Former PBI Chair Walt McRee interviews Stockton University Distinguished Professor of Economics, Dr. Deborah Figart to discuss her recent study on the impact of a Public Bank for New Jersey. Dr. Figart also penned a related opinion piece this week for the NJ Star-Ledger.
Dr. Figart's basic message: a Public Bank gets NEW money into the economy; it doesn't just shift money from one pocket to another. She brings up that NJ has a great deal of money in various accounts in Wells Fargo, being used for loans that are not going to NJ. She says for every $1 spent on infrastructure, $2 in Gross State Product is created — it’s a standard econ formula.
“A Public Bank would contribute enormously to funding economic development needs throughout America and in the state of New Jersey. … It’s very difficult to borrow money for infrastructure and if states and municipalities could find a way to raise funds through a public bank and to borrow at lower interest rates than typically what Wall Street lends money for, I think that we could do a lot to generate state economic growth and municipal economic growth and redevelopment in the U.S.”
In a related article in the NJ Star-Ledger, Figart writes:
“In analyzing the economic impact of a public bank, the question is: How much new output and new earnings are created for every dollar of new lending in an economy? Any new lending from the public bank would have a multiplier effect. … It is about leveraging the power of a lending dollar. … The state also could save money in lower interest costs; a state bank might charge only half of what commercial financial institutions charge for state bonds and loans.”