Chapter 2 - A Public Bank

I will show you a system that will work using a National Public Bank operating on behalf of the nation.

Our National Public Bank is a bank that is owned by the government on behalf of the people. It is a 'People's Bank'. It lends money to the government for all kinds of infrastructure projects at low-interest rates and all income goes to the Government. It also arranges for loans to small and medium business and owner-occupiers. The charter of our Public Bank will prevent it from lending for speculation. Speculation is buying assets with the anticipation of an increase in the value of the asset. Speculation is entirely unproductive and a hindrance to the efficient operation of the nation. Speculative income is classic unearned income.

Example of a 'The Public Bank'

There are ten people in a room that represent the people of the nation. I am a National Public Bank operating in conjunction with the Treasury. I am called 'Public' because I am owned by the public through the government. Each person at birth instantly owns a share of our National Public Bank. So each person in this room effectively owns their share of our National Public Bank. As the National Public Bank, (with the support of the treasury), I will create money tokens and spend them into society. We shall build a railway line across our nation. I will give you $100 to provide the steel for the railway lines. I will give your neighbour $100 to provide the sleepers. I will pay another person $100 to build some stations and pay another person to lay the tracks. I will spend a total of $1000 into society. In this case, the debt is owed by the government to the government so it is somewhat irrelevant. Any profit from interest is remitted to the government. So this is one of the best ways of providing money for the nation. There has been plenty of money spent into society which is available for the people to earn. The nation has not accrued unpayable debt.

Parrots hate Public Banks. We do everything we can to undermine them.

This system is currently used in China and we can call it 'The China Public Bank System'. This system has propelled China from a backwards nation to a leading economic powerhouse, in around three decades. Australia used this system from 1911 to 1924. We can call it the 'Australian Public Banking System of 1911'. The Australian Public Banking System turned Australia into the then most prosperous nation in the world, until the bankers in the City of London heard about this miracle banking system in use by the colonials. London banking interests sent across one of their best men and curbed the activities of the recently formed 'Commonwealth Bank of Australia' using their ability to manipulate the Australian political system. The 'Great Depression' in Australia started shortly afterward.

The Eleventh Flaw of Economics

   Public Banks can avoid 'National Debt' situations. With Public Banks, the 'National Debt' is owed to a government bank and is somewhat irrelevant.

China has made phenomenal progress in recent decades, almost as if they were copying the Australian formula of 1911. China runs a National Development bank that funds appropriate projects. It is interesting to read random reports from the China National Bank to see the care they take to ensure every level of society has funds available for big and small entrepreneurs to ensure that entrepreneurial effort is not stifled. I overheard this little story from an Australian gold miner of a technical background who had done work in China. His story went that when a chinaman goes into a bank and asks for a loan of one million yuan to build a factory, the bank replies with: "If we lend you three million, will you build three factories." Quite different to the west.

A crucial element of a sustainable money system in a modern nation is a National Public Bank.

National Public Banks are a solution to the money issues in Europe. A national government in Europe is not authorized to create new Euro, Legal Tender. However, each nation could create and run a National Public Bank. A National Public Bank is owned by the government on behalf of the people and can make loans to the government without creating unpayable debt. A National Public Bank would create credit and lend it in exactly the same way all European banks lend money. It would create Euros to lend to the Greek government in exactly the same way the IMF created its €30 billion.

There are other solutions, but a National Public Bank is by far the easiest because it has so often been done before and National Public Bank easily be integrated into other solutions.