15 Vermont Towns Vote to Start a Public Bank
15 Vermont Towns Vote to Start a Public Bank (thecontributor.com)
I hope that the citizens of Vermont are able to make this work.
For many years, in my home state of Rhode Island, credit unions have had nearly the same consumer powers as commercial banks. They can conduct all the same consumer transactions as the national institutions. The critical distinction is that the depositors are the "owners". Every year each depositor gets one vote towards picking the board of directors. This makes all the difference in the world. The credit unions have grown quite large, but the service they offer is still focused on the depositors who are the bankers' ultimate boss. Any profits made are returned as dividends to the depositors. To further protect the depositors the credit unions are all under the umbrella of the NCUA, which is the rough equivalent of the FDIC for commercial banks.
Local control and approachable scale makes the depositor a much more important player in the game.
Good luck Vermont.
I see this as a very positive first step. Of course, to the extent it's based on the concept of fractional reserve lending and compounding interest it remains unsustainable over the long haul.
But as a first step it's just fantastic and I support it especially as a means of exposing the extent to which interest payments made to out of state banks merely represents the labor of the people of VT being exported to banks which, frankly, do nothing, make nothing, and are not productive enterprises.
Yes, banking is essential because we need money, but the actual cost of providing that service can and should be a skinny fraction of the currently accepted skimming operation.
So what's the next step?
Easy, a state should simply issue money, not borrow it, and place it into circulation. Then, if properly managed in terms of quantity, the money supply can be expanded or contracted as necessary to support commerce. Presto! No more entrenched compound growth.
i agree 100% that the cost of banking could be a small percentage of the cost of interest….another way for society to benefit, rather than be hurt by, the concept of interest is to use interest TO PAY TAX….a public bank could be set up to fund housing, small business, college, even infrastructure….instead of private investors receiving the interest, this money, minus operating cost (with computers, what, 5%?) could be used to pay federal, state, ALL tax…..for example, this bank holds a mortgage paying $2000 per month interest, it would pay 24k minus 5% towards the mortgagee's federal and state tax….this amounts to a stupendous tax cut of most likely 100%! talk about a shot in the arm for the economy! not to mention putting the power to control government back into the hands of the people…your boss is he who pays you….at the present time, the fed reserve is "paying" the federal government…who is the boss in that situation? and all this WITH NO LEGISLATION NECESSARY! free enterprise, baby! who has the balls to set up such a bank? warren buffet? soros? it would necessarily wind down the too big fail banks mortgage portfolios…..in a heart beat, and put these "assets" on to the public's balance sheet, where they belong…
But everyone's response in the comments are coming across as just too much pro and not a single con for a Vermont 'Central' Bank. As a resident I appreciate that you all feel that the creation of such a bank is a great idea. For the most part I think that you are right. But from the view from my back door looking South across New England to Manhattan, for the life of me, I can't possibly support such a move.
From Zulzie: 'another way for society to benefit, rather than be hurt by, the concept of interest is to use interest TO PAY TAX….a public bank could be set up to fund housing, small business, college, even infrastructure…. …WITH NO LEGISLATION NECESSARY! free enterprise, baby!
Response: HOLD UP THERE!!! 'Only fools run in where angels fear to tread.' What is the cost to setup such a bank? Who will pay that up front cost? Taxpayers, that's who. Who will run the day-to-day operations? Most likely the same folks who run major banks across this nation. Will this be a non-profit banking enterprise ala a Credit Union or an investment bank ala JPMorgan Chase etc? Will the bank pay outrageous salaries and bonuses? Will there be shareholders? In short, what will the bank's governance structure look like? How will it be regulated such that promises made today are kept tomorrow? Will the governing board have independent tax payers on it or will the folks on that board be hand selected by the governor or an elected official?
What I DO NOT WANT is the SSDF going on in Vermont that I see across the entire US financial industry. I DEMAND State Government oversite, I DEMAND accountability! I DEMAND taxpayer participation! I DEMAND legislature approval for some items such as budgetting. I DEMAND full transparity.
It all comes back to following the money. Where will the money come from? Who will hold the initial debt from setting up the Vermont Central Bank? This is NOT Free Enterprise! This is the absolute opposite of Free Enterprise. This is the creation of an entity that very well may end up being backed with the full faith and credit of the State of Vermont. If that is the case, take a hike. I won't support it at all. Vermont has a large delta between tax revenue and expense. Having a bank DOES NOT FIX A PROBLEM WITH DEBT! It compounds it!! Insert here all of Jefferson's comments on bankers!
Can this be a good thing? Sure? But this is the wrong direction at exactly the worse time in our history economically speaking.
In my humble opinion of course.
It is so hard to prove that the US average taxpayer that banks are also known as "too big too fail" are entitled to their trust. As Bankrate reported that signs are very simple to see. Bankers surveyed in the same poll seemed oblivious to the truth, as they trusted that consumers trust them. Not even some personal loans will help consumers trust banks more.