Jeff Nielson for Sprott Money

(Orignally posted April 3rd 2014)

Part 1 HERE

In the first half of this piece, readers were subjected to an exposition on the status quo. We revisited the preposterous paradigm of “too big to fail”, where a Crime Syndicate of private sector mega-banks pronounced themselves so “systemically important” that (supposedly) we could not live without them.

As is generally the case; in our Wonderland Matrix the truth is precisely opposite: we cannot live with this Crime Syndicate, terrorizing individual market participants – and even pumping-up or destroying the economies of entire nations with their endemic market-manipulations. The purpose of the conclusion of this piece is to point out that not only could we “survive” the annihilation of these criminal Big Banks, we would reap large and immediate economic dividends.

Here, attorney and fellow commentator Ellen Brown deserves the credit for her extensive work in describing and detailing a different way of conducting our financial affairs: public banking. We have been carefully conditioned (by the Corporate media) to consider “public” anything to be an unmitigated evil, and the “private sector” was the supposed White Knight whom we could trust in managing and administering every aspect of our economies.

Of course having endured the last 40 years of economic rape across the Western hemisphere – by various “private sector” instruments, wielded by the One Bank – we now see that this mythology never possessed any validity. What is true, instead, is that when entities get too large (public or private) they always become inefficient. Worse, in the case of the private sector entities we know as “monopolies” and “oligopolies”; when these Corporate entities get too large they always become both predatory and parasitic.

This leaves us with only two (rational/legitimate) philosophies for managing our economies. We can adopt the “big is always bad” philosophy, in which case (obviously) we must not only ensure we practice Small Government economic policies, but also be equally vigilant in permitting nothing but Small Business.

The problem with that simplistic economic vision is that it renders impossible a lot of the major national/economic initiatives which we have been able to pursue previously only because of Big Government. The “space program” is but one example. Small Government (or small business) could never put a person into orbit – let alone send someone to the Moon.

So if we dare to dream of larger, collective endeavours, we must embrace “big” as a necessary (and regulated) evil. That leaves us with two choices: Big Business or Big Government. We already know what we get with Big Government: inefficiency. But, equally, over recent decades we have become painfully aware of what Big Business represents: inefficiency and corruption – on a scale never before witnessed with our species.

Big Government is not a “virtue” to be actively pursued/embraced. Rather, it is a lesser-of-evils, in any scenario where (for one reason or another) we need a large entity for a particular function(s). Here public banking provides one, obvious template.

What are “bankers” in the realm of finance and economic development? They are clerks and middle-men. In some cases they “facilitate” transactions, but in many cases they simply insert themselves into a transaction in order to needlessly (and parasitically) extract some “cut” for themselves.

Obviously where we have bankers acting as middle-men, we can simply eliminate them completely from the process. And where they are essentially performing nothing but clerical functions to “close a deal”, such clerical functions can just as easily be done by some public employee – with any “cut” for such services flowing into public coffers (and not the vault of some Mega-Bank).

“Banking” is not a profession, it is merely another occupation. It requires only modest skill and education to provide honest banking services. Where intelligence and/or cleverness factors into the equation is with respect to “crooked” banking (i.e. one form of fraud or another). Obviously to cheat other people it’s generally necessary to be smarter than your Chump.

“Investment banking” conversely can/does require skill and some level of professional expertise, but it’s important to note that this is not really banking, at all. Arranging financing for some corporate or public project of one sort or another is an entirely separate function from placing some client’s wealth into a particular investment – since any form of investing is simply a variation of gambling.

The dividing-line between “banking” and “investment banking” (gambling) was simply erased by the corrupt, Clinton regime (when it dismantled Glass-Steagall). Ever since then we’ve simply had “bankers” – where the word is now merely a synonym for “criminals”.

It was only when we allowed (true) “banks” to begin wagering the funds of their depositors (thus turning our collective economies into one, gigantic casino) that the banksters were able to foist the concept of “too big to fail” upon us. After betting (and losing) all our funds, which were supposedly entrusted to them for safe-keeping; the banksters then argued that we could no longer allow them to fail.

The fact that our governments willingly embraced this systemic blackmail shows where their allegiances lie: they serve the One Bank. But not everywhere. As Ellen Brown pointed out in her article, one U.S. state, North Dakota, has discovered a much better way of doing their banking: public banking.

In 1919, with the farming population of that state already enraged about the gouging they were getting from Big Banks; they pressured their state government into creating the Bank of North Dakota. Ever since that time, every “cut” taken by bankers for

handling financing and financial services in that state has flowed into public coffers, not (greedy) private hands.

The (private) bankers of the 21st century never fail to take credit – at every opportunity – for now being the driving force behind our economies. Yet for every month since July of 2008 (the Crash of ’08); North Dakota has had the lowest unemployment rate of any U.S. state, or been tied for lowest.

In an era of mega-deficits, where our various governments simply sell us pie-in-the-sky fantasies of “one day” having a balanced budget; the state of North Dakota has had a budget surplus every year since 2008. While many now think of North Dakota as an “oil state” (and seek to credit the oil industry for the state’s economic strength and health), the fact is that the BND pumps more dollars of revenue into state coffers each year than does the oil industry. It’s very profitable being a middle-man.

But with the Bank of North Dakota; it’s much more than simply a matter of how much profit it generates (for the benefit of state residents). More important is how it generates those profits. Unlike the mega-banks of Wall Street, which abandoned U.S. Small Business decades ago; the BND focuses on small-business development.

Our politicians and economists like to talk about how “small business has always been the driver” of any economy. Yet both of these groups also tell us (out of the other side of their mouths) that we should hand every new dollar created by our economies to the Big Banks.

What do the Big Banks do with 95% of those dollars? They gamble with them, in their Derivatives Casino. Here the numbers actually do not lie. According to the banksters themselves; their derivatives casino was nearly 20 times as large as the global economy, or put in opposite terms, the global economy is only 5% as large as their Derivatives Casino. This was until they suddenly came up with a “new formula” for measuring the size of their (crooked) Casino. Now it’s (supposedly) ‘only’ ten times as large as the global economy.

However, at the BND, they are “bankers” – real bankers, meaning they fund small business. Surprise, surprise. If the bankers actually fund the backbone of our economies, then even with “globalization” and “the New Normal”, our governments can provide us with some measure of real prosperity, rather than an ever-worsening spiral of unemployment and debt. Equally important, the BND has provided its superlative financial services to the state of North Dakota without siphoning $billions off-the-top as “bonuses” for its middle-men.

This is how a bank is supposed to operate. Yet certainly within any jurisdiction in North America, the bank which is doing its job the best is a public bank.

Jeff Nielson for Sprott Money