The Public Bank option — safer, local, and half the cost in NJ, in every state


Bank of North Dakota


Ellen Brown, PBI Chair, explains the value of a Public Bank on the heels of a new UK poll that reports the majority of politicians do not know where money comes from, and on the eve of the New Jersey Governor's race election day where Phil Murphy — one of the rare politicians who does know — has a double-digit lead. Murphy has made a NJ Public Bank a centerpiece of his platform. Green Party candidate Seth Kaper-Dale also strongly supports creating a state bank for NJ.  

Ellen Brown:

“For those few politicians who are aware of the banks’ magic money tree, the axiom that the people should own the banks — or at least some of them — is a no-brainer. … If Phil Murphy wins the New Jersey governorship and succeeds in establishing a New Jersey state-owned bank, expect a wave of public banks to follow, as more and more elected officials come to understand how banking works and to see the obvious benefits of establishing their own. 

As the Bank of England acknowledged in its 2014 paper, “banks do not act simply as intermediaries, lending out deposits that savers place with them.” A chartered depository bank can turn one dollar of capital into ten dollars in bank credit, something it does simply by creating a deposit in the account of the borrower. ...

Public sector banks, while rare in the US, are common in other countries; and recent studies have shown that they are actually more profitable, safer, less corrupt, and more accountable overall than private banks. 

This is particularly true of the Bank of North Dakota, currently the only publicly-owned depository bank in the US….

The BND holds all of its home state’s revenues as deposits by law, acting as a sort of “mini-Fed” for North Dakota. It has seen record profits for almost 15 years. It continued to report record profits after two years of oil bust in the state, showing that it is highly profitable on its own merits because of its business model. 

It does not pay bonuses, fees, or commissions; has no high paid executives; does not have multiple branches; does not need to advertise; and does not have private shareholders seeking short-term profits. 

The profits return to the bank, which either distributes them as dividends to the state or uses them to build up its capital base in order to expand its loan portfolio.

Among other cost savings, the BND is able to make 2% loans to North Dakota communities for local infrastructure — half or less the rate paid by local governments in other states. … Since 50% of the cost of infrastructure is financing, the state can cut infrastructure costs nearly in half by financing through its own bank, which can return the interest to the state.

[Read the full article]

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