Florida political leaders consider state bank: 2% mortgages, 6% credit cards, no state debt costs

Even though this idea is obviously cost-effective with just a few moments’ consideration of the facts, even though the idea of creating money and credit for the public good rather than for bank profit has a rich history of support from many of America’s brightest minds, and even though this is the “secret” to the state with the lowest unemployment in the nation along with a record budget surplus (it’s North Dakota, one of only two solvent states today), the idea of a state-owned bank creating its own credit is a new idea for many Americans.

Florida candidate for Governor, economist Farid Khavari, explains that a state-owned bank should replace for-profit banks to provide substantial public benefits while profiting the state. Two percent mortgages would reduce interest payments by 85%, saving $88,000 per every $100,000 borrowed. The bank would pay 5% interest on deposits, charge 6% interest on credit cards, and 3-4% on commercial and vehicle loans.

State-owned banks could operate under existing international credit-creation standards issued by the Bank for International Settlements (BIS) of an 8% capital requirement. The Federal Deposit Insurance Corporation (FDIC) has similar minimal capital requirements, called Tier 1 leverage, currently set at 4% or the ability to lend $25 for every $1 of capital. This is the so-called "stress test" leverage ratio. Prominent economists and critics argue that the stress test was designed by the banks, and in no way any signal of correction from management that caused our economic crisis.

Bruno Barreiro, County Commissioner for Miami-Dade County, is also proposing a government-managed bank at the county level.

One of the immediate benefits of a state-owned bank is ending interest payments on existing debt. If California created its own bank, they could issue 0% credit to themselves to buy existing debt and save $5 billion every year that they pay in interest. To put that number in perspective, California has 20,000 laid-off teachers. All could be rehired at $70,000/year and California would still have $3.4 billion of their saved money left-over. Retiring the national debt would be different, but just as easy; saving Americans $450 billion every year in interest costs.

While American working families are transferring record amounts of their money to banks under our existing monetary system, the question is not whether there are superior models of banking available, but how long it will take the American public to force their bank-captured political “leaders” to serve the public rather than bankster bonuses.

The below 2-minute video from Mr. Khavari’s campaign for governor walks you through the benefits of a state-owned bank. The links in this article provide history and national monetary reform solutions.

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