Ellen Brown

Attorney, macro, long/short equity
Ellen Brown
Attorney, macro, long/short equity
Contributor since: 2010
Another example -- Costa Rica after the 1940s. They nationalized all the banks and guaranteed employment for all; and it worked, for decades. Costa Rica pulled way out in front of the rest of Central America. Nazi Germany also of course guaranteed employment for all, very successfully. Australia, Canada and NZ printed the money to fund infrastructure, also very successfully. Canada issued a modest annual allowance for young people. Alaska and Pres Bush issued national dividends. No one has yet to my knowledge issued the sort of dividend that would cover subsistence level living expenses, but the potential is there. The Swiss are talking about it.
If you deposit $100, the bank can lend $100 (actually $90 or so), which becomes a deposit in another bank, which gets lent again . . . and again and again. The money supply includes deposits, so new money is actually "created" in this way -- nearly all of it. And the bank isn't limited to lending its deposits. It makes the loan first, then scrambles around to find the liquidity to back it, either from its own deposits or by borrowing the money back from the bank where the new money it just created as a deposit has wandered into. So says the Bank of England: banks don't lend their deposits. They create deposits when they make loans.
That silly claim was made by Murray Rothbard of libertarian fame. We had bank runs all through the 19th century, before we had a central bank for a backstop, because banks were lending the same money that they were supposedly holding for their depositors -- lending it over and over in "fractional reserve lending." Banks are doing the same thing today. If the Fed hadn't stepped in after 2008 with its $16 trillion plus in backup loans for Wall Street, our banks would have gone the way of Greece's banks. All banks need a central bank for a backstop, to prevent nervous customers from all pulling their money out at once, which will necessarily bankrupt the bank because the bank doesn't have enough in reserve to cover all its liabilities.
Laugh on. The Australians did it, the Canadians did it, the New Zealanders did it, the Germans did it in the first half of the 20th century; the Chinese did it, the Koreans did it -- we're behind the times and will be left in the dust if we don't start funding infrastructure with national credit. You're not going to squeeze the money out of Republicans bent on owning it all and renting it back to us. Even Beppe Grillo is now being taken seriously in Italy.
Thanks. Good observation on Ukraine.
I'm a PVG investor. The PVG message board has a comment on this article which is suspicious of your motives. I'm wondering why you don't give your name and your photo has your fingers crossed behind your back? Here's the comment --
on Seeking Alpha coincidentally coinciding with the selling bash originating in NYC. Someone wants this stock price down badly. THE SA article seeks (pun intended) to paint this great discovery as a so-so, even marginal development where it is difficult to see profit potential E.g. "Investors are scrambling for answers regarding the possible return on their investment. It is not an easy task, however, a potential for a profit exists." Note 'possible return' and scrambling' and 'not an easy task' etc. and the final conclusion that PVG is a trading stock as opposed to a long term gold investment.. “more a trading stock than a "Golden bet for the future." What a snake in the grass hatchet job! http://seekingalpha.co...
Read more at http://bit.ly/1E6gxpu
"Ellen Brown is doing a great service here. This is true, thankless investigative reporting."
Thanks John Wilson! I do wonder sometimes why I do it. I hesitate to open Seeking Alpha because I know I will get laid into. I'm just a researcher, not a player, so I go partly on hunches; but I think my instincts are good, and the MSM is so obviously wrong sometimes or the reported goings on are so suspicious that I have to expose them and present the other side.
The comments on Truthout or Truthdig are always more favorable. The reason I do read the comments on SA, when I have time, is that I learn a lot here from the people who are actually playing the game. Players are too busy playing to write, and they have their own interests to defend. I have the luxury of social security and a pension and low rent, no grandchildren, a legal background, decades of training in writing, and lots of time on my hands; so I write. Tempted to write about something else though!
Ah, sorry, I meant the Fed funds rate, currently targeted at 0-0.25% by the Fed.
http://nyfed.org/ImQEm7
That was a quote on cheap money from the Fed. More correctly, the Fed dropped the prime rate to near zero, and banks borrow from each other at that rate. Also, the QE money has gone into reserve bank accounts as excess reserves, which are used to buy treasuries which become collateral in the repo market against which the banks borrow to speculate for their own accounts. I wrote an earlier article on that, which I'll dig up and cite if you're doubting it. As for the derivatives risk from the oil price collapse, here's a credible source from Yves Smith's site (I only found it later or would have cited it) --
Did Wall Street Need to Win the Derivatives Budget Fight to Hedge Against Oil Plunge? Posted on December 15, 2014
http://bit.ly/1zooaYC
Thanks. I actually haven't had time to read them, but I will! I learn a lot from S.A. and its readers too.
Hi, I'm agreeing with the bankers – they need to attract deposits. They would make very few loans without that. My point in writing was to resolve an apparent ambiguity that people keep asking me about: the Bank of England just said, as have many other authorities, that banks don't lend their deposits. They create the money they lend on their books. Money reformers, particularly in England, conclude from that that this is a major flaw in the system and that banks should be required to hold 100% reserves. To my mind that would bankrupt the banking system, which provides the very useful service of creating the credit that makes the wheels of the economy go around. Other people conclude from the 10% reserve requirement that banks can create nine times their deposits in loans, also obviously not true. It’s perhaps true over the whole system on the money multiplier model, but not true for an individual bank. So I’m not really writing for SeekingAlpha-type readers. I’m writing for all those confused people trying to resolve all the mixed messages we get about how banking works. If any bankers want to jump in and clarify all that in lay language, that would be great!
No way will they increase interest rates; that's my bet. The Fed is directed by the NY Fed, which is Wall Street; and the big derivatives banks would get killed if interest rates went up. They're on the variable rate side of $200 trillion plus in interest rate swaps. When interest rates went up in 2008, we got the credit crunch. Plus, the government can't afford to pay higher interest on the federal debt; they have to keep it at about $400B annually or the taxpayers will squawk.
Yes but my point is that they need to throw us some bones to keep their game going. The parasite is out of its food source.
Thank you! Nice to see a favorable comment. I don't actually post my articles on Seeking Alpha, they just get picked up. But I like the comments even though they're usually negative, because it helps me sharpen my debate tools.
Sure. We should have QE for infrastructure -- lots of it. But as the authors note, infrastructure takes a lot of time to set up, and you're not going to capture a very large percentage of the unemployed in that net. They don't have the skills. We should do both.
If you're making over $100 million/year, as the .01% are, what percentage of your income do you spend on consumables? The lower 80% spend 100% of it. They live paycheck to paycheck.
As for taxing, my public bank proposal could eliminate income taxes altogether, as they were eliminated in colonial Pennsylvania. All in my book The Public Bank Solution.
I cited a source on that, an econ prof who explained it really well I thought. Did you read the link?
My point was that you could make multiple drops and it wouldn't be inflationary.
You're being rude so I'm not answering.
Or read Rob Kirby on the ESF. It's not going to be easy prying them loose. That's why I think symbiosis is the goal at this stage, before they totally destroy the planet. Even Milton Friedman recommended a basic income guarantee. Reminds me of the story of a friend who was playing Monopoly with his 4 year old daughter. He ran out of money and was bored so he said he quit. She grabbed some money and gave it to him so he would keep playing.
Of course. Have you read Web of Debt? I cited him at length. Great book, except that I don't agree with his conclusion. That's why I had to write my own.
It won't run up the deficit. That's my point. It will come back to the government -- or could, properly designed.
Thanks Tim. Case in point!
Sure, but the suppliers and service providers they'll use the money to purchase from do.
I know FIVE people who are living in their cars. That should not happen in the USA. A man just called me on Sunday, when it hit 100 degrees outside, hoping for a place to stay. He's intelligent and skilled and can't find a job. He said there is only so much time any human being can live in a car. Think about it: what would life be like without your bed, your quiet space to read and write, your bathroom facilities. The police don't let you park overnight, and it's very cold in the winter, even in L.A. People who come here from Europe and see that are appalled. We're living in the dark ages.
Keynesian economics involved borrowing our way to wealth, which increased the debt overhang. A national monthly dividend has never been tried, except with such things as social security, which has been a lifesaver for a huge portion of the population.
Agreed. I just went with the 80% the authors suggested. But if the dividend is issued as debit cards that can't be speculated with, it will all go for goods and services, and the numbers should still work at any percentage of the population.
Probably true on the basis points, but that wasn't my point. My point was that there is no way for countries to go bankrupt, and they WILL go bankrupt under our current monetary scheme, which creates a perpetual debt overhang that is impossible to repay, or at least for all countries to repay. We need a different way of getting money into the system. There is also the problem of the currency wars. This system is not sustainable and will be reset; it's just a question of when and to what.
Thanks.
It will bring the banks and investors to the table. The law is on the side of the city. Everything is negotiable.
That was going to be my next article.
Actually the Fed prints money and buys government securities on the open market, then returns the interest to the Treasury; so it's the cheapest way to finance government debt. They didn't want to return the interest, but Wright Patman coerced them into it in the 1960s when he tried to get the Fed nationalized.