2016 FBF: Central Banks vs Public Banks with Ellen Brown Author of ‘The Public Bank Solution’ & ‘Web of Debt’

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Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing, fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show. This is your host, Jason Hartman. This is episode number 435. Thank you so much for joining me today. Episode 435. Today we're going to talk with Ellen Brown. Now, Ellen has been on the show a few times before and she's done some great work in talking about banking and the Federal Reserve. That was kind of her first. All of this stuff, it's just really interesting, interesting stuff and it totally affects us as real estate investors because I mean, think about the power our central bank has and central banks around the world have on the real estate market. I mean, I remember talking with one of my agents who worked at my traditional real estate company in the early 2000s and her name was Marty. She still actually works at that company, the one that I sold to Caldwell Banker in 2005. I remember her really, really just struggling, as so many agents were at the time, real estate agents in terms of trying to get inventory. They had no properties to sell. And why did they have no properties to sell? Well, it was because of Alan Greenspan, commonly considered the maestro, the hero, the Keynesian fool, frankly, who, if you wanted to blame the financial crisis on one person, there are many people at fault. I would say Alan Greenspan's right up there in the top 3 of people to blame if you're trying to pin it on one person because he just made this massively easy money policy after 9 11, where, I mean, they were just flooding the markets with money and real estate prices were Skyrocketing. And this is artificial, folks. This is completely ridiculous that it should be this way. You know, the free market should decide on the rate rates. The free market should decide on the supply and demand of money, of property, you know, but instead it's this completely manipulated system that Ellen Brown talks about in her, I think it's her first book that I interviewed her on the first time a few years back, which was called the Web of Debt. And it's critically important that we have some real understanding of monetary policy and we understand that this is not some crazy esoteric theory. This matters. It has real direct practical impact on us every day as real estate investors. It has impact on our tenants and on whether our tenants want to renew their leases or they want to jump ship and go buy a property. Because it's countercyclical, okay? When the money is easy, it makes the prices go up, but it generally puts downward pressure on rents. And I talk about this when I discuss the three dimensions of real estate, how these things are non correlating indicators. And so Ellen Brown's big thing lately is about public banking. I like her work a lot. My only real criticism of her would be that she has too much trust for the government. And, you know, that's just my view of her, but you can judge for yourself. I think I brought this up with her in this interview you're about to hear. I guess if I had to decide between government and some secretive private banking cartel known as the Federal Reserve, which is, as we know, about as federal, as Federal Express. That's just a name. And you know what's interesting?

No member of Congress, no member of the Supreme Court, the government is not allowed to come inside and examine the Federal Reserve. Why was it thought? I hate to mention the name again because I know I'll get criticism for this. Remember the one review that I mentioned a couple of days ago on the show where I said too much politics, right. But you know, you see from my last episode how much politics matters. If you don't think real estate investing is just replete with political issues that totally affect our bottom line as investors, you really got to think again. I mean, look at that. What I did in talking about Rich Carl Guard's article on the last show, that great article that he did where he talked about the impact of regulation. I mean, basically the country and the people, all the people in it would be twice as wealthy today if we had just a little bit less government regulation. Granted, it's, it's a, it's a thesis It's a hypothesis. You know, I, we don't, can't say for sure that that would have happened that way, but I tell you, there's a pretty good case for it. Okay, and why is it that people, some people thought Ron Paul was some outlandish freak by saying that we should be able to audit the Federal Reserve? This is nuts. I mean, this is just crazy that people would think that's crazy. Right. It makes no sense at all. So anyway, we'll get into some of this stuff and talk with Ellen Brown about public banking. We'll talk about North Dakota, which is really interesting. You know, they have a public bank and it's, it's really seemingly well managed and very solvent and, and you know, what a concept. Okay. Another thing is, I got a note on one of our social media pages. I think it was on Facebook today, and it was one of our listeners. Thank you for, for posting this. It was, you know, I appreciate your comments for sure. And he said, you know, why have you only been talking about Little Rock and Birmingham lately? Well, the reasons are as I'm responding to you, our listeners and our clients, because those are the areas that you are really interested in. Nowadays, of course, Arkansas is the most landlord friendly state in the entire country. You heard when I played the soundtrack of that video about it several episodes ago. Very interesting. And of course, we had a property tour there recently. And then we have our upcoming property tour in Birmingham and our Creating wealth seminar there. And we got two more people that just registered for that today. So I'm glad to see that a lot of you are attending that and I look forward to seeing you in just a couple of weeks. That's why we're talking about it. But we've still got lots of clients purchasing properties in Memphis, Atlanta, Houston, Kansas City, Indianapolis. So, you know, there's more to the world than just Birmingham and Little Rock. I completely understand that. We just haven't been talking about those a lot lately because, number one, we're responding to you, our listeners. Number two, because we've got tours and events which are really a response to your interest.

You know, we welcome to this week's edition of Flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present and propel you into the future. Enjoy.

We try to do very informal surveys and listen to your feedback and think about where do we want to do our next Creating wealth seminar and property tour. And so we picked Little Rock and Birmingham in that order because that's what you told us you wanted. So. But you know, we do have other stuff and we have other stuff even beyond those. When you go to Jason hartman.com properties and you see there are seven featured markets, those are the markets that are the busiest for us now where we're doing most of our business nowadays. But there are other properties. You know, we have properties in Illinois, we have properties in other areas in Ohio, of course, Florida, we've got a little bit we're doing in there. Florida is a frothy kind of really sort of difficult market to work in in some ways anyway. There are definitely other properties besides the markets that I've been talking about lately. But when we've got a tour coming up, I like to get the experts in that market and you know, the people in the know to give you details about it to just fill you in before the tour in advance. Because for those of you attending, I know it's good to answer a lot of your questions up front and it'll make it a lot easier and a lot more enjoyable and educational for you. So that's that. Also thank you to those of you who have been purchasing the Creating wealth home Study course and the Meet the Masters Home Study course. And we're also looking forward to formally announcing our Meet the Masters event coming up in January in Irvine, California. So that'll be another great event. We used to do that twice a year and it just became too much work, too time consuming for us. So we're only doing it once a year nowadays, as you know. I think this will be like our 15th or our 16th meet the masters weekend event. So. So that's going to be a great event too. So plan on that in January. Just, you know, kind of save the date. We haven't formally announced it yet, but hopefully we'll do that very, very shortly here. And without further ado, let's just jump over to Ellen Brown. Oh, you know, one more thing I do want to mention to you before we get to Ellen Brown. This came out of a conversation I had with one of our clients today. His name is Jason and he asked me to review a property management deal in, in one of our markets in Texas. And I took a look at the property management deal that he was being offered and one of the things I really want to say, and it's not like I haven't said this before, but a lot of people, you know, takes a few times, maybe you didn't catch that episode or those episodes where I talked about it but that is, look, with your property management agreements, the property manager always retains discretion for small repair and improvement items, whether they be redecorating the property, you know, in terms of like doing some paint or some cosmetic work or doing repairs or maintenance issues and things like that. And I want you to tighten the reins on your property manager. Our property managers are probably not going to love me saying this, but trust me, in the long term, it's better for you and the client. And the way I want you to tighten the reins here is I want you to go ahead and look at your property management agreements and look for the clause that says they can do discretionary repairs, maintenance and improvements to the property without getting your approval first. And it probably says something like, they have discretion for two or three hundred dollars per occurrence. Okay. To do repairs and improvements to the property without seeking your approval first. And in today's world, we are all so connected. We've got our email, we've got our phones with us. No matter where we travel in the world, we're pretty darn connected most of the time. So I think you should tighten the reins on your property manager and keep them from spending your money. Okay, and how should you do this? Number one, I think you should negotiate in your property management agreements that this is not per item or occurrence, it's per month. You should limit their monthly budget for discretionary Items to maybe $200 per month per property or per unit, you know, if you own apartments. And usually those are handled a little differently depending on how large the apartment complex is. And that's sort of a different discussion. But, you know, I'm talking mostly about single family homes, duplexes, fourplexes, that kind of stuff here when I'm talking to you, okay? So I want you to limit that to $200 per month, not per item or per occurrence. Okay. Or per issue. I want it to be per month. And you know what? They can take the time to send you a quick email and you can take the time to send them a response so they seek out your approval. And you're not getting these deductions from your monthly rent check, okay? So, you know, look, your property manager is probably doing a great job. Most of them are great people. Some of them, you know, there are problems here and there for sure, but most of them are good people and they're doing a good job. I just want you to get more control, okay? So you can manage your expenses better and net more money from your investments. Now, if there's a repair item that requires Discretion. I want you to set some rules for yourself, some business rules. So, for example, if it's a $200 item, okay? And I want you to actually see, I want them to your property manager to attach the document, the scanned document, to an email that they send you, and I want you to open that attachment and look at it, okay? And that is a quote for fixing the Item. Say it's $300 in this example, because maybe you had a $200 per month limit and they haven't exceeded that yet, okay? And I want you to get a quote in writing from the actual vendor doing the work, not from the property manager. Now, most property managers do it this way. They send you the quote from the actual vendor doing the work, okay? If it's something that's done in arrears, I want you to get the receipt from the actual vendor who did the work. The difference is that will say ABC Air Conditioning Repair or, you know, John Doe Plumbing on it, okay? Or Joe's Painting Service, all right? Rather than ABC Property Management, okay? That's what it's going to say on this document, on this quote form or on this receipt. It's going to have their address, it's going to have their phone number of the person or company actually performing the work, not a document the property manager creates. There is a difference. So understand that. So set some business rules for yourself. And if the repair is over, maybe if it's over $250, you want to see two quotes, okay? Possibly. Now you set your own numbers. I'm not setting the numbers for you, okay? I'm just giving you the idea, okay? And maybe if it's over $500 or over $600, you want to see three quotes before approving the work, okay? Now, you might not want to be bothered or bother your property manager with all this. Depending on how the relationship is going, your business rule might be, look, if it's under a thousand dollars, two quotes is fine. If it's over a thousand dollars, then I need three quotes. So you decide on this, okay? But just be reasonable. Use your experience and your common sense as a guide. And get quotes before the work is done. On the discretionary items, tighten it up to an amount per month, not per incident, okay? A lot of these property management agreements, in the boilerplate form, it says per occurrence or per incident. I want it to be per month so you can control your expenses and your budget, okay? So that's your tip for the day on property management. So let's get to our guest today. Ellen Brown. We got a bunch of great shows coming up after this, by the way, so I hope you like our Monday, Wednesday, Friday publishing schedule. We've been putting out a lot of shows and I hope you're keeping up with them. One more thing, we did have that itunes problem with our feed a couple of weeks ago, so you may have missed up to six episodes. So make sure you go back and find those, you know, Bill Bonner's in there. There's some really great episodes in there. So just make sure you go back and listen to those if you missed them when we had our technical problem in the first part of October. Okay, so here's our guest, Ellen Brown. It's my pleasure to welcome Ellen Brown back to the show. She is president of the Public Banking Institute and Third Millennium Press. She's a candidate for California treasurer with the Green Party and author of the Public Bank Solution From Austerity to Prosperity. Ellen, welcome back. How are you?

Thanks, Jason. I'm fine. I have to correct you on the candidacy. That was actually we had the primary and it was a top two primary here in California. So only the Democrat and Republican will be, I mean, in all offices only.

Typical. Yeah, right? Yeah, yeah, yeah.

But I did get more votes than any other third party candidate for any office.

Well, that's awesome. That's good to hear. The two party system is something we could spend a day talking about. It's such a scam. I mean, it's awesome that the whole system is rigged in so many ways. But let's talk about banking. When it came to Ron Paul and Ralph Nader and just over the years, we've seen it so many times, it's disgusting. Let's talk about public banks. First of all, Ellen, if you would tell us what a public bank is and what North Dakota does. That's interesting. And how we can adopt this and why we should for other states.

In the US we have only one state owned bank and that is the bank of North Dakota. Globally, however, 40% of banks are publicly owned. They're largely in the BRIC countries. Brazil, Russia, India and China, which all escaped the credit crisis at least for the first few years. They've gotten dragged down now like everybody else. And North Dakota is the only US state that escaped the credit crisis, having a budget surplus every year since 2008. They have the lowest unemployment rate in the country, the lowest default rate on credit card debt, the lowest one of the lowest foreclosure rates, and they're doing really well on many parameters. I saw one Study that said something like they had the best quality of life or something, which is hard to believe considering, considering the weather. They must not have factored in the weather.

Before you move on just about North Dakota. I have to be a little skeptical with you on that because certainly that's all great, but I mean, you know, North Dakota has oil, right? And also nobody probably moves to North Dakota unless they're moving for a job. So that would help with unemployment, right? How would you address that?

Well, that's a good point.

The oil boom did not really hit until 2010, and they already, in the spring of 2009 were the only, you know, the collapse was in the fall of 2008. By the spring of 2009, every other state but North Dakota had gone in the red. So that's one thing I actually saw. I think it was. I think it was as late as early 210. And he did a little routine on why was North Dakota rolling in it when everybody else was bankrupt and they couldn't figure it out. I mean, in, in his little routine, he said that it was because they were hijacking tourists, which of course, obviously it wasn't. But at that point, oil was still not a significant factor. So that came later. And there are other states that have oil and they don't have the same unemployment rate. They didn't escape the credit crisis, et cetera, but agreed. And that was the reason that I actually wrote my second book on banking, which is the public bank solution, in order to look at banking models or public banking models globally and historically. And I was actually shocked to find that there were so many because, you know, you don't learn that in school. You know, who knew? Like Germany, for example, is now, I've forgotten the percentage, but it seems to me, anyway, a majority of commercial banks are publicly owned. The private banks just can't compete with them. They've got the.

The backing of the government. They, they give.

They give better loans, they're safer for depositors, and everybody loves them and they.

So, so let's, let's understand what a public bank is, though a little bit more so it's owned by the government.

So that's what it means, publicly owned.

A lot of people would just instantly object and say, well, isn't that socialism or communism or a dictatorship? What distinguishes this idea of a public bank from a central planning type economy?

Well, first of all, you could look at North Dakota, which is in each extremely republican state, or Germany, which is a totally or many, you know, many countries with publicly owned Banks are definitely not socialist. It's just, in fact, my daughter lives in Switzerland now. They, they're like Germany. They have a very. You can either go to a public bank or a private bank and you don't, people don't even think anything about it. It's just, you know, those are a couple of banks that are out there and you can, you can pick which, whichever you like. It's just the difference. Well, in Germany, for example, the publicly owned banks tend to be the local community banks and they have a mandate to serve the community. I was just at a conference in Santa Fe and there was a man there from Germany who was talking about the German public bank model. And he said the public banks have just done brilliantly well until they branched out into, you know, they got bigger and branched into markets with which they were unfamiliar. So they actually do commercial loans, whereas the bank of North Dakota is a different model. But in Germany they're actually literally competing with the private banks. And they have always done better than the private banks, except when they got into markets that they weren't familiar with and then it turned out there was risk and so forth. But as long as they, their mandate is to serve their local community. They know these people in their community. They know, you know, they know your father and your grandfather and they know that you're a solid, you know, you're an honest person and hard working and that you're going to pay it back and so forth. And as long as they're following that, so they're just kind of like local cooperatives, but they are owned by the local government and the profits go back to the local government. That's the main advantage. Plus they can give loans, low interest loans to the local government. You can cut out interest, which it turns out is 50% of the cost of public projects. For example, in California, the Bay Bridge retrofit was supposed to be $6 billion. It turned out to be $12 billion. By the time you add on interest, the bullet train was supposed to be 10 billion. That was just the initial outlay. It's going to be a lot more than that, but with interest, just that outlay is going to be 20 billion. So you double the cost by having to pay interest. Now if you are the bank, you own the bank, you get that interest back. And so it's a huge savings for the local government.

Well, okay, okay. So, you know, pardon my skepticism here for a moment, but we all look around and we think, most people think at least that the government doesn't do a Very good job at running things. You know, it's kind of the tyranny of, you know, when it's everybody's money, it's nobody's money. Granted, I don't like greedy bankster CEOs who I think operate in a government sponsored monopoly on Wall Street. I think that's disgusting. I don't like the way it is now, but.

Well, you can look at a lot of countries like Korea, Japan, China, they all have.

Virtually major public banking sectors, if not almost total public banking sectors. And they certainly know how to run their economies. I mean they've got major, they're running circles around us in terms of, you know, growth and exports. I suppose it's pretty hard to catch up with us. But if you look at these.

Yeah, that's a, that's a Pandora's box because it's so complex. But yeah, absolutely.

But the advantage is, see if the government owns the bank, then it mandates or it supports its local industry. That's one of its functions, is to support the export business against other countries. Whereas our banks are actually their mission or their mandate is to make as much money as they can off of our businesses and off of our local governments. So they're sort of serving a parasitic function. You know, they're sucking profits out. And they don't turn that profit right around and put it back, you know, give it back to the people. They put it in offshore tax havens, they pay their wealthy CEOs who are put it in. You know, it's always in the more money making money schemes. So it's actually an unsustainable system where you're always expecting to take more back than you put out. Whereas in the public bank they actually use those profits to build roads and bridges and all the things that people need.

I mean, I suppose you could argue that with any type of business the idea is to make a profit and to take that out of the system. But you know, in order to do that you got to get customers to come to you. And the idea is they won't come unless you're providing a decent value.

Well, in North Dakota, that particular model is that virtually their sole customer is the state itself. So they're really. That why they set it up was in 1919, the farmers were losing their farms to the Wall street bankers. It was basically a. Well, it was a Rockefeller bank was connected to the Rockefeller Railroad, which is connected to the granary. It was all a cartel. That was not. It was foreclosing on their homes. Although the grain that they were Trying to sell was perfectly good grain. So of course they needed the railroads to export the grain out of the state. So they decided they wanted to keep their money in the state and use it for their own purposes. So that's what the whole model is. Instead of giving away our deposits virtually for free and letting Wall street gamble with them in all these very risky ways, we're now seeing risky. It is having our money in Wall Street. The idea is to.

You won't get any disagreement from me on that.

Yeah, I mean, as opposed to the local community banks, which are. I mean, none of them are saints. Nobody's a saint in the whole system. It's that they're. They've been allowed to get away or they broke. They've lifted the rules so they can get away with all these things. Whereas, well, in North Dakota they say they're not saints, they just can't do certain things. And also in Germany, that's what that German expert who came to our seminar said, that we're not saints. He said we just. That's all we can do. We're only allowed to serve our local community. And so that's what we do. That's their mandate. If they don't do it, they get fired.

You keep mentioning local. Is local the issue? I mean, you know, certainly credit unions are a pretty good model. I think I've always found that credit unions offer better deals than the big institutional banksters. Credit unions are usually locally oriented. Not always, I guess, but they seem to be a lot of times. Is that the answer? I mean, you know, distinguish. Maybe a credit union and a public bank. You know, let's talk about that.

Okay. A credit union is an excellent thing for individual depositors, but what we're talking about is where the state or the. Or the city is the depositor, instead of which is a huge amount of revenue. I mean, in California there's something like $600 billion in rainy day funds all around the state that. Well, there's 60 billion. I'm from California. There's 60 billion sitting in the treasurer's investment pool, currently earning 0.23%, earning off almost nothing. Well, who's making money off that money? Wall Street. That money is going into Wall street. And then they are doing all these elaborate and very risky things with it. And then when they collapse, we're going to have to bail them out again or they will bail in our deposits like in Cyprus, and we won't see any of that again. So that's the whole idea is we want to be there's no reason in this modern age that we can't be doing our own banking and leveraging those funds for our own purposes, extending credit into the community. So in North Dakota, what the model is is the bank of North Dakota partners with those local banks, allows. So the local bank is sort of like the front office. It goes out, deals with the customer, finds the good loans and so forth. And the bank of North Dakota allows them to make much larger loans than a local bank could make. You know, credit unions are very circumscribed in what kind of loans they can make and what kind of business they can do. So if you've got the bank of North Dakota behind you, you are almost a big bank. You know, you can compete with the Wall street banks. So the local banks actually, there are more banks per capita in North Dakota than in any other state. And the Wall street banks are actually losing market share, whereas in every other state, they are just gobbling up the small banks and gaining market share.

Here's one reason I think that's really important. I'm sure you're familiar with Katherine Austin Fitz, and I had her on the show.

Yeah, she's great.

Yeah, I'm a fan of hers, too. And I had her on the show and she explained the story, which you've probably heard, Ellen, and that is she was sitting at a luncheon with a few different ladies, and one was talking about where she invests money and another was talking about her credit card statement, and another was talking about where she borrows money. And it was interesting that at that table, they could have all just done business with each other and had basically the same result, yet they're sending it to Wall street to take a giant handling fee off the top to, you know, relend this money, invest this money and so forth. And it's just a. This is really a matter of disintermediation in a way, isn't it?

Yeah, but so it's just taking it to the public level. In other words, the state and local governments rather than the citizens individually. So the state and local government should be doing all that and cutting out the middleman, who we've seen the middleman has done very bad service for state and local governments. I mean, they've lost huge amounts of money on interest rate swaps. They've lost huge amounts of money on all kinds of riggings that have gone on.

Yeah. All kinds of financial innovation.

Yeah. Whenever you hear that run for the hills, you know you're in trouble. Ellen, let's Take this to the bigger level if possible. And I don't know if it applies or, you know, if it's a different conversation, but I originally became familiar with your book Web of Debt and some of your earlier work and, you know, you talked a lot about central banking and so forth. I found that work to be fascinating and that's why I had you on the show before a long time ago. What should be done about the central banking cartel? Could that be a big public bank?

It could, and that's what it should be, I would say. The only reason I don't. I mean, I loved writing Web of Debt. It was so interesting for me to research and I loved weaving the wizard of Odds through it. But as everyone knows, Wall street owns Congress and so they're kind of deadlocked and there's just not much you can do at the federal level. But yes, ideally, I mean, there are a number of models historically, like starting with the Commonwealth bank of Australia, where they set up, it was like the first central bank. It was a totally publicly owned central bank. Before that, of course, we had the bank of England and other privately owned central banks. So the publicly owned central bank, where.

In the 1890s there had been this great crash and the Australian government decided that the bankers had failed them and they needed to take over that business as a public utility. And so the man that they put in charge, the bankers, were a bit alarmed because this is going to be competition for them. So they made sure that a real banker got in charge and he knew how banking worked. And the bankers came to them and said, well, you're going to need to borrow, you know, for your capital, your startup capital. And he said, no, I think we're just going to do like all banks do, we're just going to issue the credit. So that's what they did. They like, he just issued credit for everything in sight. I mean, you're, you're basically that's. Well, look at the Federal Reserve now. It's so blatant what they're doing. I mean, it used to be more discreet. Like they called them open market operations. Now they're just saying, okay, we just created a trillion dollars and, you know, nobody bats an eyelash. That's what banks do. Banks create virtually our whole circulating money supply. So why shouldn't. It's our money supply. So why. We're the ones backing it? It's our IOUs, the IOUs supposedly of the federal government. So we the people should be getting the benefit of that. So that's what they did. They funded roadways, seaways, all this stuff and Australia's participation in World War I. And then that governor made the mistake, Dennison Miller, I think his name was, made the mistake of going to.

The City of London and boasting about how they, anything that Australian people wanted, they could have. It's just a matter of issuing credit. And that quite alarmed the bank of England because that was their last form of control over their former colonies was to make the ball borrow from the bank of England. So then he died suddenly of a heart attack after that. And then they set up this new central bank system where the idea was that at the head would be the bank of England and under them would be all these central banks which would be basically privately owned and would print the money and lend it to the government.

So here's the thing with these central banks, they all have a way of just destroying the wealth of everybody who is trading in their currency. And you know, they just quietly, slowly steal everybody's wealth through inflation. And unless people are playing the same game the central banks are playing, which means they're controlling real assets with long term, low, cheap, fixed rate debt, they're going to get burned. You know, they're going to see their wealth just evaporate. It's an amazing thing. And this money is all created out of debt.

Well, I think that's actually not, that wouldn't be a bad, you know, you could set. Actually that's what money is all, money is debt. It's all IOUs. The whole point of a bank really, when you go to the grocer and you buy your groceries, you could write an IOU and say I'll pay you on Friday, but the groceries aren't going to take it because he didn't. At least my groceries are going to. He doesn't know me and he doesn't know if I'm going to get paid on Friday, like I said, or if I'm going to come back. But if you go to a bank, they basically guarantee your iou, you, you get a loan from a bank, they'll figure out who you are, how you're going to pay it back. And the little IOUs they give you are fungible. You know, it doesn't matter whether you pay it back, the grocer can still spend it. So that, that's really what our money all is, is we the people actually issue the money in the form of. Or it all started with like if you go back to colonial script, they, they didn't have silver and gold and they had needed to pay their soldiers and so forth. So they figured out they could pay with these little IOUs which supposedly were in advance against taxes because really it was the people who owed the government, since it was their government and their roads and bridges and all. So they would just take an advance against anyway.

Yeah, so. So my question is, do we even need that though? You know, I mean, I agree with you that it would be better. And listen, I'm not a government guy. Okay, Maybe you seem like you're a little more willing and tolerant of government. Okay, I don't like government generally speaking. I mean we got to have a little bit of it, but let's keep it at a minimum in my eyes. However, I do think that it would be better for the central banking to be in the hands of the government than a, you know, a pseudo governmental private organization. I mean, that no one really understands who owns it. Exactly. The real question is, do we even need a central bank at all? I mean, does there even need to be a public bank? Can't we just have the economy run without one? Or is it just necessary in a modern highly complex society to have central banks?

Well, as long as we're following our current system, I mean you could totally restructure the whole system of course, and get rid of central banks. But how are you going to pull that off? So it seems to me we have to work with the hand we are dealt. And so like you say, it would be the best thing would be to take that thing and first turn it into something that we have a little control over. And that, you know, even though I agree there are governments and there are governments, the first thing we want to do is make our government actually represent the people, which it doesn't at the moment. But ideally you would have some. I mean we collectively, we're all going to make different decisions. If we do it individually, you need some sort of. Somebody has to make the decision and then, you know, I would be for a sort of bottom up government where you, you elect somebody that you know personally like in your neighborhood and then they move up to the next level and they like somebody they know personally or something. I mean everybody in the world knows 20 people who would be a better government official than the ones that we have to. You know what I mean? There's so many qualified people in the world. How is it that we get the people that we get? There's something wrong with our system. But you could envision a system where you had real like the Indians or somebody that had real venerable leaders who were actually wise old men who knew what they were doing and were acting on behalf of the people.

Yeah, well, that just goes to show that the system is rigged and that's why we don't get good people.

But I would say that is partly because of our banking system. I mean, they've got the power to create money and that's where they get their initial power. So if we could get that power back, we might be able to unrig it.

Well, tell us about that. That's interesting what you say. I mean, what you think they can finance their campaigns better or finance their businesses better and that's how they grow into, you know, holding public office because they usually have successful businesses or. What do you mean when you say that?

Right. Well, at one time when we. I just heard this from a lecturer in this that, you know, it used to BE in the 40s, 50s or whatever we had, the top tax bracket was 91%. And at that time, you know, that was. Everybody thought the 50s and 60s. That's when I was little and, you know, life was good, everybody had a job and you could support your family with on one income. And education was really cheap. I went to university, California, Berkeley, for free. Tuition was free in the 60s. And then now the top tax bracket. You're probably not into taxes, but I mean, I of course think, oh, sure I am.

Yeah, I'm into it, trust me.

No, I think you could fund it through your banking system and you wouldn't need taxes at all. That's what they did in Pennsylvania in colonial times. But anyway, given that at the moment the only way you could fund the government is through taxes, then the top tax rate dropped way down. So somehow the very rich managed to change the system so that, you know, they're in control. In other words, somehow the fact that they've got all this money allows them to. Well, they've eliminated Glass Steagall, for example, so that the banks can gamble with our money, etc. So how did they get all those rules eliminated? They basically bought Congress. And how did they do that? With money. They have the power to generate as much money as they want, really, because they can leverage. I mean, they can borrow against our deposits. Our deposits are sitting there. It becomes excess reserves. They use those to buy Treasuries or something, and then they use the Treasuries as collateral in the repo market where they get loans for themselves to buy stock. I mean, now banks own all kinds of commodities and ports and all kinds of things. That banks really shouldn't be owning. That doesn't seem proper that a bank could own a port.

Why are the banks in all of these businesses? I mean, shouldn't they be in the banking business?

Exactly. But why, why did we relax the rules so that they could do all that? Because they control the regulators, because they've got the money to buy them off.

Yep. That's. That's unfortunate. You know, I, I always think if we just eliminated the lobbyist, the country in a few years would just heal a lot and become a much better country. But many people disagree with me, especially the lobbyists and especially the politicians who get the perks from the lobbyists. You know, it's amazing that still happens in today's age. It's just unbelievable. It's, it's ridiculous. But yes, Wall street does own Congress. They run the government. It doesn't matter if it's Democrat or Republican. They run the government and they bought them off. And they have all these regulations to preserve their virtual or semi monopolies. It's just really unfortunate. You know, I do hold out some hope that the crowdfunding revolution might put a dent in that a bit. It seems like now businesses might be able to be funded and deals and real estate deals and so forth can be funded without Wall street, without going that way. You can go to the crowd directly, peer to peer sort of system. Do you have any thoughts about crowdfunding? I think that's a bit of a game changer, ultimately.

Well, there certainly are all sorts of new possibilities popping up. I mean, I do feel everybody knows there's something wrong with our current system, which wasn't true before. I mean, just since these last two collapses, 97, 98 and 2008, people have gotten more and more suspicious of our existing financial structure. And there are all kinds of experiments going on. I don't know that crowdfunding as it exists right now would do it. I mean, it's just like move your money was a good idea, but did it really dent Wall Street? Not really. They didn't even bat an eyelash as we moved our deposits out. But it's, you know, it shows the possibilities. And with all these, or even like bitcoin, that sort of thing, it just shows the possibilities that you could have a whole monetary system without these bankers. So watch out.

When we get the right model, we just move into it and we could just ignore them. We don't have to bring them down. We can just choose the better mousetrap.

We can take our business elsewhere. If you will, and we'll see. I mean, it's in the early stages for all of this stuff. Since you did mention Bitcoin, Ellen, before you go, what are your thoughts on bitcoin?

Well, you know, there's two ways to look at it as an investment. I'm a little afraid because it's sort of my investment history to jump in right at the top and down it goes. I mean, it's so volatile or as. But what's. I mean, it's very interesting to watch. I don't own any for that reason that I don't even have time to watch my investments. So I'm not the person to ask for what to invest in. But just as a model, it's very interesting to see how far they've gone with something that's totally independent of the banking system.

Yeah, I mean, I would. I would love nothing more than to be wrong about what I'm about to say. Unfortunately, I just don't think bitcoin or any alternative currency is really going to make it in any significant way without the support of the powers that be. I just think they're going to find a way to manipulate it or squash it. They basically do that to gold. I mean, you know, they're manipulating the heck out of the metals. They just won't let that become an alternate currency unless the government and the central banking's unholy alliance has a hand in it and gets to exert control over the populace and gets to steal and extract wealth that way. Good luck. They're just way too powerful. So you agree with me on that?

I do. It's interesting to watch. I mean, if you'd gotten in early, that would be great. I mean, there are plenty of bubbles that you could wish you had gotten in early, but by hindsight, I don't know that now is the time.

Well, I heard tulips were hot at one point.

Yeah. Well, good stuff. Ellen, give out your website. Tell people where they can find out more about your work and your latest book.

My blog is ellenbrown.com and I have over 200 articles on it. And my banking books, I've actually published 12 books. But my banking books are Web of Debt and the Public Bank Solution. And they're both available on Amazon. And the Public Banking Institute website is publicbankinginstitute.org Excellent.

Ellen Brown, thank you for joining us.

Thanks, Jason.

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