The F-22 burns through fuel and taxpayer money at a massive rate. The military has no idea what to do with this plane, but Lockheed wants to keep building it, not because it has any military value, but because it is a “great way to create jobs.” Remind us not to go to Lockheed when we want economics advice.

Lockheed Martin has a high profile PR campaign to get the government to keep funding its ludicrously overpriced and incompetent F-22 fighter. This fighter is the pre-eminent example of out of control military spending with a price tag of $300 to $350 million each. Furthermore the US government gets almost no military capability for this massive price tag. Its complexity and unreliability have resulted in an average readiness level of 62%, the lowest of any US fighter, and it is designed to fight a threat tha does not exist and may never have existed. It redefines the term boondoggle. The F-22 actually reduces the Air Force’s capabilities and is considered a laughingstock by air power experts not in the military establishment. That is those with the combination of air power knowledge and who can exercise free speech. However, even if the F-22 were important for US defenses, and if it could stop crashing (it has never been used in combat, but keeps crashing in training), the argument Locheed Martin is putting forward is completely economically illiterate. Numerous studies show the exact opposite of what Lockheed and Congressment from the F-22 manufacturing state of Georgia propose. Time and again, defense spending ranks as one of the least effective ways to create jobs. The highest contributor to economic growth is actually infrastructure. One reason for this is it results in something that people can actually use, roads, rail, water, etc… Advanced fighter aircraft like the F-22 result in either more defense contractor fraud, or lots of dead people. Neither of these can be considered an “economic good.” The current crop of 180 F-22s already require $8 billion in refurbishment ($45 million per plane), and the fighters have yet to fly a single mission. They create such a massive logistics tail that they are unusable in any military thearter. The Pentagon’s best financial move is to mothball the current F-22s and write-off the $65 billion program as corporate welfare for Lockheed Martin, and send the planes to air museams around the country where they can serve as tourist attractions.

Defense Spending Is Only Justified for Real Security Needs – Never Jobs

This proposing defense spending as economically beneficial has got to stop. It is an idiotic proposition because the only logic by which military spending can be presented as beneficial beyond security, is through attacking other countries in order to procure their resources. If that is a policy of the US, then we need to have a discussion on this. Secondly, even if this is the official US policy, F-22s would not be the weapon you would buy. Countries that we attack like Iraq and Afghanistan do not even have modern radar systems (in the case of Afghanistan, they have no radar systems) so the F-22 is complete wasted on these types of “enemies.” 

If Lockheed is indeed prepared to present the F-22 as a jobs creator, it should perform the economic research comparing the money spent on more F-22s to public infrastructure and publish it in a white paper. However, as soon as they do this, they would fall right on their face, because it works the other direction. So they won’t do this because it won’t be effective and the economics would be lampooned. However there are a number of think tanks that would be happy to falsify research like this for a fee. What is much easier is to create emotionally laded ads which have nothing to do with real life economics. When Lockheed says that the F-22 is responsible for a certain number of jobs, the question should be “compared to what?” That same spending spent on anything else – literally anything else – will result in more jobs, and will be better for the economy in the long run.

This video describes Lockheed’s campaign

References

http://defensescholar.wordpress.com/2009/01/07/its-time-the-kill-the-f-22-and-f-35/

http://militarywaste.org/2009/03/07/quotes-on-the-f-22-raptor/

It has spent massive amounts of money on being undetectable by radar, while not noticing that inexpensive Russian made radar homing missles can lock onto the F-22 based upon its radar. These missles are in the couple hundred thousand dollar range. This means a $300 million dollar investment can be destroyed by a $150,000 investment. More details are here…

http://www.cdi.org/pdfs/stevenson%20f-22%20brief.pdf

Lockheed gets the government on the front-end and the back-end. They continually overcharge the government for service parts. The increase in the cost of parts is tremendous and has no logical reason aside from price gouging. The government plays footsy with Lockheed because high ranking members of the military want jobs in the private sector after they leave the Pentagon, and the best way to get these jobs is to look the other way when contractors steal from the taxpayers. See this article for details.

http://spplan.wordpress.com/2008/10/03/pbl-a-real-trend-or-fake-trend/

What would you do if you learned that your government had outsourced its central banking function to a private company? Furthermore that this company had only a loose affiliation to the government, and that the government have very little oversight into this entity both in terms of controlling its behavior and being able to see what this private company was doing. Would it surprise you to learn that, if you are a US citizen, that your government already has done this and actually there is nothing new in that privatizing the central bank was performed back in 1913.

What Does a Central Bank Do?

A central bank does a number of important things, but the most central to its role are the following:

• Creating money
• Controlling the money supply
• Setting interest rates (this is done through what is called the Federal Funds Rate – which is the rate they loan money to banks)
• Loaning money to banks

The central banking function is considered both one of the most important roles of government, as well as one its greatest powers. What is most unusual is that any government would give up this right to a third party, and how this happened, and the fact that it did happen tells us a lot about in effect who is running the country. That is, any government that can be persuaded to sign over its right to the central banking function, may indicate that the government may not be as powerful as one would presume that a government ordinarily is.

How Does the Fed Create Money?

The first idea to dispense with to understand this concept is paper money. Paper money is a physical representation of money, but it is less and less important as transactions are increasingly electronic. Therefore, money is increasingly accounting entries. Of the money that you have, unless you are a rare coin collector or a goldbug (someone who hoards gold), the vast majority of your money is a ledger entry at the bank of your choice. This ledger entry is supported by only a small fraction of reserves as your bank. The bank has the right to do this because  they have been deputized by the government to do so.

Now if the Fed wants to increase the money supply, they have a number of mechanisms they can do so. First they can reduce the federal funds rate, which is stimulative (causing more banks to borrow). Second, they can offer to make more loads to banks. Roughly speaking, for every $1 a bank receives, it can loan out $10 (called fractional reserve banking). Where does the Fed get this money from? Well, that is the thing, and why the Fed is so powerful. They can create money from air. They have been given this power by the government.

The Fed is nothing more than an organization that is a front for large banking interests. This is in the same way that the Cato Institute or Hoover Institute are fronts for large business and defense interests. The Fed is not only an example of a privatized central bank, many of the owners of the Fed are not even US banks. Controlling banks include a number of banks in Europe.

1. Rothschild Bank of London
2. Warburg Bank of Hamburg
3. Chase Manhattan Bank of New York
4. Warburg Bank of Amsterdam
5. Rothschild Bank of Berlin
6. Lehman Brothers of New York
7. Lazard Brothers of Paris
8. Kuhn Loeb Bank of New York
9. Goldman Sachs of New York
10. Israel Moses Seif Banks of Italy

We don’t like using the term “international banking cartel.” However, we are not aware of any other similarly important government function that is both privatized and also owned by foreign firms. This would be like learning that the Pentagon has as one of its member companies, companies in Fiji or Russia, or that the State Department is taking orders from the Illuminati. We can only conclude that central banking must not be as important as we thought it was!

Why a Private Fed?

Understanding how powerful the Fed is question arises as to why it is in private hands. And in fact, there are a number of experts in this field who believe that the current privatized Fed is unconstitutional and therefore illegal. We have been waiting for a lawsuit to be brought to the Supreme Court to test the constitutional validity of the Fed, but none have been forthcoming that we are aware of.

The Fed website seems to pretend that it serves a public interest function. They have tips for avoiding foreclosure scams. However, there is an inconsistency in their behavior. In the late 1990s when approached by the District Attorney of Cleveland about lending abuses by their member banks to low income households, they did absolutely nothing. The Fed behaves in ways that promote the interests of banks. Their public interest function is not apparent.

Who’s Interests Does the Fed Represent?

This issue of who’s interests the Fed represents is a critical one. There is evidence provided by cepr.net that in the early days of the current financial crisis that Fed Chairman Bernanke actively exacerbated the financial crisis through reducing liquidity through reducing its purchases of commercial paper. The reason this was done is that because the major banks were insolvent, and under federal law would have gone into receivership, and this would have caused the management of these banks to be removed. When one sees that one of the Fed’s owning banks is Goldman Sacks, and the Treasury Secretary at the time was the former CEO of Godlman Sacks, its not hard to see where the term “thick as theives” came from.

Paulson and Bernanke had the same employer….but its not the employer you think. Its actually Goldman Sacks and other controlling banks of the Fed. This is utterly masterful, both men pretending to work for the US government, when in fact that work for the banks that own the Fed. The banks control both the Fed and the Treasury. Because of this control of both of the major finanical branches of the US, they have the ability to collude in order to rig financial markets. For this reason it is not surprising that the bailout has been so bank friendly.

As for Bernanke, its important to point out that he lies for a living. He pretends that he works for the government when he does not. He may have a PhD in economics, but he is no longer an economist. He is now a professional actor, and he has only one role, he is paid to serially misrepresenting himself through his role as Fed Chairman.

What that major banks wanted, and what Bernanke wanted as he represents those interests, was a major bailout of the banks my taxpayers. This bailout would allow what are essentially his friends or his board of directors to maintain their management positions at these banks.

Conclusion

At last tally over $1.2 trillion has been loaned out from the Fed to banks, and that is actually an old figure. When asked about this in a congressional hearing, a representative of the Fed stated that they did not have the “specific list of banks” that received money (in fact, they did not name a single bank). The answer given was that they did not like to publicize this list as it could cause banks to be less likely to borrow from them. What should be remembered is that this is not technically the Fed’s $1.2 trillion. They have only been deputized to create this money by the US government, and without the US government, the Fed is nothing. However, what appears to be the case is that the Fed does not only not report to the US government, but they do not owe the government any accounting of where or to whom the money that they loan goes. That is a serious problem that needs significant investigation. Ron Paul seems to be one of the few congressmen who have had a long term interest in this topic.

In this excellent video by the Real News, a Fed representative refuses to provide specific banks that at least $2 trillion have gone to. Not being a government organization, they are actually not required by law to answer questions of any detail from Congress. That is why their testimony in front of Congress is primarily a dog and pony show.

Quote on this topic from Thomas Jefferson

“I believe that banking institutions are more dangerous to our
liberties than standing armies. If the American people ever allow
private banks to control the issue of their currency, first by
inflation, then by deflation, the banks and corporations that will grow
up around [the banks] will deprive the people of all property until
their children wake-up homeless on the continent their fathers
conquered. The issuing power should be taken from the banks and
restored to the people, to whom it properly belongs.”

References

http://en.wikipedia.org/wiki/Federal_Reserve_Act

http://www.geocities.com/CapitolHill/Senate/3616/flaherty3.html

http://land.netonecom.net/tlp/ref/federal_reserve.shtml

How the Federal Reserve complete failed in its duty to manage the credit and money supply of the US economy during the boom years.

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/systematic-risk-regulators-and-the-power-of-arithmetic/

There was a huge focus on change during the Obama presidential campaign. However, after being elected, Obama had the opportunity, or at least the perceived opportunity to bring in fresh blood into the senior posts. However, Obama decided to select the same people from previous administrations. This was extremely concerning, particularly for the cabinet positions related to the economy. This is of course because of the deep economic crisis that occurred before Obama took office and was a major contributor to him being able to become elected.

Obama’s Appointments

Obama’s appointments have been the “usual suspects,” and have demonstrated no unique or critical thinking on his part. He seems to have selected people from an extraordinarily narrow group of names. These names seem to have been provided to him by the banking industry. This includes Timothy Geithner (replacing another industry person Hank Paulson who had already provided immense bail-outs to his friends at the major investment banks), and Laurence Summers. Timothy Geithner has done nothing but give more money to banks, with no strings attached, and what Laurence Summers has provided is less clear, however, what is clear is that both these men are totally subordinated to the banking industry. Laurence Summers was instrumental in supporting the Gramm-Leach-Bliley Act, which lifted the six decade restrictions between commercial banking, insurance, and investment services. His statement..

“Today Congress voted to update the rules that have governed financial services since the Great Depression and will replace them with a system for the 21st century. This historic legislation will better enable American companies to compete in the new economy”

It turns out that this legislation was critical in removing the old safeguards and was instrumental in allowing the behaviors that caused the current crisis. Other areas that Laurence Summers bet wrong on include opposing regulation and standards on credit default swaps. This allows companies like AIG to provide insurance on bad mortgage backed securities without having to set any money aside to pay out. AIG, with a book value of $50 billion, now owes $300 billion due to the collapse of the mortgage backed security market. This difference will be picked up by Laurence Summers.

While Laurence Summers was president of Harvard and has quite a reputation as an economist, it is clear that he has cost US taxpayers billions and is wrong on almost every major policy decision he supports. We suspect this is not because Laurence Summers is a stupid man (he was the youngest tenured professor in Harvard’s history), but because he is utterly corrupt. Laurence Summers received millions from hedge funds and well paid speaking engagements at many of the major investment banks.

After seeing this track record, Obama selected him as Director of the National Economic Council. This is how much Obama seems to value track record vs. pedigree. Of course this depends upon how you look at his track record. His track record of being correct is awful, but his track record of supporting policies that are corrupt and enrich elite interests is second to none. This brings up the question…

Does Obama believe or know that he has to appoint a specific number of people from a batch of individuals that are provided to him by corporate representatives. Does his Chief of Staff (Rohm Emanual) have this list compiled for him by corporate doners? Are they first cleared with large corporate interests before they are presented to Obama to he can choose from a preselected group? Has this always been the way political appointments have been done, at least for the very top political appointments. Does Obama realize or at least intuitively know what would happen to him if he were to appoint people from outside of this pre-selected group?

A Democracy Allows Corporations to Control The Appointment Process?

One can question the degree of democracy in a country that both controls the electoral process to the degree that it does, has Madison Avenue produce the political commercials, engages in voter purging, adjusts the votes through computerized machines and after all of this has one final trick up its sleeve:  it then decides for those who are elected who will be appointed to the key positions in the any new administration.

Kennedy was not getting along very well with the Pentagon and Federal Reserve Bank and was not buying into key concepts like “the Domino Theory,” Cuba as a threat to US national security and the Federal Reserve as a private banking entity with government money creation abilities. LBJ proved a compliant president which the Pentagon and Federal Reserve Bank was much more happy with. Obama has to be careful and institute policies that support elite interests, or else…..well lets just say the elite have their methods of limiting someone like Obama. If it were to actually happen, it will be a lone gunman. (its must always always be a lone gunman, or the individual does it to themselves. For instance, the Waco victims were not killed by the FBI, they shot themselves, some of them managed to shoot themselves 9 times.) If anyone ever disagrees with the official story they will be labeled conspiracy nuts. However, given Obama’s complicity with the elite, putting their people in key positions and taking tax-payer money and giving it to Goldman Sacks and so on, he should avoid JFK’s fate.

US History of Political Assassination

The fact is the US conservative power structures (i.e. FBI, Pentagon) kills people that get in the way of the objectives of concentrated power. The following list of people have a number of similarities. First, each of them were opposed to the Vietnam War, each of them had an extensive FBI file on them as well as substantial FBI intimidation (except JFK), and all of them were killed by bullets.

• JFK
• Robert Kennedy
• Martin Luther King
• Malcom X
• John Lennon
• Fred Hampton

The conventional wisdom is that each of these people were killed by lone gunmen (except for Fred Hampton, who was killed in police raid by the Chicago Police Department, after being told, falsely by the way, by the FBI that Mr. Hampton was responsible for the killing of police officers). However, how likely is it that the most influential anti-Vietnam individuals were all killed by lone gunmen? Mathematically, and considering that no pro-Pentagon people were killed, not very likely at all. Simple probability theory would indicate that these people were assassinated by criminal conspiracies by those who were in the power to do so and who found their politics objectionable. Its really not that complicated, once you see the pattern. The government does not have to answer these questions because anyone questioning the official story is marginalized as a conspiracy nut.

The Conspiracy Nut and the Perfectly Rational Institution

The very existence of the concept of a conspiracy nut is in a way a license to kill. However, labeling people as “nuts” is not a new strategy. Interestingly, institutions are never described as nuts. For instance, the Pentagon and defense contractors were at one point performing nuclear testing in the atmosphere, distributing nuclear debris far and wide, but strangely the Pentagon is never described as nut. When some American scientists opposed this, the Pentagon had their passports taken and they were extensively monitored by the FBI. Only individuals are nuts, institutions are perfectly rational.

The Nut Behind the Wheel

When the automobile industry was opposing the introduction of safety belts into cars the industry (specifically GM, Ford and Chrysler, all the same companies now asking for a bail-out) came up with the concept of “the nut behind the wheel.” This was an idea that all traffic fatalities had nothing to do with car design or their safety features, but where simple a feature of “nuts” who were not driving safely. This worked for quite some time, but eventually, the industry lost the fight and began to put safety equipment in their cars. This drastically reduced the fatalities and injuries from vehicles, disproving the nut behind the wheel concept. Institutions will always propose that they are perfectly rational, and that those who oppose them or criticize them are “nuts” or “hippies,” etc… These is nothing new about this strategy, but what is interesting is that it works.

No Prosecution of the Financial Criminal Class?

What is most amazing is that there have been no prosecutions of the people responsible for this crisis. Bernie Madoff perpetuated a large ponzi scheme, however, he is not responsible for the crisis. The culprits are the major financial institutions such as Citibank, Bank of America, Country Wide, Lehman Bros, Goldman Sacks, AIG, etc…along with people like Laurence Summers and Phil Graham that supported legislation that removed necessary financial regulation. The major players a not being prosecuted, but rather are being bailed out. The number of responsible parties reaches far and wide, from the corrupt mortgage broker to President Bush who appointed people with no interest in enforcing financial and accounting laws. None of these people is headed to jail, though this scandal is far greater than the previous accounting scandals that did result in a few criminal prosecutions. Is there some reason Obama is not pushing for investigations of people in this area? Has he concluded that these people helped elect him and will be necessary to help raise money for both his re-election and the reelection of his Democratic majority in congress? Did the Secret Service show him the video of JFK when he came into office and then leave a note on his desk stating “mistakes can happen for those that don’t go along?” Its hard to know, but it is quite suspicious.

Reference

“The Order was for the Treasury to issue silver certificates against all silver held by the government which did not already have certificates against it. The Order was needed due to the passage of Public Law 88-36 which repealed the Silver Purchase Act and other related monetary measures. One result was that after the repeals, only the President could issue new silver certificates.

The Federal Reserve System could replace the certificates, but only in larger denominations. The thrust of the Order returned the authority to issue new silver certificates (and specify denominations) back to the U.S. Treasury.

This executive order allowed for the Federal Reserve System to distribute and exchange currency at lower denominations that met the growing economic need. The authoritative basis for the Order was substantially nullified in 1982 with the passage of Public Law 97-258.

The Order was never directly reversed. However, Section 1(j) of Executive Order 10289, which was added by Section 1(a) of Executive Order 11110, was revoked when Ronald Reagan signed Executive Order 12608 in 1987.[1]” – Wikipedia

In terms of how to begin thinking like this, we offer a quote from Ralph Nader:

“Ralph Nader: One day in the spring, at Princeton, where I went to college, I noticed there were dead birds on the pavement between the campus buildings, where very large trees were. At first I didn’t think much of it, I just said, there’s a blue bird or a robin. They weren’t mutilated in any way, they just were on their back, dead. And, a few days later I saw more such birds, early in the morning before the grounds keepers picked them up. I noticed that during the day, we’d be going from one classroom to another, and the ground keepers would be spraying with huge hoses these trees. It turns out it was DDT. At the time, in the early ’50s, no one thought DDT was dangerous to anybody but insects. Well, it turned out it was dangerous right there to birds. I went down to the Daily Princetonian, the college paper, and tried to persuade them to do a story. I had one of the birds with me to show them, and they said, “Naw, there’s nothing wrong. We have some of the best science professors in the world,” they told me. “Chemistry, Biology, if they had any idea it was harmful, it would be stopped.” Well it continued on for years, into the 60s and even later. And the students would wipe some of it off their face, it would be so thick at times. But that taught me a very important lesson. One, that newspaper people can get very jaded. The editor was a senior, he had his feet on the desk, leaning back in his swivel chair, which is always a sign that curiosity might have dimmed. Second, that you might know something, like an expert chemistry professor, but if you are not interested in a problem, or if you have a dual allegiance like perhaps you might be a consultant to one of the chemical companies that produces the pesticide, you are not going to apply what you know. You are going to be in your little, pigeon-holed specialization, and become one of the world’s experts on some tiny little item. But when it comes to applying it to a problem right where you live and work, you are not necessarily the best person to start the ball rolling. It could be someone who doesn’t have a Ph.D., someone who has a sense of curiosity, and begins to ask questions. That’s why I always say there’s no ticket of admission for active citizenship. Anybody can get through that gate, and anybody can ask that basic question that gets the ball rolling. “

1. China continues to grow
2. The US is actively attempting to devalue the dollar (both in terms of currency purchases and in terms of expanding they money supply in response to the crisis
3. By purchasing power parity standards, the RMB is undervalued significantly vis-a-vis the dollar

This is the current exchange rate between the dollar and the RMB

Here Jim Rodgers provides more detail

In this video he describes how to get into the Yuan. He describes an online bank called Everbank.

https://www.everbank.com/

They open bank accounts in RMB for Americans. According to Jim Rogers, this bank is backed by the FDIC.

In fact one can see the FDIC label on the bottom of the Everbank web page. Everbank does not have a very good reputation for customer service, and we have been told they wait until a time that is profitable for them to actually execute a currency transaction. However, its hard to find a bank that will manage RMB. We are thinking of opening an account there. We will start off with a small amount and see if they transfer the balance in a reasonable manner.

1. “We need to give tax cuts to the wealthy, because they create the jobs”
2. “Excellent executive leadership requires excellent compensation”
3. “We need to allow manufacturing to move overseas to become more competitive”
4. “We don’t want socialism in America”
5. “The real problem is crime in the streets and welfare queens”

Income Concentration

Wealth Concentration

The top 14,000 families have 22% of the nation’s wealth.

The bottom 133 million families have 4% of the nation’s wealth

This demonstrates the real makeup of the US economy. The ultra-wealthy call the shots, it is really their country. Everyone else is basically just “renting” the country. Somehow those that are peons are encouraged to be very patriotic, vote “conservative” – that is vote in a way that further enriches the Trumps of the country and beat down any progressive movement that might make the country a fairer place.

References

http://americannewsproject.com/videos/super-rich-tax-cheats

We find the portions of the videos that focus on the past very good, the future projections are pretty extreme, and less credible, however the entire series is certainly worth watching.

Part 1

Part 2

Part 3

Part 4

Part 5

“I believe that banking institutions are more dangerous to our
liberties than standing armies. If the American people ever allow
private banks to control the issue of their currency, first by
inflation, then by deflation, the banks and corporations that will grow
up around [the banks] will deprive the people of all property until
their children wake-up homeless on the continent their fathers
conquered. The issuing power should be taken from the banks and
restored to the people, to whom it properly belongs.” Thomas Jefferson

Interesting Points from the Series

1. Fractional banking (the banking system we currently use) was created by the Bank of England 300 years ago with a reserve requirements of 50%
2. Money is “conjured” into existence by the creation of a loan, all that is required is a fractional reserve
3. Government created money is less than 5% of the total
4. Money is currently created as debt, however, it could simply be created through the spending on public projects

Money As Debt Video Compilation (by Paul Grignon)

Part 1

Part 2

Part 3

Part 4

Part 5

Conclusion: Nationalize Banks

The question that the series rightly brings up is why banks are given the right to create money and to charge interest on something that they do not own. A more logical system could simply have the government create the money to loan. Since the money costs nothing for the government to bring into existence, it could charge no interest, only requiring the repayment of the principle. Alternatively, they could charge interest, and this would go into the general tax fund. Banks show a strong tendency to pretend that it is “their” money that they are loaning out. Banks also have no interest in educating consumers as to this special advantage they are given by the government as it would call into question why they have this special privilege. In fact, they pretend they are private companies when they are simply a direct extension of the government.

No doubt nationalizing banks would not be popular with commentators on Fox News or with Rush Limbaugh. However, there is an easy retort to critics of the plan. Simply call them “anti-American.” After all, what could be more American than a Bank of the United States?

Do Banks Need to Issue Stock?

What is also strange is that shares are allowed to be sold in banks, even though banks are a monopoly of money creation given by the government. Why would a bank, which has the ability to create money with ledger entries, need to raise money with stock issues? This is one of the great examples that stock has more to do with executive compensation and control that with actually raising capital.

Enabling Innovation by with Interoperability

Tim Berners Lee and the W3C have written extensively on how to create self perpetuating systems based upon the foundation of a centralized standards body.

The W3C is about creating standards for the web. These standards have allowed innovation to flourish. A banking system needs standards, but does not necessarily need banks and their existence hides how money is brought into existence

One of the reasons the Internet works effectively is because standards were developed which allow for many participants to develop and publish to. These ideas can be adapted to banking. As far as innovation, while it may be true that a government controlled banking system would not innovate as quickly as a private system, just because a baking system is nationalized, does not mean that subcontractors can not add on to the system for a fee. For instance..

1. Vendors that manage ATM machines could charge customers for their use (as banks that own them do now).
2. As for Internet access, as the government does not tend to develop very good websites, multiple website vendors could arise that would allow the user to interact with the government bank database for a fee. The government would simply make its databases open to these web front end vendors, and would regulate and audit them to make sure they are providing the correct security and privacy features.
3. As the government is also not known for great customer service, it would be important not to only have one choice for bank account holders. customer service companies could arise that consumers could chose from. They would also be regulated and audited by the government, and would have access to bank holders records. There could be hundreds or thousands of these companies with different levels of services offered and different price points, more comprehensive services would cost more. Switching service companies would be simple, since the funds don’t move making for a very competitive environment.

As one of the early innovators of the web, Tim Berners Lee could have decided to become extremely wealthy, instead he decided to focus on creating standards for the web, and because of it, we are all better off. Banking executives propose that they deserve massive salaries for their leadership, however who has contributed more to the public good, Tim Berners Lee or the CEO of CitiBank? Sufficed to say a person of moderate intelligence could easily be CEO of CitiBank. Nothing all that complex is going in banks in any case. Does a person really need to be paid 10s of millions per year to serve at the head of such a simple business? This concept of a public interest function is missing at banks who mistake themselves for swashbuckling private entrepreneurs, when in fact their power flows from the government.

Stability and Innovation All in One

Essentially all types of add-on functions could inter-operate with the government banking system providing a high degree of technological innovation and choice. This is in the same way that people can hire private investment advisers to provide financial pointers on bank accounts that are not affiliated with the adviser. This could all be available within the “standards” and framework provided of a stable national banking system. As far as financial innovation, most financial innovations make the financial system less stable and there is no reason to allow or to promote the creation of mortgage backed securities, credit swaps, etc… In this model there is no selling the mortgage, because the government holds it and Wall Street is cut out of the loop.

Freddie Mac and Fanny Mae would be irrelevant in a national banking system

Freddie and Fanny Needed?

Freddie Mac and Fannie May become irrelevant. Actually, the entire concept of allowing individual banks and Wall Street to sell government created money (in the form of loans) back to a quasi government organization like Fannie May appears ridiculous once one understands the fact that the government brought the loan into existence with bank ledger entry in the first place.

Banks are nothing more than money monopolies, they are a franchise granted by the government, much like the British East India Company. They see no public interest function for themselves, and do not admit to the public where their power originates from.

A More Equitable and Stable Banking System

No fees are necessary in this system outside of what the account holders chooses to pay through selecting a value added vendor. Nothing fancy or fraudulent, just a stable banking system and surrounded by a sea of value added technological and human services. We have estimated that the because the total US debt (consumer, federal, corporate, etc..) is $54 trillion, if the government were to nationalize banking, if a 9.5% interest rate were charged (on average of course), there would be no need to collect taxes. See the image below. Email us if you would like the spreadsheet.

The Right to Create Money

The right to create money is a huge privilege, there is no reason to give this away to a corporation, especially when their history is to not serve a public interest function, but instead to simply grow wealthy from nothing more than their privileged position. Recent events have indicated that they can not even maintain a stable financial system, and are not worthy of the public trust which has been vested in them.

Ellen Brown

The Movement for Public Banking

While considered sacrilegious by most of the general population and by elites, there is a small movement behind public banking. Public banking becomes more tenable the more one understands how little banks actually do, and how easily their functions can be overtaken by public institutions. One of the leading writers in this space is Ellen Brown. Her public banking blog is listed below.

http://publicbanking.wordpress.com/

Resources

http://www.moneyasdebt.net/

http://www.w3.org/2001/sw/

http://www.webofdebt.com

This is the type of thing that the W3C focuses on, creating Internet standards and publishing them so they can be used. The government can do the same thing for interoperable banking services in everything from ATM machines to banking web front ends. These standards would be at the root of the innovation that would make US banking the best in the world, and not requiring a single bank outside of the government.

The National Foundation for Credit Counseling is an organization and lobby group for the credit counseling and debt consolidation industry. However, they not only represent credit counseling and debt consolidation firms, they also represent the creditors themselves. They were the subject of an anti-trust lawsuit.

“In the late 1980s and early 1990s, the number of credit and debt counseling agencies in America increased significantly. An antitrust lawsuit was filed against the NFCC, arguing that the presence of creditors on the NFCC’s Board of Directors constituted monopolistic practices. As a result of this litigation, creditors agreed to fund non-NFCC member agencies as well.” – Wikipedia

“A credit counseling agency typically receives most of its compensation from the creditors to whom the debt payments are distributed. This funding relationship has led many to believe that credit counseling agencies are merely a collections wing of the creditors.” – Wikipedia

1. Their main role is to steer consumers away from bankruptcy and foreclosure. Generally, credit counseling and debt consolidation has one of the higher customer complaint levels of all businesses.
2. Even when following cutthroat and one-sided practices credit counselors try to obtain tax exempt status from the IRS.
3. The NFCC has either no standards or very low standards for membership

NFCC offers a video on avoiding foreclosure, which is actually one of the best things a person underwater on their house can do. However, as the NFCC and its member counselors represent creditors’ interests, they are of course opposed to it.

Get your free creditor propaganda in the mail by contacting the NFCC.

Credit Counseling and New Bankruptcy Laws

In the new bankruptcy law of 2005, it now requires people filing for bankruptcy to hire a credit counselor, and to hire them 6 months prior to declaring bankruptcy. This greatly delays the bankruptcy process, as well as increasing the cost of declaring bankruptcy. We suspect the only reason for
this is because of lobbing on the part of the credit counseling
industry (bankruptcy is now more complicated and places legal liability on attorney’s, decreasing the attorneys that practice bankruptcy and increasing their costs.). They are represented by the National Foundation of Credit
Counseling. We will write more about the NFCC on a future post.

Conclusion

Credit counseling services and NFCC have far too cozy a relationship with creditors to be honest brokers. The way credit counselors represent themselves to customers is a misrepresentation of their actual behavior. Industry insiders consider them simply collection arms of the credit industry. Finally, the employees of credit counseling services are generally considered poorly trained.

In general, its unclear why credit counseling is necessary. By reading material individuals can take care of paying their bills themselves. What is needed is more freely available material, not another layer of fee oriented individuals to walk people through paying their bills. Secondly, all advice from a credit counselor is of dubious quality as they are unlikely to advice their customers of all the options available to the customer. However, the new bankruptcy law has made credit counseling a legal requirement. Creditors, credit counselors and the NFCC are drawing a net around debtors which requires they take “responsibility” for their actions, while the creditors themselves engage in all manner of malfeasance. This is an increadibly unfair system. Furthermore, the NFCC supported 2005 bankruptcy law actually influenced the housing crisis and in the following way.

“Before Congress passed the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, households could erase their unsecured debts by
filing for Chapter 7 liquidation. That freed up income that distressed
homeowners could use to make mortgage payments.

The new law,however, forced better-off households seeking bankruptcy protection to file under Chapter 13. That chapter requires homeowners to continue paying their unsecured lenders.

The paper’s lead author, Donald P. Morgan, a research officer at the New York Fed, said last week in a phone interview that he was “99 percent confident” that the bankruptcy reform law was a major reason for the foreclosure crisis and the falling housing prices that have affected virtually every homeowner in the country.

One of the great lessons and ironies” of the new law, Treasury Department economist David P. Bernstein wrote in a recent paper, was that, by increasing the dollar value of assets susceptible to default, it has weakened many of the financial institutions that sought the new law in the first place.” – Kansas City Star

References

http://bankruptcy.findlaw.com/new-bankruptcy-law/new-bankruptcy-law-basics/big-changes.html

http://www.nfcc.org/

http://en.wikipedia.org/wiki/Credit_counseling

http://www.kansascity.com/105/story/976039.html