Marilyn MacGruder Barnewall on the Problems of Central Bank 'Debt Capitalism' and the Promise of US-Style State Banking
The Daily Bell is pleased to present this interview with Marilyn MacGruder Barnewall.
Introduction: Marilyn MacGruder Barnewall served as president of The MacGruder Agency, Inc., a bank financial consulting firm, from 1979 through 1993. She was known as the "guru" of North American Private Banking (so-called by Town and Country and Trust and Estates magazines) and a 1989 issue of Forbes magazine called her the "Dean of American Private Banking." Today, Ms. Barnewall is retired and has devoted her energies to writing books, articles and legislation focused on state banking and, generally, the devolution of American banking. Some of her ideas are similar to those of "public-banking" advocate Ellen Brown.
Daily Bell: Tell us more about your background and how you got into this field.
Marilyn MacGruder Barnewall: I became a banker quite by accident in 1972. I worked at Denver's largest bank and I started the first private bank in the United States. I started the MacGruder Agency when I left the bank in 1979, and was a consultant implementing credit-driven private banks until 1993.
I have also written a number of books. The first book I wrote, which I think is still one of the only books on private banking, is called Profitable Private Banking: The Complete Blueprint, which was published by the American Bankers Association and sold for $5,000 a copy. I went back to writing and have written hundreds of articles for Internet publications since.
Daily Bell: What is "credit-driven private banking"?
Marilyn MacGruder Barnewall: There are two types of private banking, and it is different than what you might think. Traditionally, private banking is and always has been the management of other people's money or assets. The one I created was a credit-driven form of private banking.
Basically, credit-driven private banking is done in a way that strengthens and broadens the middle class. During my time as a bank advisor, I basically created a concept of banking that enabled lenders to make business purpose loans based on personal assets and cash flow. So a business-purpose loan, a commercial loan, depends for repayment on the purpose of the loan. If the purpose of the loan is to make cars, then the source of repayment comes from the sale of those cars, the dealers or the public. In other words, individuals can't do that because they aren't in the business of selling cars or building condominiums. It's recognizing all the potential available.
Daily Bell: Tell us about the work you have been doing in relation to state banks and the resolution for the State of Colorado.
Marilyn MacGruder Barnewall: I recently wrote the legislation for the State of Colorado for state banks. The movement to create state banks is a growing one. I started writing about state banks a little over two years ago. Many people are very confused about what a state bank is. Basically, it is two things: it is an administrator and it is a correspondent bank. That's it. It is not the bank that sits on Main Street. A state bank also takes in tax revenues; all of the fees that are taken in by the state are held in the state bank instead of being sent to Washington or a money center bank. In a state bank, the money is held within the state.
All the banks in, say, North Dakota, are privately owned by investors and they are chartered by the state bank of North Dakota. Now, national banks also still do business in the state of North Dakota. Wells Fargo can be there, Bank of America can be there, but there are about seven state chartered banks that are privately owned by private investors. The other part of state banking is the correspondent bank relationship. Right now, when an independent bank has a loan that is too large for it to make, it goes to a money center bank or a bigger bank to partner in that loan with them. So those are the two things that a state bank does.
People tend to hear "state bank" and think it's a socialized system of banking with the state owning the bank that sits on Main Street but it isn't. It's very much the opposite of that and a very conservative approach to banking.
Daily Bell: There are numerous additional states that are investigating the possibility of state banks.
Marilyn MacGruder Barnewall: Correct. The problem we have is too much centralized power in Washington, DC and a lot of states have figured that out. Right now you have Washington, Oregon, California, Hawaii, Montana, Colorado, Illinois, Florida, Virginia, Maryland, Massachusetts and a few others that are actively investigating the possibility of their own state bank. Let's go back to North Dakota, and look at the reasons why they did and the results they had and why other states are looking at state banks now.
North Dakota formed their state bank in 1919, 94 years ago. They have a tremendous history and a population of about 650,000 people. The North Dakota state bank, during the last 10 years, has paid the state treasurer more than $325 million from bank profits. In 2010, the worst economy in recent history, North Dakota had its largest budget surplus in the state's history. North Dakota tops the list of state economies year after year.
Now, state economies should be the number one concern of the people. State unemployment statistics are another issue and anyone who believes the stats that are being handed out right now are accurate is crazy. In Mesa County, where I live, the unemployment rate is 19.3%. In North Dakota the unemployment rate is 3.3%. In 2009 and 2011 there were tax reductions in North Dakota. There are tremendous financial advantages to being a state bank and having a state bank and that's why all these states are looking into it.
Daily Bell: How does that differ from what Ellen Brown says?
Marilyn MacGruder Barnewall: Ellen Brown is very positive about North Dakota and the state bank concept. Where Ellen and I differ is fractional-reserve banking. If you look at what Ellen has written about state banks, she talks in terms of the large increases in loans outstanding for the state bank. With fractional-reserve, when a bank makes a loan of a million dollars, they send 10% or $100,000 to the Federal Reserve and they can get a credit of up to $900,000 in new loans. That is what has created "debt capitalism," and they want to bring the whole debt capitalism concept to the state level. I am adamant that if a state bank is implemented, the charter that is passed by the people prevents that debt capitalism from happening.
Daily Bell: Define 'debt capitalism.' Did you coin this term?
Marilyn MacGruder Barnewall: I started using this term a few years ago, but debt capitalism is where the emphasis for bank growth is placed on debt. Now, when I was a banker back in the '70s, we loaned our customers deposit-based loans. I think most people think that is still happening but that is not true with the fractional-reserve system that is in place today. In the past, we would loan up to 70% of our deposit base and we would be audited two or three times a year to make sure the quality of loans were good. In order for us to grow as a bank, or for any bank to grow in those days, the bank had to place emphasis on the growth of deposits. As you know, the only way you can grow deposits it to grow business, and that meant the bank had to be supportive of business growth within the community. If you don't have new jobs and new businesses, you are not going to have new business at the bank.
Today, a bank makes loans, gives 10% to the Federal Reserve and gets a credit to be able to loan 90% of the loan they just made to the public. So they're totally dependant on loans for growth, which has resulted in this entire debt mentality. In the old days it was always based on community business growth; new companies depositing and new employees depositing. Under the debt capitalism concept, which isn't capitalism at all, in my view, everything is dependent on debt. It's how they create money out of thin air, and it depreciates the currency at the same time.
Daily Bell: If you have a state bank, do you have to have state currency?
Marilyn MacGruder Barnewall: The answer is no. Obviously, you don't. North Dakota has had a state bank for 94 years and they use Federal Reserve notes because right now, that is the law. They also have a relationship with the Federal Reserve, which is the law, and the FBIC, which is the law. But if the federal system failed tomorrow, the bank of North Dakota would be able to clear checks for all of its member banks and all of their customers. They would be able to do all of the things that the Federal Reserve System does. With the other 49 states, if the federal system fails, the banking system fails.See, if the federal system fails tomorrow, North Dakota could create its own system in a heartbeat because it has a distribution system in place with its state bank. The other 49 states don't have a distribution system.
And as far as declaring sovereignty, there are a few things that have to be in place before you can declare sovereignty. You have to have a defined territory; of course, a state has that. You have to have population and a state has that. But the other thing you have to have is control over your own financial system and if you don't have a state bank, you don't have that.
Daily Bell: Good foresight on North Dakota's part?
Marilyn MacGruder Barnewall: I have to tell you, I do not consider the Federal Reserve System in this country to be a legitimate central bank. I am hoping some of these states get state banks implemented before Congress passes some legislation to prevent it. At the moment, states have sufficient sovereignty to say, 'Hey we're going to have our own state bank.' The Federal Reserve is a private corporation; it is not part of the government and it has no authority over the independent states of the United States.
There are several states that have legislatively declared the right to be sovereign, like Alabama, Nebraska, Rhode Island, Wyoming, Washington, Indiana, Kentucky, Georgia, Kansas, Missouri, Mississippi and Maryland. So this goes to my question: Does declaring themselves to be sovereign make them sovereign? No, because they don't have a state bank system in place they don't have control by international law, control of their own system. All I am saying is that state banks are critical to the sovereignty process or to the creation of a new currency.
So when North Dakota implemented their state bank six years after the Federal Reserve was implemented in 1913, Eastern bankers said 'That's a socialist system!' OK, look at it today and tell me which system is socialist. North Dakota just had a national meeting for all state treasurers around the United States in September, and the state treasurer of every state spent a full day becoming informed about the Bank of North Dakota.
Daily Bell: Give us some idea about the process each state will go through to have a state bank.
Marilyn MacGruder Barnewall: It's a very interesting political process, and it won't be pretty. What I have found out about the resolution I wrote for Colorado is that nothing is going to happen until after this election because the big banks will fund their opponents. They will put lots of money into negative advertising.
State banks, if they're going to happen in this country, are going to come about because of a public initiative, meaning people getting petitions signed, getting involved, learning more and so on. A state bank will turn an economy around within a year if it is properly managed and properly run. But it's a political hot potato so politicians who can't afford to have the negative publicity during an election year are passing approvals to study state banks rather than actual legislation. Is that crazy or what?
Daily Bell: You sound frustated about the process. Why did you leave the banking business?
Marilyn MacGruder Barnewall: There were endless changes that were not for the good. Basically, the Community Reinvestment Act that was passed in 1977 said bankers had to make mortgage loans to people who couldn't afford to repay them. if you didn't make the loans that the government said you should make, you would be penalized; you could be fined or they could deny you the right to expand or open a new branch. That bothered me.
Following this leglslation came the low interest rates that Greenspan was putting in place. Suddenly the private bankers didn't have time to make business purpose loans because suddenly everybody wanted to refinance their mortgage. That puzzled me greatly, I just watched what was going on and couldn't believe it. I thought, no government would do this kind of thing to its people if it wanted a healthy economy. It shocked me.
I wrote the first article about Fanny Mae and Freddy Mac back in 2003, called "Freddie Mac's Ethical Woes." You can see it at World Net Daily along with many other articles of mine. In July 2003, I wrote an article about Freddie Mac's problems. At that time, Freddie Mac was under investigation by the US Attorney's Office, the Securities and Exchange Commission and the Office of Federal Housing Enterprise Oversight.
All these changes encouraged me to begin writing my first book, which ended up becoming two fiction books. When the Swan's Neck Broke was the first one. I wrote the book in a fictional format to try to explain fractional reserve banking to the American people and explain the destructive nature of the central banking system. It discusses what was happening internationally and talked about all the corruption that was involved. It also goes into education and what has happened to the education system and why it's so dumbed down.
Swan's Neck Broke came out in 2008 and last year, in 2011, Flight of the Black Swan came out, which was a follow-up to the first one based on how do we recuperate, how do we take down all this corruption? I ended up realizing that what we have to do is a series of citizen grand juries, to identify the corruption and get rid of it. You will have to read the book to find out how that ends. It turned out really well.
Further to my books, I have continued to write several articles on how the Congress literally has gone through the various pieces of legislation that made it possible for this takeover of the American government. It's disgusting. (See If We Don't Learn from History, Part 1 of 2 and Part 2 of 2).
Daily Bell: How would you restructure the banking system in America?
Marilyn MacGruder Barnewall: I would decentralize it, and I think that's the only way to do it. That's why I feel so strongly about state banks. State banks create decentralization of what is too much centralized power within the financial services industry in the United States.
Daily Bell: Would you further regulate Wall Street?
Marilyn MacGruder Barnewall: Well, one of the first things I would do is eliminate the Gramm-Leach-Bliley Act. I would put Glass-Steagall back in place. There has always been a need for a strong, big wall in between commercial banking and stockbrokers. I don't care how much JP Morgan calls itself a bank – it's a stockbroker; it is not a bank. I understand they like calling themselves investment bankers because it gets them respect or whatever they think, but commercial banks and stockbrokers are two different things. There is a natural conflict of interest built-in between the two, from which we were protected by the Glass-Steagall Act. We the consumers and we the commercial banking industry were protected from the moral hazard that results from that conflict of interest until they did away with the Glass-Steagall Act. That's the first thing we need to re-implement.
Whenever government wants more power it ignores the regulations that are in place, and then everything goes to hell. I don't believe in a lot of regulation but I do believe you've got to have the proper structure in place to minimize the conflicts of interest involving greed and corruption. But regulations are not worth the paper they are written on if they are not enforced and adhered to. We have to make sure that the financial services industry is structured in a way that does not encourage fraud, corruption and greed.
Daily Bell: Where do we go from here? What needs to be done?
Marilyn MacGruder Barnewall: I'll tell you what I think. In America, if we don't get state banks in place we are well over the cliff of economic disaster. I think the European Union is history. I believe Greece is going to default. The Federal Reserve System has totally devalued the American dollar and we can expect a depreciation of the dollar in the not too distant future. In my opinion, and no one has said this before, but I believe the state bank concept would work as well to solve the problems in Germany and France as it does in North Dakota. There's too much centralized banking power.
Daily Bell: Is there a power elite that wants to create one-world government?
Marilyn MacGruder Barnewall: Absolutely. I think that's been the objective since the beginning. I believe that in order to get one-world government, they first had to have in place a world economy. Once they have all the world economic systems coordinated, it is child's play to flip into world government. I believe that's been the purpose. I also believe that economic failure internationally has been a planned failure and I believe the reason behind that planned failure is to create world government. The evolvement into technocrats and electronic money is horribly dangerous.
Daily Bell: What do you think of Austrian economists?
Marilyn MacGruder Barnewall: I agree with a lot of what von Mises says but I disagree somewhat on the gold/silver standard because I believe we need commodities as a whole to back our currency. In other words, I believe gold, silver, natural gas, coal, timber, fishing, etc., all of the natural resources of any state, should be able to back a state currency, for example. In my opinion, all wealth comes from the earth.
Daily Bell: Is the Internet making a difference in terms of getting out your message?
Marilyn MacGruder Barnewall: I have to say it is. You have to do a combination of public speaking and publishing to keep the message going. It's a very concerted effort.
Daily Bell: Do you have any other books in the works right now?
Marilyn MacGruder Barnewall: Yes. I am currently working on a manuscript about one of the most intricate stories in the world right now. It will take some time to complete but it is about Ambassador Leo Emil Wanta who has been an intelligence operative since his teens and who reported directly to Ronald Reagan. This will be my final book of the trilogy, Swan Song for a Shadow Government, and should be finished in about a year. It will have a lot of biographical data and be more fact than fiction.
Daily Bell: Any other thoughts you would like to share?
Marilyn MacGruder Barnewall: One of the biggest things I have come to realize is that people's lack of knowledge, not just in the United States but people all over the world, as to how their own financial systems works is the reason that the powers-that-be have been able to perpetrate this rape of our financial resources, which is what it has been. It's a financial resource rape.
I also want to say that the reason I wrote my two books in fictional format, in an international, intrigue, intelligence, operative kind of book, is because it was the only way I could think of to get the attention of the American public. It's not a good situation. People need to learn more and do more.
Daily Bell: Thank you for your time, and your insights.
Marilyn MacGruder Barnewall: Thank you. The Daily Bell is very respected among the financial people I speak with. Most of them read it and I am very pleased to have this opportunity to speak about state banks.
Good for Marilyn MacGruder Barnewall for stating the problem. There is a power elite intent on creating world government. Because of the Internet, they're moving very quickly now, trying to put in place a full spectrum of functioning, global facilities. These include the UN (the legislative arm), the IMF (the central bank), SDRs (world currency), the International Criminal Court (ICC), NATO (world army), Interpol (world police), etc.
It's pretty amazing that people don't see global governance being erected around them, especially Westerners, and can still say that those who speak of it are "conspiracy theorists." There is a conspiracy, all right, but it's being implemented by a handful of impossibly wealthy individuals who have been pursuing this goal for at least a century, if not more.
These individuals control central banks around the world (having installed them, apparently) and use their control of hundreds of trillions to generate what they call a New World Order. The way it's been set up is clever. The US dollar itself has been the lynchpin. The Saudi royal family, thoroughly intimidated, recognizes only dollars for oil. This means that other nations have to hold dollars in order to buy oil. Thus, the US central bank can print almost unlimited dollars, "exporting" its inflation and using the proceeds for whatever purposes the power elite chooses. Obviously, they choose to purchase a lot of military equipment. There's a reason that the US spends more on its military than all the rest of the world combined. It's the power elite's enforcement arm.
It's a kind of closed circle in which the rest of the world pays for its own enslavement. The tributes flowing to America are re-invested into military equipment. In turn, those at the top of the American power pyramid − the shadow government − continue to restrict discoveries of oil to ensure that oil is mostly produced by Third World countries that are easily controllable. There's plenty of oil in the world, in our view, but if the dollar-reserve system is going to work, the supply of oil (and its discoveries) needs to be restricted.
There are other aspects to this plan, as well. What has never really been emphasized, it would seem, even in the alternative media, is the extent to which the Anglosphere power elites have used fundamentalist Islam to set up further world tensions. Wahhabism is the Saudi Arabian version of fundamentalist Sunni Islam. It is consistently exported throughout the Middle East by the Saudis but it never seems to occur to Western observers that the Saudis do NOTHING (important) without the approval of Western elites. If these elites didn't want Wahhabism available, it wouldn't be.
We've also written articles, along with some other observers of the world scene, showing that the Iranian revolution and subsequent fundamentalist Shia resurgence was likely Western-backed. And finally, we've shown that the many wars that the US and NATO are now engaged in prosecuting in the Middle East are overthrowing secular regimes and putting in place Islamic ones, courtesy of the Western-linked Muslim Brotherhood.
Step by step, methodically, Western elites are building up a "clash of civilizations" that will obviously further expand the phony "war on terror" that has already done so much damage to people's freedoms. The clash of civilizations has another advantage in that controlled governments the world over are implementing Draconian passport and visa limitations using the justification of war to do so.
Take a step back and watch the pincer movement closing. On the one hand, you have the rising drumbeat of war and on the other you have additional economic dislocation. Taken together, the elites are creating a worldwide crisis that will apparently be used to further activate world government.
How can people respond? Well, in our humble view, people should do what they can to live independently, even to the point of having independent food sources and access to other resources (including perhaps gold and silver money) that are not directly linked to state facilities. We have regularly offered the solution that people should strive to live in small communities and have a say over the larger bureaucracy that is all too often running their lives.
Ms. Barnewall believes that state banks (call them regional banks) are an important part of the solution, and generally the idea of devolution is a sensible one, in our view. Of course, we've taken it further than Ms. Barnewall (or Ellen Brown) in the sense that we advocate a fully laissez faire society in which various kinds of money and banking can compete with other forms of compensation and capital-raising techniques.
We are not even so sure that banking itself is a necessary or at least important part of free-market societies, in that historically speaking, people have raised capital in numerous ways. The current "cult of banking" is a direct outgrowth, in our view, of the power elite's desire to have distribution facilities to offer-out fiat/paper currency. Absent the current distribution system, the financial landscape would be much changed.
But we have tried to be consistent throughout the years we've been offering the Daily Bell, and long ago we began to state that solutions such as the ones offered by Brown and Barnewall might be better, at least in the short-term, than what we have today. In the longer term, we hope that Western societies find their way back to REAL free markets, free banking and generally monetary freedom. It existed, partially anyway, in the US only several hundred years ago. There's no reason why it can't or won't exist again. People will look back on the current environment as a kind of bad dream − an interregnum, not a reign.
We are not sure, however, that the kinds of free-societies that we (along with many others) advocate will come about because people simply will them into existence. More and more, we are convinced that the current trends will have to play themselves out at least to some degree. For this reason, we do not advocate using the current system to CURE the current system, as more and more are arguing.
In our view, people should try to DROP OUT of the current system to the best of their abilities. If enough people do this, the current system will simply lose credibility and eventually cease to exit. There is not much to recommend it at this point, after all, unless you are a fan of continuing wars, inflation, depression, unemployment, corporatism and expanding global government.
What we call the Internet Reformation is increasingly bringing this state of affairs to the attention of Western citizens, and as this knowledge grows, changes are taking place. We tend to feel this is as unstoppable as any other trend and that the end result of the current sociopolitical, economic and military environment will be one that includes devolution as well as centralization and expansion.
Ms. Barnewall, in our view, is doing her part for devolution and smaller society with her advocacy of state rather than federal banking, and also with her books and articles on these issues. There's much we disagree with, philosophically about the idea of public banking, even at a state level, and, of course, we are not convinced that the state can ever manage ANYTHING effectively because at root, when you speak of the state you are speaking of an entity that will mandate obedience using force.
But within a real-world locale, anything that punctures the ever-bigger goals of the power elite is probably a healthy occurance. Ms. Barnewall obviously appreciates the REAL problem and is not afraid of stating it. She receives our admiration for her guts and we certainly wish her well, generally, in her endeavors. These days, smaller is surely better in so many ways.
Posted by Thomas Molitor on 02/19/12 10:08 AM
There is a reason DB After Thoughts runs longer than the interview: not much in the interview worth examining.
Posted by kenn on 02/19/12 10:38 AM
Nice to hear someone speaking sensibilities... old news to some of us but there are always those that go to the races hoping for spectacular crashes.
She points out that this has been going on since 1977. This proves planned assisted nationcide.
She points out that the banks used to loan on the hopes of bettering the communities by increasing business activity and employment. The companies of the time also felt a responsibility to the communities.
These days it's sheer greed. Production is shipped off to the lowest denominator country,,, banksters take money right out of customers accounts... it's a regular free for all and responsibility to the communities??? Well, that has boiled down to a United Way drive once a year.
Her disagreement with Ellen Brown is justified but both are sharp ladies.
Posted by eternal on 02/19/12 10:56 AM
One of the most important DB interviews by far. Well done sirs!
Posted by speedygonzales on 02/19/12 11:07 AM
Years ago there was a famous banker named Carlo Ponzi. People would give him money and he would return that and a good profit, perhaps too good a profit. What he was doing, of course, was paying his first investors money he stole from suckers who got in at the back of the line.
Banks lent out money they said they had, based on 'toxic derivatives,' and made huge profits on the interest they got when people paid back the money that actually never existed in the first place. In certain circles this is known as an 'air deal'. If you wonder how the '1%' made its billions (trillions), they did it the old fashioned way. They stole it. 'Toxic' is a euphemism for 'counterfeit.' A 'toxic derivative' is a 'thing' a bank claims it has that is worth something when, in actuality, it is nothing at all. A derivative has no money behind it, no company that makes things, no gold or silver, not even vacant land on one of the moons of Saturn.
Nobody believed that every major bank in America would lie about something this simple or be allowed to commit such brazen crimes.
After all, were there laws and regulations? Oh, you say such regulations are 'socialism' and restrict the free use of capital.(So now Ye have what Ye want. Alex Jones sees everything as socialist, marxist or collectivism. Good luck)
So the banks invented $500 trillion dollars and, finally, when the money coming in wasn't enough to hide the fact that the banks assets were imaginary, it all exploded.
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An examination of the history of corporate personhood in the United States is instructive on this point. Even with a cursory review, you soon realize that the courts and the business community have strayed far from the original intent of the Founding Fathers in establishing corporate charters.
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Contrary to the myths to which some subscribe, including many libertarians, the evolution of capitalism out of the old feudal order was not one where liberty triumphed over privilege, but one where privilege asserted itself in newer and more sophisticated forms.
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Putin has already announced significant liberalization of the election laws, among them the proposition to further lower the threshold for registering parties with nationwide status. (We will probably never see a similar liberalization of the corresponding US laws, a country where two parties share the eternal monopoly to power. Similar business monopolies are broken up by the anti-trust laws, why don't apply the same principle to these parties that steal the vote in the USA). Thanks to the political reforms that the Government has announced all those competing opposition leaders will soon have a chance to form their own parties by way of collecting the signature from 500 friends instead of the 40,000 needed today. I admit that this is a display of Putin's political genius. Then each of the much touted 'opposition leaders' will have the chance to form their own private pocket parties. Let them compete!
I predict that Putin will go down in history as one of the greatest leaders of all countries and all times.
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At the beginning of May, a few days after the communist revolution had been terminated on May 1, 1919 by the Bavarian Freikorps, Hitler was summoned as a member of the 2nd Infantry Regiment to attend a course on political instruction. The purpose of this course of lectures was to provide the soldiers with a background of politics, which would enable them to monitor the many revolutionary and political movements present in Munich at that time.
One of the lecturers was a former construction engineer turned economist, Dr Gottfried Feder (1881-1941).(1) His first lecture was entitled 'The Abolition of the Interest-Servitude'. Hitler was enthralled by what he heard, and this was to be a turning point in his political career.
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As always. Decentralization and diverzification is real point of state owned banks. It is paradox, but to achieve free market we must break monopoly thru state owned banx and enterprises- like insurance. Free hands aint worx at all. Command and control worx. Paradox numero due is, that majority of world folx wants socialism, means regulations and taxations of rich, and nazism which means abolishion of interest servitude. Socialists and nazis became anemies of bankers, so this is reason of so many fairy tales behind.
Argentina: We are paying off 'historic debts, generated over decades of abandonment, mistakes, bad policies, or also of foreign interference so that Argentina would not have nuclear development. We have restored the will and the decision that the country should govern itself.' (Message is clear.National socialism. I bet that Putin, Kirchner,Viktor Orban learned history without fairy tales).
Posted by Summer on 02/19/12 11:18 AM
AW: We are not sure, however, that the kinds of free-societies that we (along with many others) advocate will come about because people simply will them into existence. More and more, we are convinced that the current trends will have to play themselves out at least to some degree. For this reason, we do not advocate using the current system to CURE the current system, as more and more are arguing.
(This is my post from another stream it seems relevant here):
I have no ideological preference for a type authority/rule, it's for people to decide. Having said that, I would like to know if those who wish for no government or smaller government think it's productive to wait for a sweeping change of rule/structure, or if it's is better to at least attempt to make the best of the current system by engaging government policy? Therefore, at least attempting to have a positive influence over it, until a smaller government arrives, if indeed it will.
And no, I do not believe politicians are 'good' or that they work for the common good but that's an issue beyond the structure of rule and is to do with the general moral tone of society, its principles and Money Power control.
*Any* authority can be unjust and use force and coercion to achieve its ends. However, governments by nature have greater scale and scalability, which is a problem *if* the people in control are malevolent.
What constitutes force? If people wish for governance in its current guise then are they really subject to force (excluding war, rather referring to general governance)?
If 'force' is wrong then is it right to impose or to endeavour to impose no government? For example, if the populace were asked if they wanted regulations and the police most would say: yes. Are they then really subject to force? What if people want government, what if trends are past the point of no return and people simply will not go back to regional/tribal-type rule)?
Coming to interest, it has been demonstrated over and over again, without rebuttal that it does indeed transfer the majority of the wealth into the hands of a few (as far as I'm concerned those who defend interest defend Money Power). Government allows debt at the point of printing and lending. So shall we twiddle our thumbs until there is no government or smaller government before it is lobbied against? If libertarians are anti-debt at the point of printing then why not so later at lending? If it's a free market idea of 'let the market decide' then surely libertarians should let the market decide on a debt based currency too and not advise against it? This is the trouble, you cannot have a just society without principles. It would never be free, might would always be right.
Should we not attempt to engage with the world we have now? I do not support Ron Paul but he is a libertarian that wishes to engage with the current political system does that make him a statist or a proponent of the use of force?
In our view, people should try to DROP OUT of the current system to the best of their abilities.
'DROP OUT' sounds alright but how and to what extent?
Posted by dave jr on 02/19/12 11:42 AM
I began reading this interview with a bit of skepticism. After all, North Dakota isn't exactly a thriving economic powerhouse. It has a tiny population and young people leave the State in droves to find work. Perhaps it is the lure of easy unsustainable Fed Gov controlled money and entitlement?
I turned the corner with this statement by Ms. Barnewall,
'I agree with a lot of what von Mises says but I disagree somewhat on the gold/silver standard because I believe we need commodities as a whole to back our currency. In other words, I believe gold, silver, natural gas, coal, timber, fishing, etc., all of the natural resources of any state, should be able to back a state currency, for example. In my opinion, all wealth comes from the earth.'
I believe it is essential that people understand that all wealth comes from the earth. And further, it is multiplied and delivered by human effort. Economy is the division of labor by free association and cooperation to this end. Currency then, if not to defraud, has to be asset backed.
I would like to read her trilogy, and from what I have learned so far, can support her ideas.
She mentioned Wanta. I know it is a big story, but don't know the story or its credibility. Does anyone have reputable links to it?
Posted by bionic mosquito on 02/19/12 11:58 AM
I almost avoided reading this interview - another top down proposal, was my thought.
But I did read it, and am glad I did. While philosophically I oppose state intervention in all of its forms, I understand the significant gains to be made by any form of decentralization. Inherently, decentralization offers more choice and decentralization is the direction opposite to one world government.
So thanks once again to DB for bringing this interview.
Posted by Freeman on 02/19/12 12:02 PM
Finally a solution a that make obvious sense. Good for this principled lady to state the facts. We need more people of her qualifications to stand up and yell, DON'T TAKE THIS ANYMORE.
Good work DB another interesting person fighting for freedom.
Posted by rossbcan on 02/19/12 12:06 PM
MMB: "I don't believe in a lot of regulation but I do believe you've got to have the proper structure in place to minimize the conflicts of interest involving greed and corruption"
REGULATION IS FUTILE:
Click to view link
@DB: Thanks for bringing MMB to our attention. She was previously unknown to me, but, appears to be "one of the good gals".
Of course, State Banking is just a pit stop on the road to returning to "my word is MY bond, bank of ME", a devolution of power back to the individual, from whence it comes and, belongs when we finally insist that:
Law impartially deal with ALL who initiate aggression (predators).
Law impartially hold ALL to the contracts they agree to, no renegging, especially politicians, oathtakers, public "servants". Lie -] banishment to political oblivian, plus pay triple reparations to victims, from resources of criminals.
Posted by bionic mosquito on 02/19/12 12:13 PM
I am going to avoid conversation about the pros and cons of interest today. Memehunter has absolutely destroyed the dialogue on this subject.
However I do want to address your statement:
Summer: If 'force' is wrong then is it right to impose or to endeavour to impose no government?
BM: You must see the contradication; if one sees force as wrong, one cannot use force - "impose" - to implement his desire of no force (except it is always right to use force to repel an act of aggression, of course).
One can certainly "endeavor" to do about anything - endeavor isn't force, at least how I understand your use of the term and in this context.
Summer: For example, if the populace were asked if they wanted regulations and the police most would say: yes. Are they then really subject to force?
BM: The ones who say yes and bear the burden of the cost are not subject to force, they voluntarily made the choice.
The question is protection of the minority. What if one person does not want this choice? Who protects him from force? Because he is outvoted doesn't make the subsequent theft right.
There has been enough written about how voluntary associations can accomplish much of what passes for government today - the "good" part, not the bad part.
Governing behaviour is better handled by family, church/mosque/temple, and local community than it is by passing laws criminilazing non-violent acts.
Safety and "police" type activities can be better handled by agencies currently offering insurance, etc.
Street development and maintenance can be better handled by local property developers, homeowners associations, and for-profit toll road developers.
These are a few of dozens of possible alternatives.
But these at least allow each individual the choice to participate or not.
Unless the minority of one is protected in his choice to not go along, we all live under the cloud of force - to be exercised whenever the majority (or one purportedly speaking onbehalf of the majority) desires.
Posted by rossbcan on 02/19/12 12:24 PM
The interview supports DB's primary thesis, which they took the opportunity to re-state, for newbies. What's wrong with that?
Like it, or not, the state and its supporters are legion. Is it not a good thing that some "of the reality based constitutiency" are working, from the inside? Assuming good intentions, and reason prevails, a neutered state, having to compete (or die) with the free market in the cost effective provision of goods / services is the inevitable outcome. Let statist rhetoric regarding their "neccessity" be put to the test of the "unseen hand" (collective FREE choice).
I (and statists) have zero doubts where this leads. Which is why THEY lie, manipulate and confuse fools that they themselves have created with subverted MSM and dumbed down "education".
Posted by flying_pig on 02/19/12 12:57 PM
She cites the North Dakota unemployment rate approvingly. I wonder if that has anything at all to do with the shale oil boom? Or does it have to do primarily with state banking? Food for thought, eh?
Posted by dave jr on 02/19/12 01:08 PM
Yes, good point. I think a mandate of "full employment" like the Federal Reserves' is over reach. Why is that any of their business? When the desire to manipulate exists, naturally the high minded ideal is advertised.
Posted by Spectator on 02/19/12 01:11 PM
Good interview, DB.
Reply from The Daily Bell
Posted by dave jr on 02/19/12 01:16 PM
Where is the 'like' button? -click-
Reply from The Daily Bell
There is no like button. Only a "ratings" one.
Posted by Bischoff on 02/19/12 04:20 PM
"Hey we're going to have our own state bank." [... the states are saying to the federal government].
State chartered banks are nothing new or unique. Before the Civil War there were 950 state chartered banks. By 1880, there were 29,000 state chartered banks. They created their own "redeemable" currency or used other banks "redeemable" currency in their discounting of Real Bills.
In contrast to the tens of thousands of state chartered banks creating currency against discounted Real Bills, there were only a half dozen nationally chartered banks, authorized to receive deposits from the federal government.
"The Federal Reserve is a private corporation; it is not part of the government and it has no authority over the independent states of the United States."
Ms. McGruder-Barnwall is simply wrong on this point. Reading the Federal Reserve Act can easily verify my contention.
The original 1913 Federal Reserve Act was strongly supported and insisted upon by the states. Too many of the state chartered banks were violating their charter for creating "redeemable" currency. In particular, they used "idle" currency to speculate in real estate. This was a direct violation of the Real Bills Doctrine under which the state banks were chartered. The violations were difficult to detect until it was too late and real estate booms would end in busts, taking the productive economy down with it. This sort of rogue behavior by banks was particularly bothersome to states with banks which did not create "redeemable" currency on their own, but instead used "redeemable" currency created by banks chartered in other states to earn discounts on Real Bills.
During the late 1800s, a number of real estate boom-bust cycles caused pressure to be put on Congress to do something about rogue banking. The big money center banks, anticipating federal government restrictions on their banking behavior, tried to influence the Congress to give them an advantage in any future national legislation. The states were fully aware of this effort by the money center banks, and they fought it.
When the FRA finally passed in December of 1913, it reflected the desires of the states, NOT the desires of the money center banks.
The Federal Reserve System which emerged from the 1913 FRA was not one private corporation, it was twelve private, regional reserve bank associations, each chartered and franchised to create a national currency under their own seal. It was the "redeemable" Federal Reserve Note.
These twelve private reserve banking associations, each separately called a "Federal Reserve Bank", and collectively known as the Federal Reserve System, could create FRNs only against the value of un-matured Bills of Exchange (Real Bills) and gold held by their member banks. Their currency creation and currency circulation was overseen by the Board of Directors of the Federal Reserve System, an oversight arm established by, and answerable to the Congress. The intent of the 1913 FRA reflected the desires of the states to check the inflation of currency, brought on by rogue use of "idle" currency for real estate speculation. That was the reason for establishing a national currency supervised by the U.S. Congress.
For the purpose of gold reserves, which banks had to have on hand by requirement of the 1913 FRA, U.S. Treasury bonds (gold bonds) were quite acceptable. These gold bonds, however were non-marketable. To sell these bonds in secondary markets was expressly prohibited by the 1913 FRA.
In the early 1920s, the FRB NY, under its Governor Benjamin Strong, formed an Open-Market Investment Committee for the purpose of acquiring UST gold bonds, and to market them to the other eleven regional, private reserve bank associations for which these "Federal Reserve Banks" paid with "idle" currency. This illegal secondary marketing of UST bonds, conducted by the OIC at the FRB NY in the early 1920s, amounted to running a "central bank" for the purpose of monitizing U.S. government debt, and to deliberately inflate the currency supply.
The downfall caused by the OMOs of the OIC at the FRB NY was of course the "redemption" requirement printed on the face of the FRN. When people caught on to what OMOs were doing to the currency supply, the Florida real estate bubble burst, the stock market crashed, and banks refused, or were unable to redeem FRNs for gold. Subsequently, the gold standard was officially abandoned in September of 1931.
The National Banking Act of 1935 gutted the original FRA of 1913. It preserved the name (with subtle modification) to fool the public. The Banking Act of 1935 legalized the kind of debt monitization which the OIC at the FRB NY practiced illegally, starting in the early 1920s.
Here is where Ms. McGruder-Barnwell is wrong. Today's "Fed" is the "Board of Governors of the Federal Reserve" and its "Federal Open Market Committee" in Washington, DC and twelve Federal Reserve "District" Banks. This is what is known today as the "Federal Reserve" or "Fed". The term "Federal Reserve System" was dropped. What is known as the "Fed" today is clearly and unequivocably a U.S. government agency, albeit it calls itself "independent".
The American banking system itself is dependent on the "Fed" to create currency, which it then circulates through its local or branch offices. How this is done, and how our politics is shaped by this dependency of the banks on Fed policy is a subject matter all its own.
The point is, that Ms. McGruder-Barnwell's ideas about banking deal with debt and credit, and not with "Money" or "redeemable" currency. "Banking" is the creation of "redeemable" currency. Moving around monetized debt is NOT banking. At best it can be called "debt obligation" investing, but that is an oximoron.
When everything is said and done, "banking" and "legal tender" currency are incompatable terms. Cite North Dakota banks, cite "private" banking, cite any bankig at all, if "legal tender" protected currency is involved, it isn't "banking". At best, these examples point to a more efficient application and circulation of debt monitized "legal tender" FRNs, but it is NOT "banking".
The FOMC of the Fed creates "irredeemable" currency by monetizing debt. The American "banking" system, which is made up of state chartered banks as well as of federal charterd banks, merely circulates these "irredeemable", "legal tender" FRNs. How these FRNs are made to circulate is a subject of its own. Except, to say that "fractional reserve banking" has little to do with "reserve requirements" set by the "Fed".
The solution to the mess created by the National Banking Act of 1935, does in fact lie with the states.
However, what were the states thinking when they ratified the 16th Amendment, which today secures the debt obligations of the U.S. Treasury... ???
What were the states thinking when they ratified the 17th Amendment and thereby resigned their voice in the U.S. Congress... ???
States since the creation of the American Republic fought against the establishment of a central bank issuing debt monetized currency. Could it not have been foreseen what problems the 16th and 17th Amendments would eventually present to the states... ???
So what now... ??? Should the states go to the federal government and say, "Hey we're going to have our own state bank." It amounts to begging to get back power which the states readily gave up in 1913.
Isn't it clear that the FRA of 1913 only passed after these two amendments were ratified... ??? The money center banks supportetd the ratification of the 16th and 17th Amendments, because they failed to get their way in the national banking legislation. It proved the real intention of these banks, but it also proves that the 1913 FRA was not favored by them. Their supporters in Congress merely withdrew their opposition to passage of the FRA after the 16th and 17th were ratified.
Posted by Summer on 02/19/12 04:36 PM
Hi Bionic Mosquito,
Thanks for your response. In essence I don't disagree with your views.
Summer: If 'force' is wrong then is it right to impose or to endeavour to impose no government?
BM: You must see the contradication; if one sees force as wrong, one cannot use force - "impose" - to implement his desire of no force (except it is always right to use force to repel an act of aggression, of course).
Well, my point was the absence of something can be an imposition of an undesirable state of affairs for some party or another i.e. if a libertarian became president an dissolved all government and police this would still be imposing a certain environment.
My main points were: " This is the trouble, you cannot have a just society without principles. It would never be free, might would always be right.
Should we not attempt to engage with the world we have now? I do not support Ron Paul but he is a libertarian that wishes to engage with the current political system does that make him a statist or a proponent of the use of force?"
Btw, what do you think of secularism in its purer forms viz., minority rights and justice, especially regarding plural legal systems?
Posted by dave jr on 02/19/12 05:38 PM
Is it your opinion that there was no malevolent or at least an opportunistic intent with Aldrich and the boys in 1913? That the evil machinations arrived with Strong.
Are you saying we briefly had the best of two worlds between 1913 and 1935? But look at the instability during this period. I am an old fashioned conservative. I like stability.
Posted by SoCal fellow on 02/19/12 06:52 PM
Fine interview, D-B-. I had not heard of her (I do not get out much), and enjoyed reading her thoughts.
Good of you to be open minded about folks who can be useful allies in the short/intermediate-term, though they differ from your long-range ideal.
Posted by Bischoff on 02/19/12 08:44 PM
"Is it your opinion that there was no malevolent or at least an opportunistic intent with Aldrich and the boys in 1913? That the evil machinations arrived with Strong."
Oh, not at all. I think the Griffin book is exactly correct in describing the scheming by the NY bankers culminating in their meeting on Jekyll Island. They knew that federal legislation was demanded by the states to reign in the behavior of the money center banks. Whatever emerged in this federal legislation, the money center banks wanted it to favor them.
Their man in the U.S. Congress to corral support for legislation that favored the big NY banks was the Republican leader of the U.S. Senate, Senator Aldrich of Rhode Island.
Despite Aldrich's effort have the franchise to create a national currency awarded to the NY banking reserve association, the states wouldn't hear of any of such legislation.
When the NY bankers realized that their efforts to gain sole control over the creation of the national currency by legislation was never going to happen, they changed their tactics. Senator Aldrich changed his opposition to the proposal of the 16th and 17th Amendments in the U.S. Senate and came out for their ratification. The NY banks gave financial support to the "Progressive Movement" which demanded ratification of the proposed amendments.
It is my conclusion, that at the point when Aldrich and the big NY banks started to support the demands by the "Progressive Movement" for greater wealth distribution (Income Tax Amendment) and to stamp out corruption by state legislators in selecting U.S. Senators (Popular election of U.S. Senators), the money center banks had concluded their plan for future action. It was a mere matter of time, and a matter of opportunity before they would act on their plan to "elastizise" the currency supply.
While Aldrich could not persuade enough legislators to pass legislation favorable to the NY banks, he did have enough support to hold off legislation which was unfavorable to the big banks. Anly after the 16th Amendment in February of 1913 and the 17th Amendment in April of 1913 were ratified by the states, did Aldrich and his supporters drop their demand for changes and let the Federal Reserve Act pass in December of 1913. The final version of the Act favored the interests of the states. It did NOT favor the interests of the NY banks.
However, the states were completely unaware that they had shut themselves in the foot with the ratification of the 16th and 17th Amendments. It never dawned on them that the two amendments would make it possible for the NY banks to establish a central bank without their concurrence. (The politics involved in the ratification of the 16th and 17th is very interesting. Where are the gradute students who could do research in this area... ???)
When in the early 1920s, the country experienced an economic down turn as result of WW I, Benjamin Strong saw his chance to conduct OMOs and liquify the currency supply to help weather the economic downturn. It was successful. The politicians loved it, because of favorable voter reaction. Consequently, the FRB NY kept selling UST bonds in secondary markets and the country was off to the "Roaring Twenties".
The direct answer to your question is, "No, the evil machination did not arrive with Strong. The evil machination was present at the Jekyll Island meeting, it was present with the support of the ratification of the 16th and 17th Amendments, and the illegal act by the OIC of the FRB NY under Benjamin Strong was only the enactment of the evil intent which had existed with the money center banks for decades. However, I see this "evil intent" less as conspiratorial than as an act which derives from human nature.
"Are you saying we briefly had the best of two worlds between 1913 and 1935? But look at the instability during this period. I am an old fashioned conservative. I like stability."
I am not saying that at all. What I am saying is that the Federal Reserve Act of 1913 as far as legislation to solve a problem was concern, was in my opinion excellent legislation. It installed creation of a national currency under the RBD by private banks in issuing a federal franchise to their twelve regional bank reserve associations. These reserve banking association, aka as Federal Reserve Banks, created "redeemable" FRNs for their member banks based on the value of un-matured Real Bills and gold these banks held. Nothing else was eligible to be monitized under the original FRA. It worked just fine.
What didn't work was the oversight body of the Congress in the form of the Board of Directors of the Federal Reserve System. These were federal bureaucrats appointed and paid by the U.S. Congress. They were not given the respect for the kind of job they had to perform. They were shunted off into a facility with no windows at all. Their pay when compared to the pay of any of the bankers with whom they had to deal, was down right miniscule. To that add the intimidating figure of Benjamin Strong, as Governor of the FRB NY, which in size of deposits was twice as large as the next largest reserve bank in Chicago, and the Board of Director of the Federal Reserve System was essentially neutered by the rough shut treatment from Strong and the FRB NY. Things were never the same after the OIC at the FRB NY started illegal OMOs in the early 1920s while the Board of Directors failed to utter a peep.
I am quite sympathetic to you conservative sentiments. I like stability too. However, when people don't know the first thing about banking or the RBD, when politicians pander to the basic human instincts of voters, the common good will always be hurt.
Jefferson repeatedly made the point that the Republic could only survive with an educated electorate. His words "To be ignorant and free, is something that never was and never will be". Nothing could be more true today.