems, but this year it has a budget surplus of $1.3 billion, the largest it has ever had.

Why is North Dakota doing so well, when other states are suffering the ravages of a deepening credit crisis? Its secret may be that it has its own credit machine. North Dakota is the only state in the Union to own its own bank. The Bank of North Dakota (BND) was established by the state legislature in 1919, specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota.

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The BND’s populist organizers originally conceived of the bank as a credit union-like institution that would free farmers from predatory lenders, but conservative interests later took control and suppressed these commercial lending functions. The BND is now chiefly a “bankers’ bank.” It acts like a central bank, with functions similar to those of a branch of the Federal Reserve. It avoids rivalry with private banks by partnering with them. Most lending is originated by a local bank. The BND then comes in to participate in the loan, share risk and buy down the interest rate.

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The BND studiously avoids competition with private banks, but a publicly-owned bank could profitably engage in commercial lending. A successful model for that approach was the Commonwealth Bank of Australia , which served both central bank and commercial bank functions. For nearly a century, the publicly-owned Commonwealth Bank provided financing for housing, small business, and other enterprise, affording effective public competition that “kept the banks honest” and kept interest rates low. Commonwealth Bank put the needs of borrowers ahead of profits, ensuring that sound investment flows were maintained to farming and other essential areas; yet, the bank was always profitable, from 1911 until nearly the end of the century.

Indeed, it seems to have been too profitable, making it a takeover target. It was simply “too good not to be privatized.” The bank was sold in the 1990s for a good deal of money, but it’s proponents consider it’s loss as a social and economic institution to be incalculable.

A State Bank of Florida?

Could the sort of commercial model tested by Commonwealth Bank work today in the United States? Economist Farid Khavari thinks so. A Democratic candidate for governor of Florida, he proposes a Bank of the State of Florida (BSF) that would make loans to Floridians at much lower interest rates than they are getting now, using the magic of fractional reserve lending…

The state could earn billions yearly on these loans, while saving hefty sums for consumers. It could also refinance its own debts and those of its municipal governments at very low interest rates. According to a German study , interest composes 30 percent to 50 percent of everything we buy. Slashing interest costs can make projects such as low-cost housing, alternative energy development, and infrastructure construction not only sustainable, but profitable for the state, while at the same time creating much-needed jobs.

Read The Complete Article

Also, for more on issues regarding the almost ponzi-like scams inherent in our current banking system, check out Brown’s webofdebt.com

Ever wonder how North Dakota seems to be surviving the recession (depression?) as well as it is? Perhaps it’s their “socialist” banking system.

It has no automatic tellers or drive-up windows, doesn’t issue credit cards, and tends only a few thousand checking and savings accounts. Its only location is a glass, steamboat-shaped headquarters near the Missouri River, where the business moved from its original 1919 home in a former auto assembly plant.

The Bank of North Dakota — the only state-owned bank in the United States — might seem to be a relic. It was the brainchild of a failed flax farmer and one-time Socialist Party organizer during World War I.

But now officials in other states are wondering if it is helping North Dakota sail through the national recession.

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Dean Baker nails it again…

It would difficult to imagine someone with a comparable record of disastrous failures being allowed to remain in most jobs. Would a nurse who routinely administers the wrong medicine and causes his patients to die be allowed to keep his job? Would a bank teller who leaves the cash drawer open remain in her position? How about the school bus driver who comes drunk to work?

In most lines of work, a certain level of competence is expected. Unfortunately, this is not the case for those who set US economic policy.

Read The Full Review

Also, it truly is a “Question of Priorities,” as Baker brings additional clarity and concision to the unnecessarily (and purposefully) convoluted economic situation, as well as detailing the negligence and even stupidity of the bank bail-outs, with this insightful interview.

Highly recommended.

Read The Interview

This is one of the best, most concise, explanations I’ve ever read on how Wall Street banking firms are controlling the economy. Ellen Hodgson Brown describes an ongoing drama between Wall Street and Washington that gets next to zero coverage in the corporate press, and lays lie to the ongoing mythology of the “free market” that continues to intoxicate our nation’s prevailing political orthodoxy.

We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Geithner/Rubin). Left strewn on the battleground could be your pension fund and 401K.

The late Libertarian economist Murray Rothbard wrote that US politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards.

Read The Article

Here’s an additional gem to help drive the point forward…
JPMorgan Chase Aided and Abetted a $250 million Ponzi Scheme

The biggest Ponzi scheme of all is the one that the President of the United State and Congress are playing on the rest of the world.

We borrow more and more money and pay the interest with the new borrowed money.

Every year we have to borrow more and more money for wars and of course, to pay the interest.

Congress is in the process of raising the debt limit to over $14 trillion.

The Republicans are standing in the way to make the Democrats look bad but the Republicans had no problem with the finances spinning out of control during the Reagan and Bush administrations.

But Congress will, of course, raise the debt limit because if they don’t the whole Ponzi scheme will come to an end and we will be desperately poor as every tax payer in the United States now owes $150,000 toward the debt and we can hardly pay our own bills as it is…except for the people living under the local bridge who can’t do that.

How are all of those investors going to feel when the Ponzi scheme falls apart and we try to pay them off with worthless dollars? Perhaps they won’t be happy with us.

I think that will cause a world depression like we can not imagine.

The biggest joke that I can think of now is the United States lending our banks money at close to zero percent interest and then the banks buy US treasury bonds paying about 4 percent interest and make 4 percent interest on the billions that they borrowed.

Of course these huge banks get preferred interest rates of zero percent because they are too big to fail and are the biggest joke of all.

I met a banker in NYC several months ago and I asked him about the government’s Ponzi scheme.

He said that every time the federal government looks to borrow money there are all kinds of people lined up wanting to lend money. He thinks this will go on forever since the US government never defaults.

That may be the case but the dollars they pay in interest are usually worth less and less.

I don’t know why other countries line up to lend US money at 4 percent interest when the value of the dollar has dropped 14 percent since March.

But, all of our creditors are as much interested in keeping the biggest Ponzi scheme going as we are.

Perhaps we shouldn’t tell anyone that we are running the biggest Ponzi scheme of all. We might end up in the cell next to Madoff.

- Posted by Stephen Bickford

The Europeans seem to have the right idea…

Lloyds, Royal Bank of Scotland and Northern Rock will be broken up and parts of their businesses sold off to create three new banks, it emerged last night.

Government sources said ministers were “determined” to see more competition in the market, following the £1.2 trillion bailout of the sector which resulted in the loss of three independent banks and several building societies,

Anyone taken a look at Citigroup lately?

Read the full report from the Independent U.K.

Robert Fisk, Middle East correspondent who for decades has proven to be almost never wrong in his assessments, provides this one which has profound implications for the future of the American (and global) economy.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning - along with China, Russia, Japan and France - to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

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Ever since the Bretton Woods agreements - the accords after the Second World War which bequeathed the architecture for the modern international financial system - America’s trading partners have been left to cope with the impact of Washington’s control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

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“These plans will change the face of international financial transactions,” one Chinese banker said. “America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.”

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

You can go ahead and stick a fork in the American economic empire. Its finished, and nearly 800 global military installations aren’t going to be able to do much of anything about it.

Read The Complete Report

Is anyone really that surprised?

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman’s sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation’s premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk.

Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman’s failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.

Of course, they were rewarded with billions of dollars of taxpayer subsidies for their role in all of this.

Read the full report from McClatchy News

This is a must-read/see for every American. The Banksters continue their plundering in full daylight. How come William Black isn’t on every talk show in the country? Oh, yeah, that’s right. If Obama meant half the things he says, Black would be Secretary of the Treasury, not foxes from Goldman Sachs lording over the henhouse of the public treasury like people like Timothy Geithner.

The Dow Jones Industrial Average has topped 10,000 for the first time in a year, as JPMorgan Chase reported massive profits in the third quarter. Meanwhile, the Wall Street Journal is reporting that major US banks and securities firms are on pace to pay their employees about $140 billion this year˜a record high. But on Main Street, foreclosures are also at record levels, and the official unemployment rate is expected to top ten percent. We speak to former bank regulator William Black, author of The Best Way to Rob a Bank Is to Own One.

One of the many examples of Bill Black getting to the point…

Well, I mean, Summers, for example—you talked about Geithner’s aides and how much money they had made, and, of course, it’s absurdly large, and they’re making it typically for not doing much of anything. But they’re taking their cue from Summers, who got $5 million, roughly, for working one day a week in areas he had no expertise. So, you know, once you leave the federal service, then these interests that you were very helpful to find a way to make you spectacularly rich, and they know that that’s what’s coming in their future. That’s part of the problem.

But the bigger part of the problem, in many ways, is that they have such an ideology about the market and its ability to deal with all problems that has no basis in reality, has been exposed in this crisis as completely fictional, and yet they can’t give it up. I mean, think of yourself as one of these professors who’s been trained in the Milton Friedmanish views, and you’re in your fifties, and you’ve been saying—you know, everything you’ve said in your career is wrong. Everything you’ve learned in your career is wrong. All of your areas of expertise are wrong. Are you going to admit that? “Hi, I’ve been misleading you, and I’m sorry I caused this disaster. And by the way, I have no meaningful skills or experience.”

Read The Transcript/Watch The Video from this insightful interview

And for those of you who missed it the first time around, here is another excellent interview with Black by Bill Moyers.

Ever heard of Vulture Funds? The Humanitarian Chronicle will tell you a bit about this certain strain of self-aggrandizing greed. The hijacking of debt from poor nations and then holding them hostage with it. They’re going to have to do a renovation of Hell in order to provide for newer, even lower levels in order to accommodate the purveyors of this peculiar kind of conscienceless evil.

Vulture Funds are powerful financial organizations which prey upon companies and countries weakened by debt.

They buy up the debts of struggling nations at bargain prices then use bribery and legal muscle to extort the full debt plus punitive interest and court costs. Vulture Funds have successfully sued governments, frozen country’s assets and made vast profits from the poorest nations on the planet. Reverse Robin Hoods they rob from the poor and make the wealthy even richer.

In 1996 Paul Singer - the reclusive billionaire who is credited with inventing vulture funds - paid $11m for some discounted Peruvian debt and then threatened to bankrupt the country unless they paid $58m… which they did. Now he’s suing Congo Brazzaville for $400m for a debt he bought for $10m.

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