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Overthrow the Speculators

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Posted on Dec 29, 2013
AP/Richard Drew

Traders work at the Goldman Sachs posts on the floor of the New York Stock Exchange in 2012.

By Chris Hedges

Money, as Karl Marx lamented, plays the largest part in determining the course of history. Once speculators are able to concentrate wealth into their hands they have, throughout history, emasculated government, turned the press into lap dogs and courtiers, corrupted the courts and hollowed out public institutions, including universities, to justify their looting and greed. Today’s speculators have created grotesque financial mechanisms, from usurious interest rates on loans to legalized accounting fraud, to plunge the masses into crippling forms of debt peonage. They steal staggering sums of public funds, such as the $85 billion of mortgage-backed securities and bonds, many of them toxic, that they unload each month on the Federal Reserve in return for cash. And when the public attempts to finance public-works projects they extract billions of dollars through wildly inflated interest rates.

Speculators at megabanks or investment firms such as Goldman Sachs are not, in a strict sense, capitalists. They do not make money from the means of production. Rather, they ignore or rewrite the law—ostensibly put in place to protect the vulnerable from the powerful—to steal from everyone, including their shareholders. They are parasites. They feed off the carcass of industrial capitalism. They produce nothing. They make nothing. They just manipulate money. Speculation in the 17th century was a crime. Speculators were hanged.

We can wrest back control of our economy, and finally our political system, from corporate speculators only by building local movements that decentralize economic power through the creation of hundreds of publicly owned state, county and city banks.

The establishment of city, regional and state banks, such as the state public bank in North Dakota, permits localities to invest money in community projects rather than hand it to speculators. It keeps property and sales taxes, along with payrolls for public employees and pension funds, from lining the pockets of speculators such as Jamie Dimon and Lloyd Blankfein. Money, instead of engorging the bank accounts of the few, is leveraged to fund schools, restore infrastructure, sustain systems of mass transit and develop energy self-reliance.

The Public Banking Institute, founded by Ellen Brown, the author of “Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free,” Marc Armstrong and other grass-roots activists are attempting to build a system of public banks. States such as Vermont and Washington and cities such as Philadelphia, Washington, D.C., San Francisco and Reading, Pa., have begun public banking initiatives. Public banks return economic power, and by extension political power, to the citizens. And because they are local they are possible. These and other grass-roots revolts, including sustainable agriculture, will be the brush fires that will, if they succeed, ignite the overthrow of the corporate state.

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“The debate about public or private control of the monetary system has been going on for hundreds of years,” Armstrong, the executive director of the Public Banking Institute, said when I reached him by phone. “The American Revolution had everything to do with who controlled our economic destiny. The money supply is central to that control. North Dakota has proven that a state can use a public bank to further the economic interests of its people. North Dakota funds its own infrastructure and capital investment projects. It provides funding for commercial lending throughout the state. It develops the areas of its economy it wants to prioritize, areas that are often not funded by private banks.”

“When a public bank such as the bank in North Dakota funds infrastructure projects the interest costs, which [otherwise] are often 50 percent or more of a project, in essence fall to zero because the interest is returned to same people who own the bank and paid the interest in the first place,” said Armstrong, who previously worked for IBM Finance. “[Americans typically] hold labor costs under a microscope, but ... don’t hold interest costs under a microscope. North Dakota can offer commercial loans as low as 1 percent. Compare this with Wall Street banks that charge 14 or 15 percent. We can use bank credit, the tool Wall Street banks use to amass wealth and power, to empower ourselves.” And because credit, Armstrong notes, is the source for 97 percent of the nation’s money supply, this power would be huge.

The Bank of North Dakota, the vision of socialists from a century ago, has been in operation for 90 years. It offers the state’s farmers and businesses low interest rates on loans. After floods destroyed much of Grand Forks in 1997 the bank provided a six-month moratorium on mortgage payments and gave low-interest loans to the community to rebuild, a sharp contrast with the raw exploitation that marked the arrival of Wall Street bankers and speculators in Gulf Coast areas hit by Hurricane Katrina. Public banks in the United States, like the public banks in Germany, fund things such as solar power because it is good for communities rather than the portfolios of speculators.


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