California Dreaming: Create a State Bank and Eliminate the Debt!
This petition had 505 supporters
To balance its budget, fund its obligations and keep from having to raise taxes, California should follow the model of North Dakota and Charter its own state bank.
North Dakota has had a state bank, which by charter, must contain all the state's funds, and which, public-banking advocate and author Ellen Brown tells us, "was established by the legislature in 1919 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men." The bank has met its purpose fabulously. Today, North Dakota is running its biggest surplus in its history.
Ellen Brown, who is running for Treasurer in 2014 - http://www.newmenu.org/ellenbrown - found $76B in a "Rainy Day" fund maintained by the Treasurer's Office. It's time to tell the Treasurer of California, which has over a $26B deficit, that it is raining...or replace him!
Bank capital reserve requirements are only 8%. If California used 8% as a baseline, then the state could deposit its expected $128 billion in revenues this year into the state bank, and still have over 100 billion to loan out as new loans created under fractional reserve rules! Beyond that, there are hundreds of billions in state and municipal agency and pension funds, which are often providing insufficient returns to support those dependent on them. The 2009 Comprehensive Annual Financial Report, lists the following fiduciary assets:
Total investments (including short-term, equity, Debt securities, Real Estate, Other, Securities lending collateral): $357,080,094,000
Even after liabilities, there would be over $300 Billion left in net assets overall. If California shifted a portion of that to a State Bank, which would invest only in in-state, non-securitized, non-derivatized, loans, it could provide infrastructure loans to create jobs and new tax revenues that would add to the state coffers, more than would be removed by a State Bank (if you don't believe banks can contribute more to wealth than they take out, even with reasonable interest, then why have banks at all? No, true wealth is created by labor acting upon the natural resources of the world, facilitated by capital and money which can come from a bank). The new wealth provided by a State Bank would easily offset a slight rise in taxes to pay directly for pension and other obligations.
The state's existing banks would howl. Let them. They set the fractional reserve rules, now they have to play by them. Besides, who do you trust more to fund a bank: the depositors and borrowers of the Wells Fargos of California, or the citizens of the state who must pay taxes every year?
California has never defaulted on its obligations; Wells Fargo needed bailout money.
If this new state bank – which could operate as a non-profit, with no shareholders to please – were to distribute its fund to the state's smaller banks, in order to issue new loans to strapped homeowners at, say an inflation-realistic rate of 3%, still far below current bank rates of over 5% on 30-year mortgages, they could refinance defaulting homeowners, fund start-ups, and even fund general government expenditures, all without paying a dime in interest to private bankers!
Newly elected Governor Jerry Brown must balance the budget under the state constitution. But, there is another option besides crippling taxes and devastating spending cuts. There is a way to balance the budget, create a surplus, and tell the high interest charging banks that Governor Brown still has creative ideas for the Land of Dreams!
CREATE A STATE BANK IN CALIFORNIA!
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