YouTube has the video A Discussion with Michael Hudson, Ellen Brown, & Walt McRee about the public banking option.
Before you swallow this discussion hook, line, and sinker, you might want to look at my dissent below,
On Thursday April 6, 2017 two world-renowned economic thinkers came to Franklin & Marshall College in Lancaster, PA to discuss how a public banking option can affect governmental effectiveness.
This discussion focused on the key differences between government’s unquestioned reliance on private capital markets and how an entirely new, more productive arrangement could be devised.
I’d say there is a fair amount of hogwash in this presentation. If you really understand the relation between Federal Reserve Bank and private banks you can supply enough of your own knowledge to justify some of the words that are being said, but if you don’t, I think you might be bamboozled by what Ellen Brown in particular has to say. I watched about 20 minutes of this, and expected Michael Hudson to correct what Brown said, but he did not. I have read Hudson’s book “Killing the Host”, and the truth is more subtle than they are making out here.
I think a good way to understand private banks is that they get money wholesale and lend it at retail. They get the wholesale money from many places including depositors, investors, and the Federal Reserve Bank. I haven’t been able to find a reference that explains the percentages that the many wholesale suppliers are responsible for. To pretend or give the impression that private banks only have one source of wholesale money is to give you a very distorted picture.
Fractional reserve banking allows banks to lend more money than they have, but if they run into trouble, they have the Federal Reserve Bank to provide them whatever money they need (at a cost of course).
Investopedia has the article Wholesale Money that gives a hint at what I mean by wholesale money. I do not know what Fraction of the wholesale money comes from the Fed at any particular moment in history, but when the system runs short, only the Fed has an infinite supply (in the USA) to fill in whatever is needed. The excerpt from Investopedia talks about a situation in England that has close parallels to what would happen in the USA with the Fed instead of the Bank of England.
A defining moment of the subprime crisis happened in 2007, when Northern Rock, a British bank which had relied on wholesale markets for most of its finance, was no longer able to fund its lending activities and had to ask the Bank of England for emergency funding.
I have now watched the entire video beyond the initial 20 minutes that aggravated me so. There is lots of good information and ideas buried in this manure pile.
I do think that Ellen Brown is close to an idiot in understanding all the issues. Poo-pooing the need to watch out for fraud in a public bank is too naive to believe she could actually believe that. Michael Hudson was correct that their need to be stiff penalties including jail time for cheaters. There will always be cheaters and attempts at corruption. Read William K Black’s book, “The Best Way o Rob a Bank Is To Own One: How Corporate Executives and Politicians Looted the S&L Industry”
Her introduction of the idea of using block chain for the Federal Reserve to serve the banking needs of the public is a complete red herring. Block chain is merely a computer security method which has nothing to do with the fundamentals of running a bank. None of the large and small financial institutions that serve the people at the retail level, use block chain to deal with USA money.