portland 2 15 #2
TRANSCRIPT
![Page 1: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/1.jpg)
Real Wealth: A Future We Can Bank On
Ellen Brown, JDPublic Banking Institute
The Economics of Happiness ConferenceFeb 27-Mar 1, 2015
The Elliott Center, Portland, ORwww.localfutures.org
![Page 2: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/2.jpg)
The Piketty bombshell: capitalism is not sustainable.
The Piketty bombshell: exploding the myths of capitalism.
![Page 3: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/3.jpg)
The flaw – markets do not self-correct.
![Page 4: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/4.jpg)
A more fundamental flaw: Money is created by private banks
as a debt at interest.
![Page 5: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/5.jpg)
Exploding another myth of capitalism:
‘[B]anks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits … Commercial banks create money, in the form of bank deposits, by making new loans.’‘Money creation in the modern economy’, Quarterly Bulletin,2014 Q1, Bank of England.
![Page 6: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/6.jpg)
Then why do they need deposits?
• They balance their books by borrowing:
• Deposits @ 0.1%
• Money market @ 0.15%
• Fed Funds @ 0.25%
• Fed Reserve @ 0.75%
• Profit = the spread.
![Page 7: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/7.jpg)
Where does the interest come from? It can only come from more debt. It’s a pyramid scheme.
![Page 8: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/8.jpg)
Where does the interest go? Mostly into more money-making-money schemes -- loans, rents, offshore tax havens.
![Page 9: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/9.jpg)
The debt overhang: debt-at-interest always grows faster
than the real economy.
![Page 10: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/10.jpg)
Exponential growth is unsustainable.
Found in:
•cancer
•parasites
• compound interest
Eventually, the parasite runs out of its food source.
![Page 11: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/11.jpg)
How to solve the interest flaw: return the profits to the people.
![Page 12: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/12.jpg)
The public model was proven in colonial Pennsylvania.
The result: Government prints $105
Lends $100 @ 5% interest
Spends $5 on budget, infrastructure
$105 circulates in economy; comes back to government as principal and interest
Government lends $100 @ 5% interest
Spends $5 on budget, infrastructure
• No taxes
• No price inflation
• No government debt!
![Page 13: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/13.jpg)
In the US, we have one state-owned depository bank — in North Dakota.
• ND also has: • the nation’s lowest
unemployment rate• one of the lowest
foreclosure rates• lowest default rate• only state to escape
the 2008 credit crisis
![Page 14: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/14.jpg)
Globally, 40% of banks are publicly-owned.
![Page 15: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/15.jpg)
They are mainly in the high-growth BRIC countries, which also largely escaped the credit crisis.
![Page 16: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/16.jpg)
The BND model:
• Depository for all state revenues.
• DBA of the state.
• $40M annual dividend (major for a pop. of 740K; compare 584K for Portland).
• Average ROE of 20%, 2009-2014.
• Mandate to serve the public.
• 1% loans to startup farms, businesses, schools; 1.74% variable rate loans to students.
![Page 17: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/17.jpg)
Why so profitable? They have lower costs.
• No bonuses, fees, commissions.
• No high-paid CEOs.
• No private shareholders.
• No advertising (captive deposit base).
• No branches or ATMs (BND partners with local banks, which act as the front office).
![Page 18: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/18.jpg)
How to turn a profit overnight: the magic of leverage
Capital: $20M from rainy day fund or bond issue x 3% interest = $.6M cost of capitalDeposits: $200M
x 0.3% interest = $0.6M cost of deposits
Loans: $200M - $20M reserve = $180M to lend or invest$180M invested in municipal bonds earning 3% = $5.4M profit - $1.2M (cost of funds)Net profit: $4.2M (21%)$4.26M (21%)
![Page 19: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/19.jpg)
How to cut infrastructure costs in half – own the bank.
Bay Bridge retrofit:
principal, $6 billion;
interest, $6 billion.
Bullet train:
principal, $9.95 billion; interest, $9.5 billion
![Page 20: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/20.jpg)
Public banks are also safer.
![Page 21: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/21.jpg)
FDIC insurance?Don’t count on it. Derivatives have super-priority in bankruptcy.
![Page 22: Portland 2 15 #2](https://reader033.vdocument.in/reader033/viewer/2022052311/55a9ba851a28abbf488b481c/html5/thumbnails/22.jpg)
Public banks return the profits to the people and the economy, making banking sustainable.