Benjamin Franklin's Solution

Discussion in 'Economy' started by midcan5, Oct 6, 2008.

  1. midcan5
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    midcan5 liberal / progressive

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    Interesting piece on the wall street meltdown. The solution is interesting too as it is not one Americans, and particularly free market zealots like to hear. But it seems today to be happening anyway.


    "Nationalization has traditionally had a bad name in the United States, but it could be an attractive alternative for the American people and our representative government as well. Turning bankrupt Wall Street banks into public institutions might allow the government to get out of the debt cyclone by undoing what got us into it. Instead of robbing Peter to pay Paul, flapping around in a sea of debt trying to stay afloat by creating more debt, the government could address the problem at its source: it could restore the right to create money to Congress, the public body to which that solemn duty was delegated under the Constitution.

    The most brilliant banking model in our national history was established in the first half of the eighteenth century, in Benjamin Franklin's home province of Pennsylvania. The local government created its own bank, which issued money and lent it to farmers at a modest interest. The provincial government created enough extra money to cover the interest not created in the original loans, spending it into the economy on public services. The bank was publicly owned, and the bankers it employed were public servants. The interest generated on its loans was sufficient to fund the government without taxes; and because the newly issued money came back to the government, the result was not inflationary."

    Credit Default Swaps: Evolving Financial Meltdown and Derivative Disaster Du Jour
     

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