New legislation calling on the USPS to begin offering banking services is a dangerous use of government resources.Not just payday lenders that are whining.
American Banker — Bank Think
Postal banking should be a dead letter
Postal banking should be a dead letter
Rebeca Romero Rainey | President and CEO of Independent Bankers of America
25 comments:
One thing the bankers cannot legitimately oppose is not Postal Banking, which I warned is poisoned by the requirement that it make loans, but inherently risk-free checking/debit (NOT CREDIT!!!) accounts at the Central Bank itself alongside their own inherently risk-free checking/debit accounts at the Central Bank and thereafter the abolition of all other privileges for the banks including the responsible, progressive (say 10% reduction/yr) in government provided deposit insurance.
The way the banks will be cut down to size is via irrefutable PRINCIPLES and a responsible strategy, not half-baked pragmatic proposals that ignore how well entrenched the usury cartel is.
Not that the MMT gang even WANTS to reduce the privileges of banks, e.g. Professor Bill Black calls the banks "our banks".
Total BS article. The Postal Service recently finished paying employee benefits 75 years ahead (the plan was to bankrupt and privatize) and is awash in money.
Nationalize the banks, take the blood-sucking leeches out of the equation. They don't add value, they destroy it for their own benefit.
The postal service becoming intertwined with corporate delivery services (UPS /FedEx) adds another wrinkle. Will I be able to bank with UPS?
@ Andrew Anderson:
“Not that the MMT gang even WANTS to reduce the privileges of banks…”
The MMT gang doesn’t want to reduce federal taxes either. They admit that the U.S. government has no need or use for tax revenue, and that the U.S. government effectively destroys tax revenue upon receipt. Nonetheless, they say that “taxes drive money” because they imagine that taxes are what give value to money. Hence, for the MMT crowd, if federal taxes were reduced to zero, dollars would become worthless, and no one would use them.
Absurd? Obviously.
Ridiculous? Of course.
If the MMT crowd was correct that taxes are what give value to money, then even if we did away with federal taxes, we would still have state and local taxes.
The MMT crowd agrees with this, but they nonetheless love federal taxes because, “Taxes drive money. Taxes drive money.”
Any attempt to reason with them just makes them chant louder. They claim that you have “not done the required reading.”
The raw basics of MMT are incontrovertible (e.g. the U.S. government's deficit is the economy's surplus) but beyond the basics, much of the MMT crowd is a faith-based cult.
NOAH WAY WRITES: "Total BS article."
Of course it is, because that blog represents the US banking establishment, which has been at war with the US Post Office since at least 1910, when the Postal Savings Bank Act established a public savings alternative to a private banking system that had crashed the U.S. economy in the Bank Panic of 1907.
The Postal Savings Bank Act threatened to give Americans an alternative to the bankster-thieves. Therefore the American Bankers Association (the biggest lobby in Washington DC) formed a Special Committee on Postal Savings Legislation to block any extension of the new postal service.
That same banksters lobby churns out blog posts like the one above.
Ellen Brown has done some excellent work about the myriad advantages of a postal bank, and about the banksters' endless jihad to keep a postal bank from ever being created. I recommend three of her articles…
https://ellenbrown.com/2018/03/17/13747/
https://ellenbrown.com/2013/09/23/what-we-could-do-with-a-postal-savings-bank-infrastructure-that-doesnt-cost-taxpayers-a-dime/
https://ellenbrown.com/2012/08/12/saving-the-post-office-letter-carriers-consider-bringing-back-banking-services/
A Postal Bank that lends or pays interest is no more ethical than the current government-privileged usury cartel, i.e. you don't fight thieves by becoming one yourself.
If we play things ethically we can get:
1) Equal fiat distributions to all citizens to accompany the progressive (say 10%/yr) abolition of government provided deposit insurance.
2) A Citizen's Dividend funded with negative interest on the accounts of banks and other large fiat users.
3) An additional, inherently risk-free, always liquid payment system to the one that must work through the banks.
4) A positive trade balance since foreigners would no longer be paid to hoard US dollars.
A Postal Bank is a trap; let's not repeat that blunder though it was perhaps the best that could be done before the Central Bank was established in 1914.
Konrad - The MMT crowd cult agrees that state and local taxes would be enough to drive money, federal taxes could be zero. For much of US history, tariffs were the main federal tax, while states and localities levied all sorts of taxes. So how you are disagreeing with MMT here is not clear.
But do you think that all taxes, federal, state & local could be done away with? It is not entirely clear to me what you are saying. In that case, with levels of spending anywhere near in magnitude to today's, the dollar would quickly inflate into worthlessness.
the dollar would quickly inflate into worthlessness. Calgacus
Let's never forget that demand for the dollar is artificially low in that US citizens may not even use the dollar except for grubby, unsafe, totally inadequate for modern commerce PHYSICAL fiat but must instead work through a government-privileged usury cartel consisting of commercial banks, credit unions and other depository institutions who alone in the private sector may have fiat checking/debit accounts at the Federal Reserve, the Central Bank.
And what does the MMT cult propose to do about that?
NOTHING!
@ Calgacus: Thank you for your questions. For the record, I do not include you in the “MMT cult,” since you are able to reason and to ask questions, rather than simply become angry like MMT cultists do about some issues.
CALGACUS WRITES: “The MMT crowd agrees that state and local taxes would be enough to drive money, federal taxes could be zero. For much of US history, tariffs were the main federal tax, while states and localities levied all sorts of taxes. So how you are disagreeing with MMT here is not clear.”
By MMT crowd I mean people like Randy Wray, Stephanie Kelton, and Warren Mosler, and everyone who hangs on these people’s every word. I agree with 99% of what all these people say. It’s the 1% part that I call a “faith-based cult.”
In communication with me, Randy Wray agreed that taxes are not necessary to give value to money. Nonetheless, Wray continues to claim that taxes are what give value to money.
I can see how taxes might help in legitimizing a new currency, but once that new currency is backed by local and federal laws, plus government force and social habit, the currency no longer needs taxes to give it legitimacy and value. The currency is backed by social convention, just like a nation's language.
Today, with or without taxes, the U.S. dollar has value because society says it has value, and not because of taxation. To claim otherwise is illogical. It is to be part of a faith-based cult.
CALGACUS WRITES: “But do you think that all taxes, federal, state & local could be done away with? It is not entirely clear to me what you are saying. In that case, with levels of spending anywhere near in magnitude to today's, the dollar would quickly inflate into worthlessness.”
The question is whether taxes are what give value to money. I say no. I say that laws, government force, and social habit are sufficient. Some nations have no income taxes, yet their currencies work just fine (e.g. Bermuda, Monaco, the Bahamas, Andorra, the United Arab Emirates, and couple of others). These currencies gave value because they are backed by laws, government force, and social habit.
Inflation is a different matter. Obviously taxes are one means among several to control inflation.
Also, when I speak of taxes, I am always careful to specify federal taxation, which is one means to control inflation, but it does not “give value to money.”
State and local taxes are indispensable, since state and local governments could not financially survive without tax revenue (unless the U.S. government simply gave them enough money to function).
Ellen Browne has been seduced, like so many have been, by the purchasing power creation ability of asset-backed money (formerly known as fractional reserve lending).
Is there anything wrong with asset-backed money? Should it be banned? Not necessarily to the first question and no to the second.
But unless done ethically, asset-backed money creation is a subtle form of theft by inflation*, robbing the poor of purchasing power and investment opportunity and is a major cause of the boom-bust cycle.
Look, there's an ethical way to create fiat and credit in order to have just, sustainable growth - and not necessarily a growth in the use of Earth's resources but sustainable growth in doing more with less.
And what's the problem anyway? Can Americans at least agree to "Thou shall not steal", even if by subtle means?
The Chinese believe in the Middle Way, i.e. moderation which is wise if one is unsure about how to proceed. But the US can do better, if we'll be guided by ethics and not just pragmatism.
*Just ask any Austrian Economist believer but they wish to replace theft by inflation with theft by DEFLATION - which is arguably WORSE than the former.
@Konrad
"Today, with or without taxes, the U.S. dollar has value because society says it has value, and not because of taxation."
If taxes were eliminated, the value of the dollar would first face an extreme volatility, and afterwards its value would eventually fall to zero. Convention would not hold its value together. And the mass dellusion theory (that money has value because people believe that other people will give some random value to it) is just untrue
@ André
Nonsense. Like all MMT cult members, you have a tax fetish, and it's bizarre.
[1] If taxes are what give value to money, then how do you account for nations that have no income tax and sales tax like I noted above?
[2] I said that money has value because of social habit, plus government laws and government force. You ignored those last parts.
[3] What you call “mass delusion” I call social convention. Laws, language, monetary systems, and every other aspect of society exist because of social convention.
If federal taxes were reduced to zero, then everyone would continue to use dollars, just as they do now.
MMT cult members like you would claim that your dollars are now “worthless,” yet you would refuse to give me any of your “worthless” dollars.
You can’t b.s. your way out of this.
@ Andrew Anderson
Ellen Browne correctly understands that fractional reserve banking is a myth. When a bank makes a loan, the bank does not "lend out deposits." Instead, the bank creates loan money out of thin air, simply by crediting an account.
Where Ellen Browne errs is that she thinks that bank lending is the ONLY way that money is created. For Ellen Browne all money consists of loans. For Browne, government spending is government borrowing.
I have talked to her in person, trying to shake her out of her dream world, but on this topic she is incorrigible.
Instead, the bank creates loan money out of thin air, simply by crediting an account. Konrad
Yes, but the deposits created thereby are liabilities for fiat, 1-for-1, which the bank typically does not have to back all deposits hence the bank has "fractional reserves."
However, those liabilities for fiat are only genuine liabilities among banks, the central bank and the monetary sovereign since the non-bank private sector may not even use fiat except for grubby, unsafe, totally inadequate for modern commerce physical fiat, a.k.a. "cash."
If the non-bank private sector COULD use fiat via accounts of their own at the Central Bank and if all other privileges for the banks were abolished, especially government-provided deposit insurance, then banks would be seriously limited in how many deposits they could safely create.
Is it bad that banks would be seriously limited in how many deposits they could safely create?
No, because:
1) The deposits they did create would be ethical and cheat no one.
2) Fiat could be equally distributed to all citizens for the purpose, if desired by a citizen, of actual lending of fiat - i.e. "loanable funds".
"MMT cult members like you would claim that your dollars are now 'worthless,' yet you would refuse to give me any of your 'worthless' dollars."
Dollars are not worthless, because there are taxes driving its value.
If taxes were extinguished, custom or social habit would make it valuable for a few weeks at best. People would soon realize that it is useless.
"then how do you account for nations that have no income tax and sales tax like I noted above?"
There are not only income taxes or sales taxes. There are many other kinds of taxes, and there are fines too. The fact that a country does not levy income or sales tax means nothing. Also, it may be the case that the country adopts a foreign currency (or pegs its currency to a foreign one, which is almost the same thing). You have to be more specific if you want to advance that point of the discussion.
"plus government laws and government force"
What government laws and force? Be more specific. When MMTers claims that taxes drive money, they are talking about governmen tax laws and its power to enforce it, so we are at the same page.
However, if you are talking about legal tender laws, it is impotant to notice that, first of all, there are actually no legal tender laws in a lot of coutries. Second, in the coutries where there are legal tender laws, they are not enforced, or very rarely enforced, enough to make them meaningless. Notice that if you want to barter something with someone, there is little a government can do and is willing to do to stop it, except if you are avoiding taxes or transacting illegal goods.
"If federal taxes were reduced to zero, then everyone would continue to use dollars, just as they do now"
There would still exist state or local level taxes, which are enough to drive money's value, depending on the country you are taking about. In countries where federal taxes account for almost every tax revenue, then the currency would become worthless, if it was not a foreign or pegged one.
“which the bank typically does not have to back all deposits hence the bank has "fractional reserves."
Reserves are an accounting abstraction that represent the amount of USD balances the banks have available for interbank settlements.... the amounts are regulated by the government...
Konrad:
"Where Ellen Browne errs is that she thinks that bank lending is the ONLY way that money is created. For Ellen Browne all money consists of loans. For Browne, government spending is government borrowing."
I want to understand this correctly, Ellen Brown doesn't understand that the government has the power to create its own money? And, doesn't Randell Wray agree? It seems that I have heard him say that money is only created through debt.
Good article on difference between Chinese banks and US banks:
Chinese banks are big. Too big?
At least the Chinese are not hypocrites about their banks while the US pretends to conform to "free market" principles - ignoring that US banks, credit unions, etc. are a government-privileged usury cartel which alone in the US private sector may use fiat in convenient, inherently risk-free account form at the Central Bank.
Reserves are an accounting abstraction that represent the amount of USD balances the banks have available for interbank settlements.... the amounts are regulated by the government... Matt "Respect my authoritah!" Franko
Obfuscation from someone who claims bank deposits created by loans are fiat, rather than liabilities for fiat.
Simpler and what I said: Reserves are fiat (held by the bank as vault cash or account balance at the central bank).
@Konrad
I just realized that you specified some countries.
"Some nations have no income taxes, yet their currencies work just fine (e.g. Bermuda, Monaco, the Bahamas, Andorra, the United Arab Emirates, and couple of others)"
First of all, why do you mention specifically income taxes? What is so special about it? Why don't you consider all other taxes in you assessment? MMTers do not claim that "income tax drives currency", but "tax drives currency". I am sure that those countries do levy taxes.
Second, Bermuda's currency is pegged to US dollar, so its value is given by US dollar value. Monaco and Andorra adopt a foreign currency (euro). The United Arab Emirates peg their currency (1 USD = 3.6725 AED).
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