Ten Steps to Prosperity: Step 9. Federal ownership of all banks

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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders.

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Banks are involved in most U.S. dollar creation. Even the dollars created at the direction of the federal government originate with banks.

The two primary dollar-creation methods in the U.S. are bank lending and federal spending:

Each time a bank lends, it simply increases the numbers in the borrower’s checking account. That instantly adds dollars to the money supply.

When the federal government spends, it sends instructions to a creditor’s bank, instructing the bank to increase the numbers in the creditor’s checking account. When the bank does as instructed, dollars are added to the money supply.

This participation in the vast majority of all dollar creation gives banks enormous financial power, and as we all know — and the “Great Recession of 2008” reminds us —  power corrupts banks, especially when multiplied by a profit motive and government complicity.

Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, and that makes all the difference. The government neither needs nor uses profits, and unlike bank employees, federal government employees do not receive remunerations based on federal agency profits.

In evaluating federal vs. private operations of any business, the obvious question is, “What does private industry offer that the federal government does not?”

And the answer usually has to do with private industry’s creativity and competitive motivation to improve services and/or prices.

Some critics of government hold that private sector employees uniquely are able to develop new and innovative products and services, and federal employees are unimaginative, unmotivated drones.

Yet it was federal government people who invented usable atomic energy, landed men on the moon, created thousands of inventions, and run some of the worlds most sophisticated research centers.

People are people, whether they are employed by the government or by private industry. Any difference boils down to motivation.

Unfortunately, the motivation to improve services and pricing for the benefit of the public sorely is lacking in the banking industry. Attention to service is way down the list of concerns for the biggest banks.

(One tiny, though typical, case in point: The bank nearest my home charges a price-gouging $3.50 for a simple ATM withdrawal. That’s more than the cost of three cheeseburgers at the local MacDonalds.)

The largest banks and their leaders are hypnotized by the billions of dollars to be made by cheating the public, especially when the punishments either are non-existent (no jail time for bosses and the fines are so minimal as to be considered a cheap cost of doing business).

Three facts:

1. Unlike other private industries, the private banking industry, being perverted by the profit motive, is not motivated to improve services, prices, or even honesty.
   Criminality is rewarded with hundred-million dollar bonuses.
2. The lack of punishment is the fault of a federal government, that itself has been polluted by massive contributions from private banks.
3. The federal government is not impaired by a profit motive.

It may seem ironic to suggest that the federal government should own the banks that have, in part, been corrupted by lack of government supervision.

But again, the key is motivation. The federal government’s supervision of private banks has been corrupted by the private banks.

If there were no private banks, there would be no motive to corrupt government supervision of banks.

One can visualize individual instances of a private party bribing a government banking official to grant a questionable loan or to perform some other unethical behavior.  But these transgressions would pale in comparison to the widespread cheating of the public the banking industry has made standard operating procedure.

Further, money or favors that might be given to bank employees are much more easily discovered and prosecuted than are bribes to politicians, aka “campaign contributions.”

Federal ownership of banks may be anathema to those who always believe the federal government is “too big and too powerful” (no matter the current size), and that private control always is better than public control.

But, it is the banking industry that is too big and too powerful, and too tainted by personal greed, and too rich, and too ready, willing, and able to corrupt our politicians.

Allowing private ownership of banks and expecting honesty is like putting meat on a dog’s tongue, and expecting him not to swallow.

Our federal government is supposed to control our sovereign currency, but this control is diluted because the banks, not the federal government, create the majority of dollars.

America should not continue to cede such control to a proven-to-be greedy-and-corrupt industry, whose profit motive far exceeds any motive to benefit the public. Private ownership of banks is an invitation to criminality, recessions, depressions and overall actions against the public interest.

Finally, privately owned banks can and have become insolvent, costing the innocent public significant dollars.

Federal government ownership of banks would eliminate the need for the Federal Deposit Insurance Corporation as well as the dangers to the public of insolvency and under-insurance.

In Summary: No public purpose is served when the banking industry is in private hands. For many of the same reasons the U.S. Treasury is owned by the federal government, the federal government also should nationalize and run all banks. 

Rodger Malcolm Mitchell
Monetary Sovereignty

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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY