Friday, May 20, 2011
Cut out the banksters and see the economy boom
The theory is that a state/county/large city creates its own bank using its own property/assets as its capital base. State/county revenues are deposited in the bank and and payroll also goes thro' it, creating more deposits - all guaranteed by the state. Enough credit is created to meet short-term budget needs, to buy back the state's compounding debt and to stimulate the local economy (e.g. loans for income-generating infrastructure and housing - repaid from the resulting profits or refinanced), thereby augmenting the tax base. It can partner with other local banks and backstop them ( a local central bank, as in North Dakota). The new credit is non-inflationary since it finances real projects. This theory is in the process of being put into practice in 12 US states.