Does Public Banking Work? – Ellen Brown

https://vimeo.com/427504936 With the power of the financial sector overwhelming politics and the economy, are publicly owned banks the answer? Ellen Brown joins Paul Jay on theAnalysis.news podcast.   Transcript Paul Jay Hi, I'm Paul Jay, and welcome to the Analysis DOT News podcast. The current pandemic crisis has clearly shown that the finance sector, the big banks, investment firms, and money management, institutional investors,  like BlackRock and Vanguard in such times of crisis, either caused by this pandemic or created by their speculative frenzy, are not capable of surviving without government intervention and trillions of dollars of virtually no-cost loans. To paraphrase Franklin Roosevelt, bankers get a return on their investment, a profit because they take risks.   If there's no real risk because the public keeps saving them whenever their risk doesn't pay off, then why do they get a profit? And then why shouldn't the public own finance? Ellen Brown is an American author, attorney, public speaker, and advocate of financial reform, most prominently public banking. She's the founder and president of the Public Banking Institute, a nonpartisan think tank devoted to the creation of publicly run banks. Thanks for joining us, Ellen. Ellen Brown Thanks Paul.  It's great to talk to you. Paul Jay So I'd like to break this discussion into two or three different kinds of assumptions. There's public banking within the current political economic system, Capitalism, as we know, or at least as we knew it, because who knows exactly what it is. Once this Covid crisis plays itself out, at any rate, I'm talking about, for example, the public bank owned in North Dakota. There are public banks in Germany and other places. I want to explore the existing models of public banking to start with. Then I want to talk about if there was really a progressive government federally or at a state level, maybe even at a city level. But I think that's harder to do. But if you really had a progressive controlled government at a federal or a state level that really wanted to develop public banking, what might that look like? But we'll get to that in  the second part. So let's talk about first what exists, and deal with sort of the normal arguments that are against public banking, which is it's not as efficient without that competitive, profit driven motive, public banks simply won't make rational loans and that could be misused by government and so on and so on. So what exists and what's the actual record? Ellen Brown First of all, it's a myth that public banks are not efficient. They're actually more efficient. Studies have shown this. We have Germany is probably the leader among European public bank systems. Say half of their banking assets are publicly owned and these are the Sparkassen banks. And so that's one model where they service the local community and they are regular local commercial banks. In China,  80 percent of financial assets in China are publicly owned by the government. But that's more of a top down system. So you have the big banks, the infrastructure banks are owned by the government.  And the key to all this is that banks actually create the money they lend. And so what the big banks, the big Chinese infrastructure banks do is they create money on their books. So the government borrows money created on the books and the banks build stuff and then pays the loan back with the profits of the loan.  And that's the same thing Roosevelt did during the 1930s. But he did it with the Reconstruction Finance Corporation, which wasn't technically a bank,