Ellen Brown of Web of Debt blog writes on the eurozone crisis picking up on ‘Deficit Easing’ and some MMT links… She concludes with a novel idea for Irish nationalised banks;-
Restoring Credit with a Publicly-owned Bank: The Model of the Bank of North Dakota
There is another possible solution to this dilemma. Neither states in the U.S. nor those in the eurozone can print their own money, but they CAN own banks, which can create bank credit on their books just as all banks do. Most of our money is now created by banks in the form of bank credit, lent at interest. Governments could advance their own credit and keep the interest. This would represent a huge savings to the people. Interest has been shown to make up about half the cost of everything we buy.
Only one U.S. state actually owns its own bank – North Dakota. As of last spring, North Dakota was also the only U.S. state sporting a budget surplus. It has the lowest unemployment rate in the country and the lowest default rate on loans. North Dakota has effectively escaped the credit crisis.
The Bank of North Dakota (BND) is a major profit generator for the state, returning a 26% dividend in 2008. The BND was set up as “North Dakota doing business as the Bank of North Dakota,” making the assets of the state the assets of the bank. The BND also has a captive deposit base. By law, all of North Dakota’s revenues are deposited in the BND. Municipal government and private deposits are also taken. Today, the BND has $4,000 in deposits per capita, and outstanding loans of roughly the same amount.
Extrapolating those figures to Ireland’s population of 4.2 million, a publicly-owned Irish banking system might generate credit of $16.8 billion. That would be enough to fund most of Ireland’s deficit of 14.4 billion Euros (19.6 billion USD), and this money would effectively be interest-free, since the government-owned bank would return its profits to the state. Funding through its own bank would remove most of Ireland’s deficit from the private bond market, which is highly vulnerable to manipulation, speculation and crippling downgrades.
Alternatively, this bank credit for building sustainable infrastructure and putting people back to work.
Governments everywhere are artificially constrained by having to borrow at market interest rates, which means whatever interest banks can extract. Governments can throw off the shackles of this scheme, in which private banks create the national money supply and lend it at interest, by forming publicly-owned banks. These banks can then advance the credit of the nation to the nation, interest-free. And if this credit is advanced against future productivity, prices will not inflate. Supply (goods and services) will rise along with demand (money), keeping prices stable.
