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Letter to the editor: Alaska should establish its own public bank

Posted: December 15, 2013 - 1:59pm  |  Updated: December 15, 2013 - 9:24pm

December 23, 2013 will mark the 100th anniversary of our Federal Reserve Bank (Central Bank). The name implies a public bank owned and operated by the federal government. That assumption is wrong. It is a private banking system that operates for profits of the private banks who are members. They have dual mandates from government. “Maximum employment and stable prices.” With the Central Banks’ promise came a great privilege. Money creation through credit. Banks do not lend deposits. They create credit from assets/deposits to expand the money supply. There is no direction given to the banks on how the oodles of money created should be used.

The private cabal of banks too big to fail/jail have a primary objective, profit. It is what crony capitalism is all about. Make the most money possible. Money making fiascoes through gambling investments and economic bubble creation. Janet Yellen (expected new chair of the Federal Reserve Bank) gave a speech at UC Berkeley in 2009. She was asked about money expansion causing speculative bubbles and should the Central Bank keep such financial bubbles from developing. Yellen expressed the difficulty in determining whether a price increase of an asset is related to value or inflated value. I believe private mega-Banks do not care. Money is to be made until the bubble bursts.

There is a better way. Money creation directed to increasing the productivity of the nation rather than money making Ponzi schemes. Small commercial banks understand and want to help small-medium businesses. But, the behemoth banks control 50 percent of America’s deposits. Productivity ignored, let’s make money. Our federal government has lost its way. The Federal Reserve Bank with the madness of Congress continues to teeter on the brink of economic disaster.

Alaska has a choice. Establish a public Bank of Alaska. It would work like a central bank with one major exception. Use the full weight of money creation towards improving Alaska’s productivity. Supporting small commercial banks to help small and medium size local businesses for advancing all Alaskans’ prosperity. Perhaps even support a large part of the funding for an all Alaska Gasline.

Consider the compounded interest Alaska will pay for our share of the Gasline. Rather than borrowing money from Wall Street banks (with the credit they create with our deposits) let’s establish a public bank. Withdraw our deposits from Wall Street and open our own public Bank of Alaska. Keep the money and create credit to build infrastructure. Alaska would be paying interest to the Bank of Alaska, which in turn would pay profits back to the great State of Alaska. Profits to Alaska instead of bigwig bankers on Wall Street. Not a new idea. The public Bank of North Dakota has been doing it since 1919.

Ray Southwell

Nikiski

 

 

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