How The Big Banks Run The World -- At Your Expense

Continued from previous page

(One rough estimate offered by the Public Banking people is that had the United States done what they are talking about over the last 24 years, the amount saved on interest payments on the national debt would have been roughly eight trillion dollars - and the economy might also have been moved out of recession. Whatever the number might be in a careful statistical analysis, it is very, very large indeed.)

* * *

There is a rough parallel in all this with the way student loans used to be handled and are handled now. For a substantial period, the banks provided some loans to students that were guaranteed by the government, adding a mark-up for their profit. In 2010, Congress decided to eliminate the middleman and the government now simply makes the loans directly at lower cost.

But, of course, we don't allow ourselves to follow the straightforward path outlined above or suggested by the student loan program changes. Indeed, to even suggest the Public Banking strategy is to suggest a horror of horrors, since one of the biggest money makers for the banking industry would be on the chopping block.

And the banking industry - especially its Wall Street branch - plays a very powerful and rough political game opposing anything or anyone who tries to "uncorral" the thinking of the public.

Nonetheless, that is the direction that was opened up for serious discussion at the Public Banking conference. First steps first, of course. We currently have one "public bank" in the United States, the 93-year-old Bank of North Dakota. Since 2010, seventeen states have considered legislation to create banks based in one or another way on this model. Ellen Brown, the leading theorist behind the movement - along with many participants - urges the value of such banks on their own terms in that they help small businesses, farmers, home-owners, students and others.

But, down the line, the big payoff is to get us thinking much more carefully about the way the world really works, and why. Once you start thinking about how money is created and who gets to use that power and for what purpose, some very, very interesting questions indeed begin to follow.

To be sure, the story gets more complicated when you bring in global trade, finance, the Chinese, and so forth: A serious move in the way posed by the Public Banking people would have major implications for global finance, and the role of the US - and the US dollar - in the global system.

But this, too, is one of the purposes of taking such proposals seriously - and the importance of starting a far-reaching new debate not only about money and the US system, but the fragility of the entire superstructure of global finance these days.

* * *

(By the way, one estimate is that roughly 25 percent of the world's banking systems allow central banks to extend credit directly to governments; another 37 percent allow short-term advances. These include some of the fast charging so-called "BRIC[S]" countries such as India and South Africa, as well as Malaysia, the United Arab Emirates, Israel and Japan.)

If you want to have some fun with this - before you get angry at the rip-offs - take a look at the video of  12 year-old Victoria Grant explaining the same thing for Canada. There is a reason why it went viral and has been seen by more than a million people.

#

Gar Alperovitz is the Lionel R. Bauman professor of political economy at the University of Maryland and co-founder of the Democracy Collaborative. He is the author of the newly released book, " America Beyond Capitalism." Follow him on  Facebook and Twitter  @GarAlperovitz.