To balance its budget, fund its obligations and keep from having to raise taxes, California should follow the model of North Dakota and Charter its own state bank.
North Dakota has had a state bank, which by charter, must contain all the state's funds, and which, Ellen Brown tells us, "was established by the legislature in 1919 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men." The bank has met its purpose fabulously. Today, North Dakota is running its biggest surplus in its history.
Bank capital reserve requirements are only 8%. If California used 8% as a baseline, then the state could deposit its expected $128 billion in revenues this year into the state bank, and have over 1.28 Trillion to loan! The state's banks would howl. Let them. They set the rules, now they have to play by them. Besides, who do you trust more to fund a bank: the depositors and borrowers of the Wells Fargos of California, or the citizens of the state who must pay taxes every year?
California has never defaulted on its obligations; Wells Fargo needed bailout money.
If this new state bank – which could operate as a non-profit, with no shareholders to please – were to distribute its fund to the state's smaller banks, in order to issue new loans to strapped homeowners at, say an inflation-realistic rate of 3%, still far below current bank rates of over 5% on 30-year mortgages, they could refinance defaulting homeowners, fund startups, and even fund general government expenditures, all without paying a dime in interest to private bankers!
Schwarzenegger must balance the budget under the state constitution. But, there is another option besides crippling taxes and devastating spending cuts. There is a way to balance the budget, create a surplus, and tell the high interest charging banks 'Hasta La Vista, Baby.'
CREATE A STATE BANK!
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