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Interview Transcript: Ellen Brown; Public Banking-- the Bottom Up Solution to a Lot of Economic Ills

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I interviewed Ellen Brown on April 30th.  This is part one of a two part interview. Here's a link to the audio podcast.

Thanks to Don Caldarazzo   for doing the transcript.

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Also, check out the Public Banking Conference , June 2-4, here.

Ellen Brown is an attorney, president of the Public Banking Institute, and author of 11 books. Her websites are http://WebofDebt.com, and In her latest book, "Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free," she shows how the power to create money has been usurped from the people and how we can get it back. 
OEN Member Page for Ellen Brown
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by Ellen Brown

Rob Kall:   And welcome to the Rob Kall Bottom Up Radio Show, WNJC 1360 AM out of Washington Township, reaching metro Philly and South Jersey.  My guest tonight is Ellen Brown.  Now, Ellen Brown could be THE world expert on public banking.  When I think of public banking, I think of Ellen Brown.

Ellen Brown:   (laughs)

Rob Kall:   She has been writing on this for a long time.  She's got a book out: The Web of Debt: The Shocking Truth About Our Money System, and How We Can Break Free.  Welcome to the Show!

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Ellen Brown:   Thanks Rob!  Great to talk to you.

Rob Kall:   Really good to have you here, back again.  Now, a couple things.  I want to get some definitions set up, because you talk about ideas and concepts that are really important, that touch everybody's lives, but I don't know that everybody really understands some of the ideas.  So let's start off with derivatives and the Glass-Steagall Act.  Could you describe what each of those are?

Ellen Brown:   OK.  Well, the Glass-Steagall Act was passed in 1934 and it separated investment banking from depository banking.  Before that, the banks we commingling their funds; so if they did some wild investments that went bad, they took those from the depositors' funds.  For many years after Glass-Steagall was imposed, things went along fine.  Then they repealed Glass-Steagall in 1999 - supposedly to help the banks, to help them with their market share - because (laughs) they were losing market share.  For this reason, they changed the law. 

Derivatives are essentially bets, but they're called "derivatives" because they're derived from something else.  So you don't actually own the assets, you're betting on the assets.  For example, if you went to the racetrack and you bet on the horses, you would not own the horses, but you would just be betting on who is going to win.  So derivatives are like that.  You can bet on whether interest rates are going to go up or down -- I mean, theoretically, you're hedging your bet.  It's what farmers do, where they would sell their corn early, betting that the price will be a certain price; and whoever buys the futures for the corn is betting that the price will actually be better than that when the corn comes to market, and that they'll make a profit.  So they're both betting on the future: one betting one way, and one betting the other way.  

So you have this gigantic derivatives market now that's built up, that's way bigger than the GDP of the world.  In fact, it's about -- well, it depends on who you talk to, but according to the BIS itself (which has fairly reliable numbers), it's over 600 trillion dollars, which is -- wait.  60 Trillion [dollars] is the GDP of the entire world, so 600 trillion is ten times the GDP of the  world.  But some people say it's up to two or three quadrillion, because they're all just numbers.  You don't need to own anything, and therefore you can have bets, upon bets, upon bets, and they're all counted in the figures. 

So those outrageous bets are being commingled with JP Morgan's deposit share arms now, and Bank of America's depository arms.  Those are the two biggest derivatives players.  They have, respectively, 79 trillion and 75 trillion [dollars] in derivatives that are mixed with their 1 trillion in deposits.  So if they go bust, the deposits are going to be sucked into that for the derivatives losses - as we saw with MF Global, for example.  So that's more than a definition, sorry! (laughs)

Rob Kall:   No, that's good, that's good.  There are some people who say that the solution is to just ban derivatives and eliminate them from the world economy.  Is that possible?  Would that work?  And what would the effect of that be?

Ellen Brown:   Up until the nineties - derivatives were considered an illegal form of gambling until they were legalized, so you could certainly do that again.  The problem is unwinding them.  The fear factor is that when you start unwinding them, because all these derivatives players have placed their bets both ways.  They tend to hedge their bets, you know, like Goldman Sachs will do it.  So if they lose one bet, then they can't pay off the other bet - and so [the fear is] the whole thing is this great house of cards, and that it'll all go down and take the economy with it. 

But we know that's not actually true, because Iceland did it, for example, and it worked out perfectly well for them.  They just refused to bail out their banks.  Even when Lehman Brothers went down, which precipitated the banking crisis of 2008, they settled up on their derivatives claims and a couple of years  ago.  It can all be netted out.  There will be a little time of trauma, but it could work, I think.

Rob Kall:   If it was done, how would that change things?

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Rob Kall has spent his adult life as an awakener and empowerer-- first in the field of biofeedback, inventing products, developing software and a music recording label, MuPsych, within the company he founded in 1978-- Futurehealth, and founding, organizing and running 3 conferences: Winter Brain, on Neurofeedback and consciousness, Optimal Functioning and Positive Psychology (a pioneer in the field of Positive Psychology, first presenting workshops on it in 1985) and Storycon Summit Meeting on the Art Science and Application of Story-- each the first of their kind. Then, when he found the process of raising people's consciousness and empowering them to take more control of their lives one person at a time was too slow, he founded which has been the top search result on Google for the terms liberal news and progressive opinion for several years. Rob began his Bottom-up Radio show, broadcast on WNJC 1360 AM to Metro Philly, also available on iTunes, covering the transition of our culture, business and world from predominantly Top-down (hierarchical, centralized, authoritarian, patriarchal, big) to bottom-up (egalitarian, local, interdependent, grassroots, archetypal feminine and small.) Recent long-term projects include a book, Bottom-up-- The Connection Revolution, debillionairizing the planet and the Psychopathy Defense and Optimization Project.

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Rob Kall's Bottom Up Radio Show: Over 200 podcasts are archived for downloading here, or can be accessed from iTunes. Rob is also published regularly on the

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