Illuminating discussion with Richard Werner and Catherine Austin Fitts is now posted:
Werner: “Like many crises, it’s an engineered crisis. … We can’t trust the Fed. And therefore what do we need? … What you need is a state level bank … as a bulwark to support and back … all the banks in the state.”
Austin Fitts: “In a world with the FedNow system … the state needs a place to keep its money — a depository that it controls …”
Werner: “…absolutely and can trust. And is a sovereign one….”
Richard Werner, Member of Linacre College, Oxford, and a university professor in banking and finance, recently published a briefing memo for state legislators and advocates supporting the case for a public bank.
[Web presentation]
[Read paper]
[PDF]
The rationale presented by Dr. Werner applies equally in any state. The benefits discussed include dividends, higher state-level tax revenues, greater job creation, greater local autonomy and resilience to shocks from outside the state, a greater variety of options for funding public sector borrowing, increased options for state pension funds, protection against CBDCs, and protection of financial transaction freedom and privacy. Dr Werner also advises that “the State Bank of Tennessee, like the Bank of North Dakota, not join the Federal Deposit Insurance scheme. Instead, deposits should be guaranteed by the full faith and credit of the State of Tennessee (as is the case in North Dakota).”
He writes in the Executive Summary:
This document presents to state legislators in Tennessee the case for setting up a State Bank of Tennessee (SBT). SBT would act as a second-tier bank, interposed between the Federal Reserve Bank of Atlanta (FRBA) and the Tennessee State Government (TSG) on the one hand, and local banks (community banks, credit unions, savings banks, locally-headquartered commercial banks) operating in Tennessee on the other. The goal of SBT is to ensure that the State of Tennessee can better act in the interests of its citizens, better fulfill its constitutional duties, and provide for a resilient and strong economy and financial system. SBT will not compete with smaller local banks for loan and deposit market shares, but will act to support them in a number of ways, including loan participations and purchases, while mutually benefiting from expanded liquidity in state-level short-term money markets.
Photo by Dave Petrovich.