On November 2nd, President Obama and congressional Democrats took a collective royal "shellacking" in the 2010 elections, rivaling the Dems' losses of 1948 (forget '94!). Democratic representation in the House has fallen by 60 seats so far, including a loss of 22 Republicrats (a/k/a "Blue Dogs"). Conversely, Progressives survived relatively unscathed, with the exception of two Progressive Caucus House members and Senator Russ Feingold of Wisconsin.
Russ was the protector of our Constitutional rights as the Chairman of the Committee on the Constitution. This, of course, made him a high-priority target for the Republicans and conservatives, whose warped interpretation of free speech and the Constitution became the basis of the Citizens United Supreme Court ruling that contributed greatly to this year's landslide. Those shadow organizations, fueled by huge corporate dollars, pumped hundreds of millions from unidentified sources into attack ads against Dems across the country. As a result, the same folks who drove America into the "ditch" are now back in power. It will be interesting to see what "remedies" the Republicans and their Tea Party mutations offer.
Even the president has finally acknowledged "...we're stuck in neutral. We are not moving the way we need to." Unemployment is frozen at 9.6 %, with almost 15 million out of work and homes still being lost. Meanwhile, banks sit on unprecedented amounts of cash while their CEOs continue to receive those fat bonuses that incurred the wrath of the nation. And the loans they were supposed to be giving to pump up the economy? Missing in action. The Banksters continue to rule, hoarding our money and refusing to adjust mortgages to keep folks in their homes. Too Big To Fail prevails, as those banks, which are little more than fronts for multinational corporations, anyway, send our money abroad instead of reinvesting in the people and our country's economy.
Last week Ben Bernanke, Chairman of the Fed, offered a plan to buy $600 billion more in Treasury bonds in the hopes of driving down interest rates on loans and mortgages. Spending more by the people, so the thinking goes, would be an engine of job creation. Interest rates are already historically low, so this proposal -- as well as others by the Fed -- is questionable. Bond purchases could drive inflation up, create speculative buying in stocks and could weaken the dollar even further, potentially causing trade disputes. Following Bernanke's announcement, the stock market soared 219 points to its highest level in the two years since the collapse of Lehman Brothers.
Yet while the Fed continues playing parlor tricks to try and stimulate the economy, a much simpler method of igniting long-term economic growth and stability exists in North Dakota. Yes, North Dakota, a state operating with a surplus of cash and unemployment at 4%. In the early 1900's the economy of North Dakota was agriculture-based, and the farmers there were experiencing serious financial problems that prevented them from buying and selling crops and financing farm operations. Grain dealers from out-of-state controlled prices and kept them artificially low, while farm suppliers continually increased their prices. To no one's surprise, interest rates on loans climbed.
By 1919 the people of North Dakota had had enough and wanted state ownership and control of marketing and credit agencies, and so the legislature established the Bank of North Dakota. Its mission: to promote the development of agriculture, commerce and industry in ND. The Bank of North Dakota is a public bank that is robustly solvent, with a strong record of financing loans for agriculture, housing and higher education, as well as funding municipal bonds. All tax revenues and fees in the state go into the State Bank, allowing North Dakota to finance construction of roads, bridges and other infrastructure, maintain schools and libraries, and assist local businesses.
The Bank of North Dakota is truly a peoples' bank that exists for the benefit of the state and its residents, only, with loans made at low interest rates and no bloated, outrageous CEO salaries and benefits that squander funds. And no shady derivatives allowed, either; a novel concept indeed. For 91 years the bank has flourished and North Dakota today is a rare example of economic strength in a sea of debt-ridden states that must slash services and raise taxes to stay afloat, giving a whole new meaning to the term "red states."
On the other hand, we have New York State, with a budget deficit of $8 billion. Yet there are Fiduciary assets here worth $111 billion, plenty of money, one would think, to create a state bank, with its reserves in state and municipal agencies. The state's equity and bond investments, including management fees, total $40 billion in losses, for which the state paid out $773 million in administration costs. Pension funds total $126 billion and could be invested by a state bank in non-speculative sources. The reserves in state and municipal agencies are estimated to total nearly half a trillion dollars, so if all of this money from taxes and fees and all other municipal revenues were invested in a state bank, New York State would thrive instead of regularly teetering on the brink of ruin. I should note that these are numbers for 2009, so one can only guess what the state's Comprehensive Annual Financial Report for 2010 will look like.
The Bank of North Dakota has now received inquiries from 25 states and 3 foreign governments as a result of its continued profitability. The momentum is building for this sane kind of banking system that works for the people and state instead of the bottom line of banks and shareholders. In the spirit of free markets, a state bank creates competition with private banks, creating lower interest rates on loans for borrowers across the board. One would think the Republicans and conservatives would favor this since, after all, they are the champions of "states rights," and what is more fundamental than a state's right to manage its own money?
The important lesson here is that governments do not need to borrow money from private banks. If governments have the power to create and control the amount of money in circulation, then they do not need to pay banks for their own money creation. The stranglehold of borrowing money creates endless debt that enriches no one but the private banks and gives them incredible power over the nation and its economy. The concept of state banks is not new, as governments have used it for centuries. But unscrupulous Banksters always have somehow convinced governments (possibly through big-dollar donations to politicians??) to throw control back to the banks.
Hence we see cycles of inflation as debt rises and the need for more money is artificially created. Eventually, the cost of this ever-growing debt becomes too much for the government to pay and the economy goes into a freefall. Sound familiar? The Deficit Commission might look at this model as a solution for our national debt. It is time for the States to show the Federal government how to truly revive our economy. ITS TIME HAS COME.
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