This piece was reprinted by OpEd News with permission or license. It may not be reproduced in any form without permission or license from the source.
During hard times, North Dakota also had the largest $1.3 billion budget surplus in its history, cut income and property taxes as a result, expanded the state's Homestead Property Tax program for seniors and disabled people, and has the nation's lowest unemployment rate at 4%. The model works. It's time all states tried it to fix their financial crisis at a time Washington proposed change promises worse ahead endangering them with insolvency.
Ellen Brown does exceptional financial writing, her book, "Web of Debt (now in a new edition), must reading on how the Fed and Wall Street usurped money creation power, and how we can take it back.
She calls the Bank of North Dakota a "credit machine (delivering) sound financial services that promote agriculture, commerce and industry" as follows. It "create(s) 'credit' with accounting entries on (its) books" through fractional reserve banking that multiplies each deposited amount about tenfold in the form of loans or computer-generated funds. As a result, it can re-lend many times over, and the more deposits, the greater amount of it for sustained, productive growth. If other states (and cities) owned public banks, they'd be as prosperous as North Dakota, be able to rebate taxes not raise them, and expand employment and public services, not retrench.
BND "chiefly acts as a central bank, with functions similar to those of a branch of the Federal Reserve." Although 100% state owned, it "avoids rivalry with private banks by partnering with them." They do most lending, "BND then com(ing) in to participate in the loan, share the risk, buy down the interest rate and buy up loans, thereby freeing up banks to lend more. (It also) provide(s) a secondary market for real estate loans, which it buys from local banks."
Its property market function helped it "avoid the credit crisis that afflicted Wall Street when the secondary market for loans collapsed in late 2007 and helped it reduce its foreclosure rate. (Its other services) include guarantees for entrepreneurial startups and student loans, the purchase of municipal bonds from public institutions, and a well-funded disaster loan program." When the state didn't meet its budget "a few years ago, the BND met the shortfall."
In sum, state-owned banks have "enormous advantages over small private institutions....Their asset bases are not marred by oversized salaries and bonuses, they have no shareholders" demanding high returns, and they don't speculate in derivatives or other high-risk investments. As a result, BND is healthy with a 25% return on equity, paying "a hefty dividend to the state" annually, so it begs the question why other states don't operate the same way. As their crises deepen, some are considering becoming credit machines like North Dakota, but why have they waited this long, and will they act now?
Media Coverage
On April 18, McClatchy-Tribune writer Jake Grovum headlined, "State-owned bank in North Dakota an inspiration," saying:
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
