Banking For The People, Not Wall Street Profits
It has been a hundred years since the first and only public bank was created in the United States, in North Dakota, but now there is renewed interest in starting more public banks. California passed a law last year allowing public banks. New Jersey and New York are not far behind. To explain why public banks are necessary and describe the growing movement for them, we speak with Ellen Brown of the Public Banking Institute. She discusses the benefits of public banks, how they save money and free up funds for necessary public projects and what the obstacles are. Brown also writes about financial issues. She talks about the current crisis in the repo market that is brewing in the United States and how it makes the economy precarious.
Ellen Brown is the founder of the Public Banking Institute and the author of a dozen books and hundreds of articles. She developed her research skills as an attorney practicing civil litigation in Los Angeles. In the best-selling Web of Debt (2007, 2012), she turned those skills to an analysis of the Federal Reserve and “the money trust,” showing how this private cartel has usurped the power to create money from the people themselves and how we the people can get it back.
In The Public Bank Solution (2013) she traces the evolution of two banking models that have competed historically, public and private; and explores contemporary public banking systems globally. She has presented these ideas at scores of conferences in the US and abroad, including in England, Ireland, Scotland, Wales, Canada, Iceland, Ireland, Switzerland, Sweden, the Netherlands, Germany, Croatia, Malaysia, Mexico and Venezuela. Read her full bio here.
Margaret Flowers (MF): You’re listening to Clearing the FOG speaking truth to expose the forces of greed with Margaret flowers…
Kevin Zeese (KZ): and Kevin Zeese.
MF: And Clearing the FOG is a project of Popular Resistance dot-org. You can subscribe to us on iTunes, SoundCloud, Mixcloud, Stitcher and Google Play. You can also find us at Popular Resistance dot-org and while you’re there check out our store where you’ll find Clearing the FOG gear like bumper stickers, t-shirts, water bottles and tote bags. So today we interviewed Ellen Brown, a co-founder and chair of the Public Banking Institute
KZ: And she’s done incredible work mobilizing people in support of public banking. They’ve had tremendous breakthroughs recently with California and other states are getting close. We could see a real public banking Revolution against Wall Street banks in the near future.
MF: So stick around for that interview, so you can learn more about public banking, why it’s important, and places where it’s starting to be put into place. Before we get to that interview, let’s start out with some news from around the world. First off this past week, there were protests in 22 countries, more than 200 cities saying no war on Iran and US out of the Middle East.
KZ: And they followed protests in Iraq more than a million people are protesting there to get the U.S. Out of Iraq. So there’s a worldwide movement now to getting the U.S. Out of Iraq, the U.S. out of Middle East and stopping the threats of war with Iran.
MF: Right we wrote about this in our newsletter this week and we were at the protest in New York City. The weather was not very Cooperative. I’m Glad that other cities had nicer weather than we did here in New York City. But despite that about a hundred fifty people came out in the rain and the cold.
KZ: It was rainy and cold and windy at times and good speeches from people from the podium. There seems to be a very clear message now US out of the Middle East. I mean, it’s been a too destructive presence by United States since 2001. Iraq of course was a horrible military attack and occupation. Libya totally destroyed. Obama starting a war in Syria,. It Yemen, and now threats to Iran is really time for the u.s. To leave that region. Even Donald Trump says we don’t need their oil anymore since Obama made us the number one oil and gas producer in the world. Of course Trump does not give Obama credit for that. He takes credit for something Obama did. Not something to be proud of us since is a climate crime. It’s time for the u.s. To get out. Trump said he’d get out and his last election campaign. Instead he’s escalating. He needs to order US military out of the Middle East.
MF: Well, I imagine that our listeners know that the Iraqi Parliament voted to tell the United States to leave Iraq, and that was part of the agreement that the United States have with a rock that they would have the power to do that. And so people in Iraq, you know, as you said, millions came out to protest there. Big banners said get out America. Very clear messaging that if you don’t get out we’re going to force you out. And there was you know, a couple of days following those massive protests another attack on the US Embassy in Baghdad. There were an estimated three to five missiles that hit the u.s. Embassy. This is the 15th attack on the embassy and green zone since December and this time they actually hit part of the embassy, a dining area. Allegedly there is one person who was injured in that attack on the embassy, and the US state department is telling Iraq they need to protect the US Embassy and that violent attacks are unacceptable
KZ: I wish I had done that when we were in the Venezuelan Embassy. That embassy was subjected to Violent attacks. A pro-coup mob, under siege breaking Windows, breaking doors, breaking in, and the US government, the Secret Service did nothing to stop them. And so I think this is now coming back against the United States. They didn’t protect the Venezuelan Embassy. Why should anyone protect the US Embassy in Baghdad. And this is Embassy by the way is really a city. This is a massive embassy, massive Skyline, 20,000 people. And of course those people are not all diplomats. Most of those are military and intelligence personnel, CIA. That’s what that really is. People in Iraq know that and you know, just in the last week, we’ve had two attacks on that green zone, this massive City with in Baghdad. If the u.s. does not listen to the Iraqi Parliament, the Iraqi prime minister and leave voluntarily it is going to be a bloody year for US troops in Iraq. The people showed when Soleimani was assassinated that they supported Iranian involvement in their defense, and millions of people came out in Iraq to support and mourn the death of Soleimani. Then you have millions of people protesting after the u.s. refuses to leave. The incredible insulting response from Secretary of State Mike Pompeo when the Prime Minister called him and told them, told him the United States had started to plan its exit. His response was, “we respect Iraqi sovereignty, but we’re not going. We’re staying.” That is just unacceptable and the people are showing that and these attacks on the green zone are just the beginning. One of those signs the protesters were carrying that we highlighted are popular resistance dot-org newsletter, “People of the United States. Tell your sons and daughters to leave Iraq or get ready to make coffins for them.” That’s what’s going to happen. And that’ll be Trump’s election year Mantra. You promise to get out and you stayed, and now people from the United States are dying and more chaos is being created in the Middle East.
MF: The Iraqi government did say it would take efforts to protect the u.s. embassy, respecting the Vienna convention. It’s interesting that the Chinese Ambassador traveled to Iraq earlier in January and offered support to Iraq to help them get the US to leave, including Military Support. So our question in the newsletter is… the world is telling the US to get out of the Middle East. Will the u.s. Listen?
KZ: The only way the US will listen is if the u.s. feels threatened. The US military has a mantra of protecting its troops and if the Iraqi people and civilian militias begin to cause problems for the safety of us personnel, the US has two choices… One, the orderly exit or two, escalation. I don’t see escalation happening, just don’t see the US government or population willing to see escalation of another war in Iraq, especially during election year. So I think the orderly exit is the way out. Every day that Trump delays that is every day a risk to us personnel and more chaos in the region. It’s time for the u.s. to get out of the Middle East.
MF: We also posted an article on popular resistance about representative Seth Moulton. He’s a Democrat from Massachusetts and a Marine. And he’s questioning… he once information about this supposed imminent threat that was used to justify the u.s. assassination of general Soleimani. And we also have to remember that also in that attack the Iraqi commander [Abu Maryam Mohandas] was also murdered. Moulton is urging every person in the military to look at the commands that they’re being given and determine whether they’re lawful before they consider following them.
KZ: Well, what molten is not saying… I appreciate him saying that but what he’s not saying is that when you are in an illegal war or an illegal occupation, every order is illegal. Every act is a violation of international law. Every order being given is a violation of international law. At some point United States has to be held accountable under International law. We flout it now, we ignore it now, but at some point there’s going to be a breaking point where the world says, “US, you’re accountable and every soldier should recognize they are being given illegal orders, illegal wars, illegal occupations and illegal military actions. Every order is illegal. Disobey them all.
MF: There’s another interesting article we posted recently on popular resistance about China’s ties to countries that are resisting us imperialism, and how the Left in the United States is not framing that in that type of way. The left in the u.s. frequently says, “oh China will be just as imperialist as the United States” but this article is pointing out how China is really giving material support to countries like Venezuela, like Iran, that are resisting US imperialism. Iran and China just updated a long-term twenty five-year deal that they have. This past fall they added another 400 billion dollars on gas and infrastructure investment to that. Of course Iran is important to China’s belt and Road initiative
KZ: And that belt and Road initiative is very frightening to United States because they fear that this will be the dominant economic explosion of the 21st century, connecting Asia and Europe through Africa. And the Middle East is going to be a very powerful engine of economic development and that frightens United States because dollar domination is already weakening. On China, you know, it’s confusing for people on the left because we don’t like their use of facial recognition. We don’t like their capitalist tendencies, their wealth divide. They have problems in in China. So we have problems with domestic policies, but China and Russia have been the bulwarks against US attacks on countries around the world, including Latin America, Africa, Middle East. They have been critical and so we have to recognize that despite the imperfections in their governments. They are actually allies against US imperialism and allies against US Empire. They’re going to be the key to ending dollar domination. The 2020s are going to be a time when US power wanes internationally and China and Russia, as well as lots of other countries that are under attack… 39 countries now are facing sent US economic sanctions. So lots of countries are going to uniting together to say no to US domination
MF: Right. And I think it’s important for listeners to understand when we’re talking about, you know, how the global dynamics are changing and China and Russia are are stepping into assist those who are resisting us imperialism… The point here is that the United States is a nation that flouts, as you said, international law, that is taking actions around the world to destabilize countries that result in the deaths of tens of thousands if not hundreds of thousands of people. And we’re calling for the u.s. to be brought back into obeying the rule of law. And China and Russia have said that they’re willing to negotiate as well as Iran… willing to negotiate with the United States if the US starts behaving in a way that respects the sovereignty of Nations and international law
KZ: And that’s what has to happen. We need the rule of law not the rule of war. War is not an effective method of foreign policy, and the US in these never-ending wars of the 21st century has proven it cannot win wars, but can cause chaos and destruction around the world. A major reason why Venezuela has not been attacked by the United States is because Russia is an ally of Venezuela. They are provided with anti-ballistic missiles to protect Venezuela from aerial attack. They’ve had Intelligence officers helping uncover various schemes of the pro coup mob led by Guido in the United States. And so Russia’s involvement in Venezuela has been the key to stopping a naval blockade and an aerial attack. So this is true around the world. We see it over and over again. We probably would have seen a different result in serious, if it had not been for Iran and Russia stepping in to help defend the government of Syria. Whether we like that government or not, that’s not our determination. That is the government in Syria and the US should not be starting a war to cause regime change in Syria.
MF: And all of the conflicts that are going on right now have an ominous, you know, impact. The Doomsday Clock made a change recently, the Doomsday Clock which has been around since 1947. And it’s now at 100 seconds to midnight. This is a big change. Going from minutes to seconds. This is the closest that it has ever been to midnight since it started more than 70 years ago. In 2017 it was three minutes away, or prior to 2017 three minutes away from Midnight. Then in 2017 they moved it to two and a half minutes. In 2018 and went to two minutes. Now we’re at a hundred seconds and they say that the big problem is that the world leaders have allowed the infrastructure to handle threats to the world. They call the three biggest threats nuclear war, the climate crisis and cyber disinformation campaigns that are used to justify these interventions, like these military interventions. And they say that the major treaties that have been either ended, like the joint comprehensive plan or agreement, or the nuclear treaties like the INF treaty and the new start treaty is actually up for reauthorization in just a few days, that these are leading to an escalation of the arms race.
KZ: People should not underestimate what this means. One hundred seconds till doomsday. Why? Because we are on hair-trigger alert to use nuclear weapons in response to a perceived attack. That is highly risky. We should be immediately off hair-trigger alert. That is unacceptable when you’re dealing with nuclear weapons. Why? Because we’re also in a new era of a nuclear arms race. Begun under Obama is a trillion dollar 10-year plan to improve nuclear weapons, upgrade nuclear weapons so they can be used. Now continued by Donald Trump. This is a nuclear arms race. And so the destruction of these treaties, the nuclear arms race, the hair-trigger… And you know and none of the candidates running for office are really talking about this in the Democratic party. It’s a total silence. The only candidate whose clear on this is Howie Hawkins who seeking the green party nomination. He is very clear on nuclear weapons. You can read about that at opwieHawkins.us. But we need a real debate in the Democratic party and in the general election about this very serious risk of nuclear weapons, and whether we should be engaging in a nuclear arms race, which is going to get even worse with the global arms race that the Democrats joined with Trump in helping to develop. Now we have this outer space force. And we think a trillion dollars being spent on nuclear weapons is a lot of money. When you talking about outer space you’re talking tens of trillions of dollars being spent over the next decade. That’s what kind of arms race you’re going to be seeing, in outer space, and the potential risk to the planet and to people of the world is incredibly multiplied when you’re talking about a war developing in outer space.
MF: Right and when you talk about kind of disinformation campaigns, a good example of that is what happened around the alleged Syrian chemical attacks in Duma, Syria in 2018. One of the team leaders of the organization for the prevention of chemical weapons, Ian Henderson, testified before the United Nations security council last week. He had wanted to travel to New York to testify in person, but the United States in violation of its agreement with the United Nations blocked his Visa, so he was only able to testify by video, but he was part of a team that went in shortly after the alleged chemical attack and did a three-month study where they found that there was no chemical attack. And what did the OPCW do? They kicked them off, brought in some other people and put out a false report saying that there was an actual chemical attack. The outcome of that was that the alleged chemical attack was used by Britain and France to bomb Syria again in violation of the United Nations.
KZ: And of course the UK and France are lap dogs of United States. Those actions would not have been taken without the u.s. directing it. And so the OPCW becoming a fraudulent source of information is a very serious problem for world affairs. We need to have chemical weapons controlled. We either have an unbiased, independent chemical weapons authority to review those and now we see that the OPCW is not that, that the OPCW has become a fraudulent source of information, and become a vehicle for escalation of wars based on misinformation about the use of chemical weapons. It’s really a much more serious problem. And then the United States is trying to block those truths from being told before the United Nations. The US has been abusing its power as the host of the UN in multiple ways over the last year. It’s very damaging to international law and the body that is there to try to prevent wars and put in place the rule of law. So the u.s. is playing a terrible role as the host of the UN.
MF: Well, I think that might be what the Doomsday Clock people were talking about in terms of eroding infrastructure. When you can’t even have people travel to the United Nations to provide information or to debate these very serious issues. Another hearing that’s going on right now are the pre-trial proceedings in the trial of five men who were accused of planning the attacks on September 11th, 2001. That hearing is going on in Guantanamo and the two psychologists who worked for the CIA to develop their torture program, James E. Mitchell and John Bruce Jessen, testified at Guantanamo basically saying that they would torture again.
KZ: And this is a truly destructive act by these two psychologists. They should lose their licenses. They should be prosecuted for engaging in torture. This is one of the great damages that Obama did when he was president, when he said he would not look back but would only look forward and not hold people accountable for torture. As a result we are still in this situation where torture is not clearly illegal, even though it’s written into law internationally and domestically that the u.s. should not be engaging in torture. Because of the failure to prosecute people… and these people testifying and open with no punishment, openly admitting we tortured and we would torture again… That should be the source of a criminal prosecution of both of these individuals and they should certainly be losing their licenses.
MF: Yes. And so the American Psychological Association did renounce them in 2017 and the purpose of having them testify is that the court is trying to determine if any of the testimony that was gained through coercive measures, through torture, can be admitted into that trial.
KZ: And we know from these kind of political trials that the judicial system can’t be trusted. We’re going through it right now with the Venezuelan Embassy prosecution. We’re seeing actions by the Trump prosecutors trying to blind the jury by not letting them hear the truth about Venezuela, not literally told that Maduro is president, that Guido is not president, that we were in the embassy with permission of the government. All these basic facts the Trump prosecutors want the jury not to hear, and we’ll find out later this week whether or not the judge will agree with that. We may have a very blinded and deaf jury passing judgment on us in a fictional trial.
MF: Right I just want to add that Guido who proclaimed himself president of Venezuela last year and then recently lost the election as leader of the defunct National Assembly in Venezuela is traveling around the world and things aren’t going so smoothly for him. He was protested in the United Kingdom. He was pied in the face in Brussels and he went to Spain and they basically… the high-level officials refused to meet with him.
KZ: Yeah one Guido has become a tragic comedy and he’s never been the president of Venezuela for even a second in the last year. He’s no longer president of the assembly. He’s a person without any political power in Venezuela and yet the United States continues to support him in a failed coup. It has failed multiple times and I have to say Bernie Sanders calling Maduro a vicious Tyrant is a very bad sign for whether he should be president or not. It reminds me of 1964. LBJ had a great domestic policy on poverty and on racism, and the left remain silent and elected LBJ. What did he do? He escalated the war in Vietnam, destroyed the war on poverty because of the war in Vietnam. Bernie Sanders… this comment about Maduro could lead to a regional war in Latin America, could lead to a global conflict with Russia and China siding with Venezuela. You have to correct the record, admit you were wrong in calling Maduro a vicious Tyrant. He is a democratically elected leader. Guido is running around Venezuela, running around the world. He should be under arrest. He should be incarcerated. But Maduro is not allowing Venezuela to use that power to arrest this coup monger.
MF: And of course information, when it goes counter to what the power structure wants is often suppressed, and let’s talk about two people who are being targeted. One is Glenn Greenwald. He is being now prosecuted in Brazil facing criminal charges of cyber crimes. They’re alleging that he assisted hackers that gave him the chat logs of the judge and prosecutors involved in something called Operation Car Wash, which was used to imprison, falsely imprison the former president, Lula da Silva. Federal police found Greenwald conducted himself appropriately. A judge previously said that going after Greenwald was censorship but the Bolsanaro government is going after Greenwald anyway.
KZ: This is clearly not about cyber crimes. It’s about retribution for the truth being told, for exposing the reality of the corrupt Operation Car Wash and the corrupt judge who is now the top prosecutor in the Bolsanaro Administration. He’s been given extraordinary powers by Bolsanaro. He should be removed from office and probably prosecuted himself for what he did in operation Car Wash, working with prosecutors helping them to prosecute people like DeSilva and undermine democracy in Brazil.
MF: Let’s also talked about Assange. He had another hearing leading up to his extradition trial which begins on February 24th. The British Court recently ruled that Assange would not be protected by the First Amendment if he was extradited to the United States, and that also he would be placed under a special administrative procedure, which means that neither he nor his lawyers could speak to the Press about their side of the story during that if he’s extradited and tried in the US.
KZ: Going into the extradition hearing. That’s the first step. But this is going to be multi-year process. There will be multiple appeals. Whatever happens at the extradition hearings. If Assange is extradited, these decisions about the First Amendment and special administrative detention could be sufficient to reverse any extradition. Extradition for political purposes not allowed under the US UK extradition treaty and these decisions to be silencing Assange, silencing is lawyers, not allowing any public discussion by them of this prosecution… this unprecedented prosecution… the first time ever that a journalist publisher in an editor has been prosecuted under the Espionage Act… to not allow discussion of that by his lawyers or by Assange shows it’s a political extradition and should be denied.
MF: And let’s not forget that Chelsea Manning and Jeremy Hammond are both still in jail refusing to cooperate with a secret grand jury investigation that’s fishing to get more charges or information about Julian Assange.
KZ: Chelsea Manning and Jeremy Hammond are both heroes for refusing to participate in this Witch Hunt grand jury. And the fact that the United States is willing to put these people in prison because they will not testify against Julian Assange shows they are not confident about the evidence they have against Assange. They need more evidence. They need Hammond and Manning to turn on Assange, provide false testimony if necessary, and the fact that they’re being held in contempt while this grand jury goes on shows the weakness of the prosecution of Julian Assange and shows the abusiveness of law enforcement Authority in the United States.
MF: Let’s talk about some other places where major protests are going on that don’t get covered in the US corporate media. Of course France has now had protests going on for more than sixty two weeks. It began with the yellow vests and now the unions have joined in. There’s been a nationwide strike going on since December. This past week they had a huge torch-lit protest through the streets of the major cities in France. They had Guillotines and Macron’s head on a spike protesting the pension reforms that Macron is trying to push through.
KZ: And these were really beautiful protests all over the country, torch-lit nighttime protests. We cover this on popular resistance dot-org if you want to see the images of these tremendous protest and this is just one of many. The Wall Street Journal reported a few days before that the strike was fading in France. They obviously showed the Wall Street Journal to be making up news rather than reporting the news because it looks like the strike is actually strengthening and not weakening. And they really focused their attention on Macron. Macron, you know, is being seen as putting in place policies for the bankers. Of course he is a former Banker, policies for the wealthy at the expense of the people and the people are fed up and they are incredibly… people are protesting intensly. The other thing that doesn’t get covered in the United States Media or the Western media is the incredible violenceMacron has used to try to stop these protests. Real injuries to protestors.
MF: Well, I think we can add a pinata to that as well with the protests that have been going on in Chile for three months now. The National Institute of Human Rights says that there have been 412.. this is the cases they know of… 412 cases of torture. 191 cases of sexual violence including rape. Three thousand six hundred and forty nine people injured. That doesn’t count people who are treated on the street by the street Medics and released, and 405 of those have been injuries. As well we’ve seen those serious eye injuries in France.
KZ: These neoliberal politicians have a very strong fascist streak. We see it in Macron. We see it in Chile. We see it in Bolivia where the capitalists want to have their control of the economy in total, and they will do anything they need to in order to stop the people from saying no to that. And we’re seeing that in Chile now. A really interesting thing developing in Chile, where we have on popular resistance about this… is the privatization of rivers. This is a classic I mean case of capitalism versus an economy for the people, a socialist economy. It’s a classic case of the rights of nature versus the rights of property owners, a classic case of the commons versus private property, of wealth versus people selling the rights of rivers. It just shows the extreme nature that capitalism requires.
MF: Let’s bring some attention to what’s happening in the western part of Canada where the ——s are fighting the Coastal Gas link pipeline. This has been This is a long time battle. They what’s the wet and tribe did win in a former Hearing in Canada. The Supreme Court ruled that they never ceded their territory to Canada that they have a clear lineage of hereditary Chiefs who are the, you know, leaders of that land and yet the Trudeau government is refusing to meet with them. The coastal gas line pipeline signed agreements with these band Councils that are not recognized by the tribe as being the leadership. And now in December a court in Canada ruled that the members of the tribe cannot obstruct construction of that Pipeline, and they are now in a very serious situation where they’re under siege by the Royal Canadian Mounted Police. And the hereditary leaders sent this open letter to Trudeau basically saying “You must meet with us to resolve this situation.
KZ: And Trudeau in his usual two-faced dishonest self earlier in his Prime ministership said that he would respect indigenous rights.In Canada these are called First Nations because they remain Nations. These hereditary leaders are leaders of Nations. Trudeau’s rhetoric about respecting the indigenous needs to become reality rather than pushing through these pipelines that are inconsistent with the requirement that we end our fossil fuel economy and inconsistent with respect for indigenous rights. It needs to be reversed and we really applaud them… the people in Canada for standing up against the RCMP and the Trudeau government.
MF: And protests have begun in the United States against what the US is doing to Puerto Rico in terms of its disaster relief. There have been literally hundreds of earthquakes since December in Puerto Rico, some as big as a magnitude of 6.2. I believe. They have caused over a hundred and ten million dollars worth of damage. 8,000 people have lost their homes because of these earthquakes. And what is the Trump Administration doing? They’re holding up disaster relief aid because they want to tie it… there forcing Puerto Rico to agree to severe austerity measures in order to get this aid and people are starting to protest that here.
KZ: Well, the reality is that Puerto Rico gets no benefit of being a territory. The u.s.eEspecially under Trump and his racist policies has been consistently irresponsible in the treatment of Puerto Rico when they have these kinds of climate disasters and other environmental disasters.
MF: Let’s mention a report by the environmental working group. They looked at water in the United States, at these what are called “forever chemicals” these … floral alkyl substances PFOs and PFAs are found in Teflon and firefighting foam. They said that the water in the u.s. is worse than they thought especially in cities such as Miami, Philadelphia and New Orleans. They’re fighting to get awareness. A lot of these cities that have high levels … people are not even aware that they have this in their drinking water.
KZ: This is one of many problems of a weakening Environmental Protection structure. The EPA has been politicized by both parties. We know people who are whistleblowers during the Clinton-Gore era. We know people who were forced to stand down on issues during the Obama era. This is not just the Trump Administration. The Trump Administration is more overt and open about it, just as Bush was. But this is the undermining of environmental protections. We need to be strengthening the Clean Water Act, strengthening the Clean Air Act and facing up to the climate crisis and dealing with the mass extinctions that are happening globally. We are in an environmental crisis at a time when we’re weakening environmental protections
MF: Let’s close with some good news. 2019 was a good year for ending the prohibition of marijuana. Switzerland is starting a pilot study of five thousand people allowing them to have legal adult use of marijuana so they can decide on how best to regulate that. Netherlands is allowing 10 cities to open cannabis cafes. Countries such as Luxembourg, Denmark and Italy are all moving towards ending prohibition of marijuana as well as Australia and New Zealand. Mexico, Colombia and the Caribbean. The World Health Organization also removed medical marijuana from schedule four of the Global Drug treaties.
KZ: And we’re making progress the United States as well. We have come a long long way from when I first got involved in this back when I got a law school 1980, when we were getting death threats for talking about legal marijuana during the just say no Reagan years. Now, we have 11 states that have legalized adult use of marijuana, three dozen states that have allowed medical marijuana and more States considering it in this 2020 election year. We are coming to the end of marijuana prohibition. We saw for the first time in years a decrease in the arrests for marijuana. So major change, but we need to decrease it a lot more. We still in the hundreds of thousands of people arrested every year for marijuana offenses in the United States. We have a lot of work to do, but progress is being made. Momentum is on our side. We are going to see the end of the marijuana war in the coming years.
MF: So let’s take a short musical break and we’ll come right back with our interview with Ellen Brown of the public banking Institute.
MF: You’re listening to Clearing the FOG, speaking truth to expose the forces of greed with Margaret Flowers and Kevin Zeese. And now we turn to our guest, Ellen Brown. Ellen is an attorney and a co-founder and chair of the public banking Institute. She’s also an author. Her current book is Banking on the People: Democratizing Money in the Digital Age. Thank you for taking time to join us Ellen.
Ellen Brown (EB): Thanks Margaret and Kevin. It’s great to talk to you.
KZ: Yeah, it’s great to talk to you as well. You know often when I am involved in political conversations, you’re going a door-to-door for a candidate… I mentioned public banks and the initial reaction is negative. But then when I explain in what it is, “oh, that sounds great.” Can you tell our listeners what a public bank is?
EB: A public bank is a bank owned by a government. So it’s owned by the people through their government. Ideally it assumes a more or less uncorrupt government. So it could be a City, a state, a county or a federal government. We have plenty of public Banks globally, but in the u.s. it’s sort of a foreign concept. We’ve got the Bank of North Dakota as our one and only state-owned bank. It’s been around for a hundred years. I mean, we now have the Bank of American Samoa as of last year, but American Samoa is not exactly on the continent. But anyway, that’s a start. So the idea is that the bank takes the deposits and the capital of the state or city or governmental entity and leverages it. The deposits go into the, you know, the public bank and then their leveraged into low-cost credit for the community. So they go for things that we the people really need and the profits go back to the people. So we basically cut out the middle man and make banking a public utility.
KZ: Yeah. So essentially if you take the public payroll, the taxes, the fees, the fines, the permits… all the money that comes into a governmental entity, and rather than sending it to Wall Street where you can borrow it back for a high-interest, you actually put it into your own public bank and hopefully it’s controlled democratically by the people. So it’s a great concept and it’s a challenge to make progress on it.
MF: Can you talk about how it saves money for the entities that have a public bank.
EB: Well, first of all you cut out the Wall Street middlemen. Second, you can make below market loans. So one thing that most people don’t understand and it’s very hard to get across is that banks actually create our money. Ninety-seven percent of the money supply according to the bank of England is created by banks when they make loans. So you’re allowed to lend under the capitalization rules 10 times as much as you have in capital. So let’s say, for example, we have this infrastructure and development bank in California. It’s called the bank, but it’s really just a revolving fund. It’s got three hundred million dollars in it. And there’s a huge demand for these loans. They make below-market loans at 3% and there’s like 20 times as much demand as there is money in the pot. So if you called it a depository bank and brought in deposits from government monies. Now, you’re not actually lending your deposits or spending your deposits. They are deposits at all times, deposited in the bank, but you could then create ten times as many loans. So you can make 300 million in loans, or sorry 3 billion in loans. So you’d have a three billion dollar bank. And so first of all you get more credit into your local economy, into places where it’s needed. You actually get more money into the local economy. Right now our money tends to go out and the profits from our banks go into other communities or States. So you can make below-market loans where they’re needed in your local economy, and that of course stimulates the economy, that increases your tax base and the profits from the loans themselves go back to the state or other entity that owns the bank.
MF: Right. So for our listeners, cities are whoever… the governments pay a lot of fees and interest to these Wall Street Banks, so you wouldn’t be paying those so that saves you millions of dollars. And then as you said you can kind of create your own money by leveraging the money that you have and investing that and things that are needed in our communities.
KZ: It’s a tough deal that lot of cities and states have been considering public Banks. But you know, you’re going against Wall Street and that’s a big challenge for politicians that depend on Wall Street for campaign loans and donations. And as well as depend on the cities and states that depend on Wall Street credit ratings to finance their economy. So it’s a big challenge but … there’s been a lot of places considered but no one’s really making any progress until recently. Just had a tremendous victory in California. Can tell us about that?
EB: Right A B 857 was a bill brought by… it’s totally Grassroots brought by the California public banking Alliance, which is an alliance of 10 cities up and down the state. Largely Millennials who came out of the divest movement like in Los Angeles. Los Angeles is largely the leader… persuaded the LA City Council to divest from Wells Fargo. This was after the Standing Rock protests and they wanted to get out of Wells Fargo because they didn’t approve of their Investments and because Wells Fargo had of course ripped off a lot of people with their mortgages, and their you know, their subprime mortgages, and they’re selling all sorts of things to people that they didn’t really need or opening up fraudulent accounts Etc.
So the LA City Council actually voted to pull their money out of Wells Fargo, but then the question was where do you put it on none of the… The local banks are not big enough and the the other alternative is to move it into Chase or something that has even more frauds against them, more fines that have been levied against them. So that logical alternative then was public banking, establish our own bank, and course we’ve been beating that drum now for a decade. So the idea was out there. I spoke about it at Occupy Wall Street in 2010 along with one of the leaders of the California public banking Alliance, Carlo,s who’s now on our public banking Institute board. And we had a retreat where we brought all these people together a couple of years ago, and you were there as well and you gave a great presentation. And by meeting each other I think they started working together and they just had so much enthusiasm. It’s just amazing what these young people have done to mobilize. Their generation is getting screwed and they know it. They came into the world like they woke up to what was going on in the world after 9/11. I woke up after Kennedy was shot. But I mean imagine living in New York and seeing those buildings came down as a young person. It’s got to make such a vivid impression on you. Anyway, they know that they’re living in very perilous times and that things have to change and it’s up to them to change them and they’re the next voters and the politicians know that so they listen to them.
So the bill ABA 57 is about carving out a special Charter for a publicly owned bank or it’s not exactly special but it said set the parameters for how you can set up a public city-owned or County owned or group of counties, group of cities, any sort of Municipal Bank. It actually got longer and longer as it went through the committees because they kept adding their amendments to it. But what it did was make it basically legal to have a public bank. That was one of the objections we used to get. We would argue and argue. Of course, it’s legal and we’d have our various… I mean, I’m sure you know how this is when you know the law and you could show to the satisfaction of the court that it’s legal. But you know, you just get that push back that well, it says in the California state constitution and in many constitutions, it says the state shall not lend their credit or extend their credit… something like that. And so that is construed to mean that they can’t have their own bank, but they extend their credit all the time. They have all kinds of revolving funds and that’s all we’re talking about… making the same kind of loans they’re already making but using our own funds to do it, you know leveraging our own funds in the same way that Wall Street that does. Anyway it was a huge success.
KZ: It was a tremendous success and I remember at that meeting in Colorado that you mentioned that the Los Angeles folks were a bunch of young people. They were really impressive and they had won that victory of divesting from Wells Fargo Fargo. Their Investments and climate polluting infrastructure. That was an amazing victory for them and they said… then they wanted to push for a public bank. I think they were able to get a voter referendum on the ballot. They lost that referendum but then they said we’re going to go to the state now. We’re going to win this on the state level. I have to say my reaction was oh man these people they don’t now they’re going to get real challenge to deal with the state government. There’s such corruption in all these state governments with Wall Street money flowing in. How are they going to ever do this? But they were so enthusiastic about it and they did it. Just for other states can learn from this, what were the keys to their success?
EB: Well, they mobilized a lot of people, mostly young people, and they got close to 200 endorsements from big like labor unions and California Democratic party. They just got a lot of support, and had a lot of social media which they knew how to do themselves. When they first did the bill, it was the LA City Council that brought a bill for City owned bank and it took us all by surprise and we only had four months to publicize it and try to get support and we still got 44% of the vote. But when they were first trying to set up a committee just to raise money, to advocate for a bill, they were talking to a lawyer and the lawyer said “well, you must have some money.” He said I saw the video videos you’ve made and the young man he was talking to you said, “no, we’re just all under 30 we know how to do that stuff.” So they’ve definitely got social media down. Somebody told me their secret of mobilizing was they made everything fun. You know, they did a lot of cheering and making signs and, you know, they would all meet and they’d go to have pizza afterwards or whatever… go to a, you know, meet somewhere afterwards. So it’s a big social event.
MF: So now that they’ve passed the bill have any cities or counties made any progress towards creating a bank, a public Bank.
EB: Well, the number of them are working on it, but the first thing they have to do is a business plan. It’s required. It’s part of the bill that they have to come up with. They used to be called feasibility studies. But we managed to get rid of that word. But it’s… anyway ideally do an actual business plan that shows this is how we’re going to do it. This is where how we’re going to make money. This is where the money’s going to come from. And for that they have to raise money in order to get an expert or team of experts to write the plan. So they’re actually all now competing for this one really good expert in California, but that means It’s like raising $250,000.
The Oakland Group, which is the East Bay. It’s three cities I think and the county together have raised a hundred fifty thousand dollars. So they’re working on it. Now in Washington State they actually raised four hundred and eighty thousand dollars, or the Senate actually got four hundred and eighty thousand dollars to do a business plan and it’s supposed to be out in March. So we’re looking forward to seeing what it says. That’s what we need is some sort of a.. you really need to wait for the big cities to do it first. It’ll probably be L.A., San Francisco or the East Bay group. And then my thought is that the smaller groups working on it should just ride on your coattails, you know, just basically do their business plan in the same way. Now New York has come out with a bill that basically copies a be 857 and they’ve got to also have a lot of enthusiastic young people pushing it. So that’s great.
KZ: I saw Cuomo promises the past that…
MF: So that’s another state level Bill.
MF: Wow. And now New Jersey, I think also the Governor of New Jersey had some sort of executive order. Can you talk about that?
EB: Yeah an executive order… again for a committee to actually form a bank… so they’re bypassing the whole business plan, the whole feasibility study step, and just going straight for setting up a bank. So that’s excellent. And in New Jersey it’s a state bank not a municipal, you know, not a city owned bank. So yeah, we’re definitely watching them and they have one advantage, one major advantage besides the fact that the governor himself is a banker. He was a Goldman Sachs banker. And so when he heard about that idea he got all excited about it. And he said he understood banking. He understood why it was a good idea. He understood it could be a moneymaker for the state and they definitely need a new source of money. But another Advantage they have besides the owner who is a banker is that they’re collateralization requirement for public deposits is only 5%. In California it’s a hundred and ten percent.
So that means that if you take deposits you have to collateralize them or buy something very safe secure Securities, ideally Federal Securities in the same amount or actually more than the same amount… a hundred ten percent. So that limits how you leverage, you know, what you can do with the money. Somehow the big Banks manage to do it. How did they do it? By, you know, by basically through the shadow banking system and the repo market and off-the-books accounting and triple using their security. So what they do is they buy the Securities. The Securities are sitting on their books and they say, oh, yeah, we have a hundred and ten percent Federal Securities backing these public deposits. And then they take those very same Securitie,s use them as collateral in the repo Market. Borrow overnight, you know, that’s the way the repo Market Works… night after night after night. So generating, actually creating new money in the form of loans, which is how money is created.
And not only do they do that once but on average federal Securities are used three times over. So there are three different parties that all thinks they own the same security, so they’re not nearly as secure as it’s thought to be. But anyway, that’s a big scandal going on in the repo market right now, that the Federal Reserve had to step in and basically fund the thing because the lenders have gotten skidish about who their lending to, which was the hedge funds and that’s what made them really nervous. But I just saw recently that before 2008 it was the mortgage-backed Securities that were the Securities for for the repo market, like most of them were mortgage-backed Securities. And then just a few were Federal Securities. And then everybody got afraid of the mortgage-backed Securities and that’s what happened in 2008. It was the repo Market that really collapses the economy, a run on the repo market. So after 2008 they were using just Federal Securities, and that’s why Federal Securities remain low interest wise. You know, there’s a huge demand for them, even though the federal government just keeps borrowing and borrowing and borrowing key, issuing more and more bonds, but they have funds to keep up with the thirst for them in the repo market. Now they’ve gone back and 90% mortgage backed Securities because the Federal Reserve is underwriting the whole thing because the Federal Reserve’s a big player now.
MF: So that sounds very precarious to me. So after 2008 when you know, we basically bailed out the big Banks and the federal government was doing something called quantitative easing, which I think to the tune of 80 billion dollars a month or something, to prop up these big banks. So is that kind of what the government is doing again?
EB: Well in the repo Market… this is also very strange. You know it’s the FED, not the government, not the treasury or not Congress. The FED declares itself independent. It’s not really independent. It’s definitely independent of the federal government, but it’s not independent of the big Banks. It’s really a pawn of the big Banks. But anyway in the repo Market… Well, so the repo market is a long story. It was set up basically because when Deposit Insurance was provided in the 1930s to protect the banks because nobody wanted to bank with these bankrupt banks, they were putting their money in the big public banks, which were at that time the postal Banks. We did have a big postal banking system from 1911 to 1967, which was very popular and everybody rushed to the postal banks particularly in the 1930s because they were so safe and they pay 2% interest. It was a good deal.
So Wall Street leaned on Congress to give them Deposit Insurance so that we the people are actually guaranteeing our own deposits in these private Banks, but Congress was reluctant to go above $100,000, and the cap has now been raised a $250,000, but you have all these huge institutional investors… basically Pension funds and hedge funds and Sovereign wealth funds that have massive amounts of money and they kee growing all the time and they don’t want to put their money in a bank where they’re only guaranteed $250,000. But they wanted something similar to a bank. In other words, they wanted to be guaranteed and they want to be able to get it out on one day’s notice just like if you went to a bank and pulled your money out. So the repo Market evolved as a sort of pawn shop where the borrower would put up some sort of security in lieu of Deposit Insurance, and that would be the guarantee. And it was called upsale and repurchase. That’s what the word repo comes from because technically the holder of the security sells it to the lender overnight, but the deal is she’ll borrow it back the next day. So it really is a secured loan. But the reason they do it that way is if the borrower goes bankrupt and can’t pay the loan back then the lender avoids bankruptcy court. They they say, nope. We own it. You know it was a sale. It was a purchase and sale. We bought it. It’s ours. We don’t have to go through bankruptcy. And that was another big problem in 2008 with the 2008 collapse.
But anyway, so now you have this huge repo market and the lenders are money market funds and Pension funds and big funds, and the borrower’s well… So the repo Market was actually undercutting the FED funds rate. So banks themselves were going to the repo market to borrow for several reasons. First of all, they could get a better deal than in the FED funds Market which is where they borrow from other banks and that’s what the FED has control over… the interest rate on the FED funds market. So they were going to the Repo Market instead first of all because they could get a better deal but also because they could use that collateral several times over and you know, basically say it was a sale and not a sale. They really still had that collateral that they could keep using…
KZ: Sounds like such a fragile Market. You know, Wall Street seems so powerful and so strong but it really sounds like it’s a sandcastle that could disappear. I mean the public Bank approach would be such a challenge to Wall Street power. If all the states and major cities had their own public banks it would be a dramatic shift to public control of finance. Right? Have you ever thought about what that would be like. You work on this for so long. You’ve written so many books. What’s your ultimate vision if we are successful in actually putting public banks in throughout the country
EB: Well to have a network of public Banks in every city … every town would have it. Public banks… but they would all be hooked up to the central bank, which would also be a public utility which would basically be the source of liquidity. So right now we have this very phony system where the sense is that you have to get money before you can… you have to borrow it from someone or money that’s pre-existing but it’s not really pre-existing. It’s really created on the books and it’s created over and over on the books. And the big money people have access to this very cheap credit, whereas we don’t. And now that the Federal Reserve has stepped in to back the repo Market because the lenders themselves have pulled out, the Federal Reserve is guaranteeing the loans of hedge funds and you know, things that are speculative and crooked and that are ripping us off for rent… they’re the landlord’s that bought up all the properties cheaply and are renting them back more expensively among many other things they do… leveraged buyouts Etc. So they’re all about money making money. It’s all about financialization. So the whole economy has gotten financialized. And in order to make it serve people once again, if we had a public banking system where the banks were public utilities and the source of money was the Federal Reserve which is just a deep pocket of credit… which is what it is now, but it’s all credit going to the rich. It’s not credit that we have access to.
MF: Yeah. So a public bank would really put that control of money back into the hands of the public and we’d get out of this kind of profit-seeking speculative and I think fraudulent in many ways corrupt type of system right now. So we do have one place in the United States that’s had a public bank for over a hundred years now or just had its hundredth anniversary. And that’s in North Dakota. Can you talk a little bit about how North Dakota. You know what the impact has been on the economy of North Dakota and their ability to invest in public programs. Have they been able to do that?
EB: Totally. Yeah it was established a hundred years ago. It’s a 7 billion dollar bank right now and it’s basically a bankers bank. So it doesn’t compete with the local banks. It partners with them and does largely participation loans where the local bank gets the client and takes a part of the loan and then the bank of North Dakota steps in and takes the rest of it so they don’t have to sell off these big loans or lose these big Loans to Wall Street, for example. So the profits go back to the state. They managed to escape the credit crisis. I started writing about the Bank of North Dakota in 2008 right after the crisis because they were the only state that escaped the credit crisis. At first there were four states and then there were three and then there was two then there was one and that was in North Dakota. So I thought Aha and started writing and and just like China which also has a very strong public banking system, escape the credit crisis. In fact all those Asian countries with strong public banking systems escaped the credit crisis.
KZ: It’s so interesting. Essentially a public bank is democratizing the banking system. It’s is putting the government which in the United States is at least so-called the democratically-elected. It really puts the power back into the people and we were envisioning a public bank in Baltimore as part of a mayoral campaign with the green party. And we looked at combining the concept of a public bank with the idea of participatory budgeting, you know, participatory budgeting is where communities get together and decide what they need for their Community. We were envisioning the idea of the Baltimore pity people voting on what are the priorities we need in our community.
MF: So things like low-interest mortgages for housing because people are having a very hard time getting mortgages.
KZ: We have 40,000 abandoned houses in Baltimore.,
MF: So prioritizing fixing those up or or getting capital to businesses, to small businesses so they could operate
KZ: Businesses in East in West Baltimore that have been neglected for years… funding entrepreneurship in those in those neglected communities
MF: And I think in North Dakota, haven’t they done something with student loans to ease that crisis?
KZ: One thing about North Dakota I wanted to mention that’s so interesting is that they have a the highest per capita rate of Community Banks and that’s because the Community Banks team up with the North Dakota State Bank and fund projects. And that’s such an interesting concept as well.
EB: Yeah, they’re highly successful. Yeah, they did make below-market student loans. They were the first to make student loans. Actually, I think. Student loans, agriculture and energy. Those are the three sectors that they particularly supported
MF: Also when they had a big flood in North Dakota weren’t they able to pretty quickly, you know, find the money to recover from that as well?
EB: Yeah for infrastructure. So I just I’ll just mention, you know president Obrador in Mexico has just said or just started this… He’s going to establish 27 hundred … a system or network of public Banks across the country. That’s what I’ve recommended in my book, Banking on the People… That and tapping on the central bank as a public utility for all these banks. So all these banks can get their liquidity from the central bank. But anyway the big objection to this whole system in Mexico was that it would take money away from the other banks, the private Banks, you know, because everybody would want to deposit in the public banks. So that’s one to watch. I mean they’ve got the first… it looks like the first network of public banks, or at least a first in this century… the first such system…
KZ: …in this Hemisphere, and that would be incredible. I mean… if I I pursued that policy I’d be watching my back because I suspect the Wall Street Bankers are not going to be very happy about a country the size of Mexico going to a public banking system. The US was so upset with China, you know, and their public Bank funding there. You know, it’s such an interesting difference. In China, they own the banks. In the United States Wall Street owns the government, you know. And the u.s. is very upset. [They say] “that’s unfair. How can we compete? [laughter] MF: So Ellen, can you tell our listeners how they can learn more about public banking and get involved? And some areas that people are working on?
EB: Our website is public banking Institute dot o– r– g– and it has lots of information on it and we’ve got all the bills that have been brought for the last decade. And if you want to get connected with a group in your area just you can just email us and we’ll hook you up. And my books on the subject our Web of Debt: Public Bank Solution, and Banking on the People. My own website is EllenBrown.com.
MF: Right and you have frequent articles there that are very important.
KZ: We published almost all of your articles on Popular Resistance because we think that it’s really a critical issue, and I think it’s an issue that’s time has come and so I’m glad to see California has made a breakthrough. I hope you get New York or Washington State or New Jersey joining them. I think will really start to see a public banking transformation in this country, which would be great.
MF: Yeah. Well, thank you so much for taking time to speak with us today Ellen.
EB: Thank you for all the work you do and the brave challenges you’re taking on right now.
MF: Thank you.
KZ: Thanks a lot. Appreciate your time.
MF and KZ: Well that’s all for today. Let’s go out with a song byJunkyard Empire because the people organized can create a future we want.