In many states in the US, local governments are having to lay off teachers, policemen, and even firemen because of the budgetary shortfall. This could not happen in North Dakota (where no such workers are being laid off) or in any other state in which the "profits' from a state-owned bank could be made available to the larger community instead of having to be funneled into the pockets of the banksters.
How else to explain why North
Dakota has the lowest unemployment rate in the country and, unlike so many
other states, actually has a budgetary surplus?!
Ninety years ago a populist movement formed in North Dakota and its members decided that they were tired of being defrauded and otherwise cheated out of their money by Wall Street banks, and didn't want their money to any longer go out of state, so they moved to form their own bank right at home in their own state. And there is no reason why every state in the US couldn't do the same thing today. There are still private banks in North Dakota and they get along well with that central bank of theirs, which acts as their 'Fed.'
Also to consider: Ellen Brown's eye opening article on the Commonwealth Bank of Australia operated successfully as a government-owned bank for most of the 20th century, until it was privatized by banksters in the 1990s.
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Our financial crisis began in November of 2007 when most banks seized up, afraid to loan money to most anyone, especially to other banks, for fear they would never be repaid (owing to the toxic assets that the other bank might secretly be holding). In the previous month the Dow had hit a record high of 14,000, but in November all banks were required to revalue their capital according to what those assets could fetch in the market place rather than on the basis of their previously supposed value. Why was this requirement imposed on banks? It was because of the widespread discovery at that time that many of the assets held by banks (such as collateralized debt obligations), were composed of dodgey subprime bundles of loans that were in all probability worth nowhere near what they had been previously supposed to be worth. Suddenly, therefore, banks realized that the capital reserves they were holding were nowhere near enough to warrant all of the outstanding loans they had already made. Consequently they could not allow themselves to make any more loans without violating fractional reserve rules. As a result of that, credit dried up, even froze, and businesses across the country, which normally depend on short term bank loans to meet their payroll or buy supplies or equipment, were stuck. This then precipitated the mammoth recession that followed. Ultimately millions lost their jobs and much of our economy ground to a halt.
How we could avoid this in future
Newly formed publicly owned banks would have a clean set of books in which were hiding no toxic assets, and so could immediately offer loans to whatever qualified businesses in their state were in need of them. It would be a bit like someone with clogged coronary arteries getting bypass arteries (made out of segments of veins from one leg) sewed into place next to their heart, to bypass the old clogged-up arteries, so as to once again allow the free flow of blood to his lungs and to the rest of his body.
Plus, as already mentioned, the "profits' from these publicly owned banks would be available for state use rather than being directed exclusively into the pockets of banksters. One more thing: these banks could not go bankrupt. Why? Because by law all the assets of the state are the assets of the bank, and all the money that the state receives from taxes etc. must by law be deposited in the state bank.
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