The recent collapse of Silicon Valley Bank (SVB) and Signature Bank — the second and third largest bank failures in U.S. history respectively — has laid bare the vulnerability of the private banking sector. With over 563 federally insured banks toppling between 2001 and 2023, it’s impossible to ignore: The status quo is unsustainable. Amid this financial turbulence, the need for public banking has never been more pressing. It’s high time we seriously consider public banking as a stable, transparent, and accountable alternative that would firmly anchor public interest at the heart of the financial system. After all, banking should be a public utility that benefits everyone, not a high-risk game played by bankers trying to score big profits.
Longhorn Pad C is located about half a mile south of a small cemetery and a little over a mile north of a Methodist church in Elk County, in northwestern Pennsylvania. With a population of around 30,000, this county sits squarely in the center of the path the Marcellus Shale formation takes as it curves through the commonwealth. The lonely well pad houses four natural gas wells that records show were initially drilled in 2011 but sat inactive for years after that. Now, it also houses infrastructure designed to mine cryptocurrency, which, according to a comment filed by the surrounding township’s Board of Supervisors, hums loudly enough to have solicited numerous noise complaints from residents.
The breakup of banks that is now occurring in the United States is the inevitable result of the way in which the Obama administration bailed out the banks in 2008. When real estate prices collapsed, the Federal Reserve flooded the financial system with 15 years of quantitative easing (QE) to re-inflate real estate prices – and with them, stock and bond prices. What was inflated were asset prices, above all for the packaged mortgages that banks were holding, but also for stocks and bonds across the board. That is what bank credit does. This made trillions of dollars for holders of financial assets – the One Percent and a bit more.
Today, you probably know who Sam Bankman-Fried and FTX are, and the details of why he and his company are front-page news are emerging at an amazing pace. Here’s the short version: Bankman-Fried—a boyish-looking cryptocurrency baron known commonly as SBF—announced that his lauded cryptocurrency exchange, FTX, had lost at least $1 billion in client funds, sending the crypto market into a tailspin (Fox Business, 11/16/22). The company, once the third-largest cryptocurrency exchange (AP, 11/16/22), has filed for bankruptcy. Lest one think this is a debacle that only affects crypto bros, Treasury Secretary Janet Yellen warns that “the sector’s links to the broader financial system could cause wider stability issues” (New York Times, 11/17/22). How could this happen? How could no one have seen this coming? These are the questions many people are asking. One problem is that in the months leading up to Bankman-Fried’s transition from financial genius to possible financial criminal (Yahoo Finance, 11/14/22), he received little scrutiny in the media. On the contrary, he was celebrated.
The FTX story seems truly remarkable. From being founded only in 2017 it rose to be a “partner organisation” of the World Economic Forum and the second largest donor to Biden and the Democrat’s mid-term election campaign. It has now gone completely bust, taking every penny of its depositors money with it. That is some trajectory. I suppose it is inevitable that dodgy chancers would create derivatives markets for gambling on crypto, but I confess I had not given the matter much thought. It goes without saying that in those five years the founder of FTX had managed to take a huge personal fortune out of the company before it went bust. FTX was a one man company belonging to Sam Bankman-Fried.
The use of cryptocurrencies is rapidly increasing across the world. In 2020, scholars at the University of Cambridge estimated there were 101 million people using cryptocurrencies worldwide, an increase from 35 million just two years previously. The rise of cryptocurrency is usually a story of pizzas bought with bitcoins now worth over a billion dollars, kingpins of darknet drugs markets ordering assassinations and hospitals being held to ransom by anonymous hackers. These new levels of activity however are pushing cryptocurrency, and its underlying blockchain technology into the mainstream – with significant consequences. The first and arguably biggest impact so far is cultural.
Ag Tech and Big Tech firms are championing a kind of uberisation of farmlands in an effort to dominate all aspects of food production. This ensures that it is the powerless smallholders and agricultural workers who take on all the risks. The German pharmaceutical company Bayer’s partnership with the US non-profit Precision Agriculture for Development (PAD) intends to use e-extension training to control what and how farmers grow their produce, as agribusinesses reap the benefits without taking on risk. This is another instance of neoliberalism at work, displacing the risk onto workers whose labour produces vast profits for the Ag Tech and Big Tech firms. These big firms are not interested in owning land or other resources; they merely want to control the production process so that they can continue to make fabulous profits.
The Popular Resistance and Rebellion Bloc, a platform that brings together 32 social organizations, movements and unions and has been at the forefront of the recent wave of anti-Bitcoin demonstrations, stated that the measure “hit the working class, the peasantry and rural communities the most.” The bloc also highlighted that the majority of the population lack technological tools and high-end telephones to download and operate the government-backed electronic wallet app, known as Chivo. The organization also alleged that the electronic currency could cause an increase corruption and poverty in the country. Many economists warned that the digital currency’s lack of transparency could attract increased criminal activity to the country and make it a haven of money laundering as it does not record the identity of those who handle it.
Payments can happen cheaply and easily without banks or credit card companies, as has already been demonstrated—not in the United States but in China. Unlike in the U.S., where numerous firms feast on fees from handling and processing payments, in China most money flows through mobile phones nearly for free. In 2018 these cashless payments totaled a whopping $41.5 trillion; and 90% were through Alipay and WeChat Pay, a pair of digital ecosystems that blend social media, commerce and banking. According to a 2018 article in Bloomberg titled “Why China’s Payment Apps Give U.S. Bankers Nightmares”