A Vision For State-Owned Banking in Wisconsin

David Redick

Activist Post

State-owned banks are finally being seen as a step in the right direction away from dependency on, and control by, the Federal government and its cohort, the private Federal Reserve. State-banking initiatives have now been undertaken in 14 states, with Wisconsin being a recent addition.

The long-term goal of state-run banks is to end inflation, and reduce wars and business cycles by abolishing the Federal Reserve (and its unlimited supply of fake money), while allowing private mints to issue real gold currency, and “representative” paper certificates and token coins, redeemable for gold to bearer on demand, for convenience. The short-term goal is to keep the profits and lending in the state to enhance local economic development.

All states, except North Dakota, are subject to the rates and management judgments imposed by private banks. The states must deal with these banks for loans and other services just like any person. As a big customer, states pay many dollars in interest every year. Bonds are also a source of debt-financing. The Bank of North Dakota was founded in 1919 with the mission of “promoting agriculture, commerce and industry” in North Dakota. It was never intended for BND to compete with or replace existing banks.

Instead, Bank of North Dakota was created to partner with other financial institutions and assist them in meeting the needs of the citizens of North Dakota. Over the years, its fiscal responsibilities to the state have increased dramatically.

Today, the Bank operates with more than $230 million in capital. The State of North Dakota began using bank profits in 1945 when money was first transferred into the General Fund. Since that time, capital transfers have become the norm to augment state budgets.

It is important to look at the history of why exactly the state-run bank movement is so important, as well as the current conditions that indicate that a change of direction is essential for the survival of America as we know it.

Fake Money is the Cause of Wars and Depressions

On Jan. 22, 2008 the Federal Reserve System issued an interest rate cut to “rescue the economy.” This shows how counterproductive government “management” of the economy is.

It creates problems with too much easy money (mortgages), then tries to solve them with more of the same (a “stimulus” package). The analogy is that easy money is like a heroin high, and recessions are like withdrawal. In each case, it is better to avoid the fake highs and let the free market work.

Our monetary system is very important because it affects government policy so much.

Our leaders in Congress want an unlimited supply of that money so they can continue to give handouts to voters and fund wars for empire, such as Iraq, Afghanistan, and perhaps Iran is next.

Since only the Federal government can create money, we see an increase in the number of state projects funded by Washington and more pork from the Capitol that usually benefit Federal cronies and not local companies.

You won’t read this analysis in the newspapers or in a college economics course. Politicians, business leaders and professors like the current system of fake money, because their jobs, grants, and social lives depend on it. Thus, they ridicule the idea of real money (made of gold, represented by paper certificates and token coins for convenience, but redeemable for gold to bearer on demand) as old-fashioned. However, history and logic show us that the use of real money, not subject to manipulation by government, is fundamental to the long-term success and survival of a nation.

Conversely, all failing nations in history have resorted to debasement of their currency, using worthless paper and less-precious metal in coins, to fund their excess spending. Fake (fiat) paper money, managed by the Federal Reserve, is what allows the massive spending and debt for wars and domestic pork and welfare that have brought the United States to the brink of economic collapse.

The Fed is a private bank created in 1913, which was granted authority to produce our currency and manage our monetary system. Its mission was to bring stability and maintain the value of the dollar. It has been a complete failure. The U.S. dollar has lost 96% of its purchasing power since 1913.

The key reason to convert paper money to a commodity is to limit excess expansion of the money supply. The commodity could be wheat, iron, diamonds, or pearls, but gold works best for many practical reasons. Politicians hate real money because it limits their spending.

The United States is bankrupt due to excess debt, spending, and future obligations, with no cure in sight. Those countries that own a lot of U.S. dollars can’t afford to dump them as their value declines due to fear of starting worldwide panic selling.

But history shows us that something always triggers panic selling and a crash. This crash could reduce the value of the U.S. dollar by 50 percent or more, and start a worldwide depression. The “trigger” happened when the US housing bubble burst in mid-2008, which lead to a worldwide recession. As we see Greece and others fail, and become enslaved to the subsequent austerity measures, we are bound to see a severe depression and crash of the U.S. dollar. The U.S. can be seen as a “Big Greece.” Sadly, very few people understand or care about currency issues. Instead, they prefer our version of Roman bread and circuses as we crash.

A wise man once said: “Things that can’t last, don’t.”

Author David Redick is a “Ron Paul” Republican running for Wisconsin State Assembly 77 and supports establishing a state bank.