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Banking in the public interest? Public Bankers look to spread their model

Newly redesigned $100 notes lay in stacks at the Bureau of Engraving and Printing on May 20, 2013 in Washington, DC.

For 94 years, the state of North Dakota has run a public bank. It acts like a mini-Federal Reserve that subsidizes loans based on local priorities. The bank helps local entrepreneurs, students and others all while generating a profit for the state treasury.

This weekend, attendees of the Public Banking Conference in San Rafael, California will gather to re-think the global banking system. They hope to spread North Dakota's time-tested financial idea.

Marc Armstrong, executive director of the non-profit The Public Banking Institute, joins Marketplace Morning Report host David Brancaccio to discuss public banks and the benefits of making credit decisions locally.

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio
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Just back from the Public Banking Institute conference, where I found out that money is actually a unit of measure, like inches or tons, not a unit of value, like gold or silver. We'll never 'run out' of inches.

Americans will continue to give away our savings, natural resources, homes, children's education and future, and our ethics -- as long as currency is seen as a unit of value which people compete for like hungry rats fighting over fresh garbage. That's the Economy of Scarcity.

In an Economy of Sufficiency, money is the public utility that ends our gridlock of idleness and puts all our skills and education to work, while simultaneously preventing sociopaths from concentrating wealth at the top. Like water and sewage agencies, the money utility needs transparent management, a team of professionals and elected representatives, to keep it flowing.

For example, there seems to be no way to pay to repair our crumbling infrastructure. But public banking could do it! North Dakota has had a public bank for 97 years, which means any interest they pay for projects goes to the citizens, not to banksters, and the state bank lends to sound projects that for-profit bankers shy away from.

The Bank of ND is respected and valued by other banks and credit unions in the state (it helps that citizens can't open up checking accounts in the BND!) and works well with them (or rather, the ones that are properly managed).

Back in the 1700s, many of the American colonies had state banks and back then they took it a step further. Pennsylvania, for instance, would print currency as needed by the public. For every 105 units, they could lend out 100 at reasonable interest and spend 5 on the costs of infrastructure and government. Income taxes were unheard of. A key factor of the American Revolution (not in your history books!) was King George and Parliament's demand that taxes to the crown be paid in pounds, a currency very scarce over here, which led to economic collapse (as intended by our colonial masters trying to put us in our place).

You could say that first the Bank of England, and then subsequent banking arrangements (most recently the Federal Reserve), have kept us as a colony all this time!

Public banking works; forty percent of banking, world-wide, is public. The secret's out!

Be inspired and revived, visit PublicBankingInstitute [dot] org

Forming a public bank is not limited to states. Universities could do it, chartered cities too.

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