PBI Chair Ellen Brown’s recent articles on the current state of the banking system have led to a surge of interest in public banks as well as a spate of interview requests from all corners. Her article “Banking Crisis 3.0: Time to Change the Rules of the Game” in ScheerPost points out that these recurring banking crises are caused by an age-old problem with the system itself.
The systemic flaw was and still is that to make long-term loans, banks must borrow “other people’s money,” which is expected to be available on demand. Today the banks’ liquidity options include not just their own depositors but other banks’ depositors in the fed funds market, and pension funds and other institutional creditors lending in the repo market. But they all expect their money to be available on demand; and if the bank has lent it out in long-term loans, the bank can be caught short shuffling reserves around trying to meet that demand.
Related interviews and presentations:
Presentation for the Coalition for a National Infrastructure Bank, March 16
It’s the Empire Stupid podcast with Phillip Farruggio
The Corbett Report interview with James Corbett
Think Local Conference, Ireland
Photo by Minh Nguyen, courtesy ScheerPost.