America’s 7 Biggest Banks Created 14,500 Subsidiaries To Avoid Billions in Taxation While Creating Zero New Wealth for Society

This Week In Money July 23–29

This Week In Money by Greg Coleridge helps you understand the history of economics. Get TWIM delivered directly to your email inbox for free.

JULY 23

2012 — PUBLISHED ARTICLE, “SEVEN LARGEST U.S. BANKS HAVE CREATED THOUSANDS OF SUBSIDIARIES TO AVOID TAXES: FED REPORT” “America’s seven biggest banks now have more than 14,500 subsidiaries around the world, according to a new report by the Federal Reserve Bank of New York (h/t Bloomberg). They have hatched more than 10,000 of these subsidiaries since 1991, largely in an aim to skirt regulations and taxes, according to the report.”

2021 — “1ST JUST MONEY FESTIVAL” OF THE ALLIANCE FOR JUST MONEY — VIDEO Opening Remarks, Breakout Room Discussions, and Post-Discussion

JULY 24

1862 — DEATH OF MARTIN VAN BUREN, 8TH PRESIDENT OF THE UNITED STATES

“It can only be when the agriculturalists abandon the implements and the field of their labor and become, with those who now assist them, shopkeepers, manufacturers, carriers, and traders, that the Republic will be brought in danger of the influences of the MONEY POWER”

2012 — COMMENTS BY NEIL BAROFKSY, FORMER INSPECTOR GENERAL OF THE TROUBLED ASSETS RELIEF PROGRAM (TARP)

Neil Barofksy says on “Morning Joe” on MSNBC that Treasury Secretary Timothy Geithner said that the Treasury Department’s housing policies were “Foaming The Runway For The Banks.” More TARP money went to help American Express than all the struggling homeowners.

JULY 25

1876 — BIRTH OF CONGRESSMAN LOUIS T. MCFADDEN (R-PA), CHAIRMAN OF THE HOUSE BANKING AND CURRENCY COMMITTEE

“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. Some people think the Federal Reserve Banks are U.S. government institutions. They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people of the United States for the benefit of themselves and their foreign customers…The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board.”

2011 — PRESENTATION OF “WORKINGS OF A PUBLIC MONEY SYSTEM OF OPEN MACROECONOMICS — MODELING THE AMERICAN MONETARY ACT COMPLETED,” BY KAORU YAMAGUCHI, PROFESSOR, DOSHISHA UNIVERSITY, KYOTO JAPAN

“Being intensified by the recent financial crisis in 2008, debt crises seem to be looming ahead among many OECD countries due to the runaway accumulation of government debts. This paper first explores them as a systemic failure of the current debt money system. Secondly, with an introduction of open macroeconomics, it examines how the current sys- tem can cope with the liquidation of government debt, and obtains that the liquidation of debts triggers recessions, unemployment and foreign economic recessions contagiously. Thirdly, it explores the workings of a public money system proposed by the American Monetary Act and finds that the liquidation under this alternative system can be put into effect without causing recessions, unemployment and inflation as well as foreign recessions. Finally, public money policies that incorporate balancing feedback loops such as anti-recession and anti-inflation are introduced for curbing GDP gap and inflation. They are posed to be simpler and more effective than the complicated Keynesian policies.”

This paper was originally presented at the 29th International Conference of the System Dynamics Society in Washington D.C. http://monetary.org/wp-content/uploads/2011/11/DesignOpenMacro.pdf

2016 — “CENTRAL BANK DIGITAL CURRENCY: THE END OF MONETARY POLICY AS WE KNOW IT?” POSTED ARTICLE BY MARILYNE TOLLE

“I argue that taken to its most extreme conclusion, CBcoin issuance could have far-reaching consequences for commercial and central banking — divorcing payments from private bank deposits and even putting an end to banks’ ability to create money. By redefining the architecture of payment systems, CBcoin could thus challenge fractional reserve banking and reshape the conduct of monetary policy.”

2020 — “TWO FLAWS IN FRACTIONAL RESERVE BANKING” JOURNAL ARTICLE BY RALPH MUSGRAVE

“The existing bank system, fractional reserve, is inherently risky because it involves accepting deposits while lending out about as much money as has been deposited, and telling depositors their money is safe, which it quite clearly is not and for the simple reason that if a bank makes silly loans, it cannot repay depositors. That problem is currently dealt with via taxpayer backed deposit insurance and billion-dollar bail outs for banks… “Second, having a bank lend on your money is just as much a commercial transaction as having a stockbroker lend on or invest your money, and it is not the job of taxpayers to shield those involved in commerce from loss, unless there is an extremely good reason for doing so, which in this case there is not. “The best solution to the above two flaws in fractional reserve is to abandon all state support for banks while letting those who want their money to be totally safe deposit it with the state, something the people in several countries have actually been free to do for a long time anyway. And that arrangement equals full reserve banking.” Advances in Social Sciences Research Journal — Vol.7, №7

JULY 26

1925 — DEATH OF WILLIAM JENNINGS BRYAN, DEMOCRATIC PRESIDENTIAL CANDIDATE, SECRETARY OF STATE

“We say in our platform that we believe that the right to coin money and issue money is a function of government…Those who are opposed to the proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson…and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business…When we have restored the money of the Constitution, all other necessary reforms will be possible, and … until that is done, there is no reform that can be accomplished.”

JULY 27

1694 — ROYAL CHARTER GRANTED TO THE BANK OF ENGLAND King William II (William of Orange) created the privately owned central bank via a charter (a license to exist) out of urgency. England needed to rebuild its navy to counter the French, but the sovereign King William II lacked the money or credit. He traded his exclusive right to create money to the private bank. The bank raised money from shareholders, which was loaned to the King at interest. The bank also created money out of nothing. As William Patterson, the bank’s co-founder and early Director, said, “The bank hath benefit of interest on all moneys which it creates out of nothing.” The bank is located in the 1 square mile City of London, a separate city within the larger London municipality.

2012 — NATIONAL ASSOCIATION OF LETTER CARRIERS ADOPTS A RESOLUTION AT THEIR NATIONAL CONVENTION TO INVESTIGATE ESTABLISHING A POSTAL BANKING SYSTEM The resolution noted that expanding postal services and developing new sources of revenue are important to the effort to save the public Post Office and preserve living-wage jobs; that many countries have a successful history of postal banking, including Germany, France, Italy, Japan, and the United States itself; and that postal banks could serve the 9 million people who don’t have bank accounts and the 21 million who use usurious check cashers, giving low-income people access to a safe banking system. “A USPS bank would offer a ‘public option’ for banking,” concluded the resolution, “providing basic checking and savings — and no complex financial wheeling and dealing.” At one time, the Postal Savings System offered savings accounts to depositors, but no loans. When banks failed after the Great Depression, many people shifted their remaining funds. The Postal Savings System held upwards of 20% of the nation’s savings in the mid 1940’s. Commercial/corporate banks opposed the efficient system (post offices served as bank branches) and lobbied for their limitation and finally elimination, which occurred in 1967. One wonders to what extent current efforts to eliminate the Post Office are based on eliminating this legitimate alternative to private banking corporations.

JULY 28

1919 — BANK OF NORTH DAKOTA FOUNDED The Bank of North Dakota is the only state-owned bank in the US. Its primary deposit base is the State of North Dakota. All state funds and funds of state institutions are deposited with the Bank, as required by law. Other deposits are accepted from any source, private citizens to the U.S. government.

2014 — PUBLISHED POLL OF UK PARLIAMENT MEMBERS SHOWING THEIR IGNORANCE OF MONEY CREATION 100 MPs were polled through Dods Monitoring in July 2014. MPs were asked to read a number of statements and indicate whether they were true or false. They could also select “Don’t know”. In response to the statement “Only the government — via the Bank of England or Royal Mint — has the authority to create money, including coins, notes and the electronic money in your bank account.”, 71% said this was true, 20% said it was false (the correct answer) and 9% said they didn’t know. There was no significant difference between the parties. In response to the statement “New money is created when banks make loans, and existing money is destroyed when members of the public repay loans.”, only 12% of MPs gave the correct answer: true. 64% of MPs said this was false, while 24% said they didn’t know. The full results can be found at http://bit.ly/1qTZHHa

2019 — “ON MONEY: THE LIBRA VERSUS SOVEREIGNTY” BY GOVERT SCHULLER POSTED ARTICLE ONLINE

“A US-based progressive monthly, The Nation, just published an article about the Libra by MMT enthusiast Rohan Grey, titled: ‘Facebook Wants Its Own Currency. That Should Scare Us All. Instead of embracing Facebook’s Libra, we should be rallying for a public option for digital currency.’ “This is an interesting article and deserves close scrutiny for several reasons. First of all it sounds the alarm about this proposal by a group of transnational corporations led by Facebook to capture the privilege of issuing currency at the expense of sovereign, public institutions.”

2021 — “A CENTRAL BANK CRYPTOCURRENCY TO DEMOCRATIZE MONEY” POSTED OPINION BY YANIS VAROUFAKIS

“Since 2008 — and more so during the pandemic — central bank money has been showered, via private bankers, on the ultra-rich, while everyone else suffers stagnation and austerity. The time for change is now, and the way to do it is by creating central-bank cryptocurrency… “Central-bank digital money will happen sooner or later. The great struggle over who will control the payment system and the money tree will continue. But we have a chance to use new technology to democratize money, to reclaim control over the money supply, to offer savers a decent interest rate without precipitating a new depression, and to lay the groundwork for a universal basic dividend — in short, to press the money tree into the service of people and the planet. “Who controls transactions, interest rates, and money creation controls politics. That’s why the powers-that-be will fight this proposal tooth and nail.”

JULY 29

2011 — PUBLICATION OF ARTICLE “YOU CAN’T SOLVE THE DEBT CRISIS WITH MORE DEBT” BY BEN DYSON, DIRECTOR, POSITIVE MONEY

“We cannot solve a debt crisis by adding more debt. It’s a fact that seems to have been completely missed by the IMF, European Union and our own government. “The solution to Greece? More debt. The solution to the US government`s inability to fund two simultaneous wars from tax revenue: more debt. The solution to the high indebtedness of ordinary people in the UK? Get banks lending again: let`s have more debt. … “What we need now is not more debt, but less of it. “But for the economic mainstream and those young and inexperienced civil servants who are deciding how to fix one of the largest banking systems in the world, it seems perfectly normal to let banks create money out of nothing to lend to people who already have too much debt. The idea of taking that power away from the banks, and using newly-created money to actually reduce the indebtedness of ordinary people seems radical and somewhat dangerous to them.”

2019 — “MICHAEL HUDSON: THE COMING SAVINGS WRITEDOWNS” POSTED ARTICLE

“Debts that can’t be paid, won’t be. That point inevitably arrives on the liabilities side of the economy’s balance sheet. “But what of the asset side? One person’s debt is a creditor’s claim for payment. This is defined as ‘savings,’ even though banks simply create credit endogenously on their own computers without needing any prior savings. When debts can’t be paid and debtors default, what happens to these creditors?… “Writing down savings by a few percentage points helps bring the glut of creditor claims marginally back towards balancing bank deposits with the ability of debtors to pay. But such marginal moves are rarely sufficient. A quantum leap is needed. “Governments have long followed a basic guideline when faced with a need to devalue their currencies (for instance, as the dollar was devalued against gold in 1933). Nothing is worse for a politician or central banker than to be overly shy when it comes to devaluation. The motto is, ‘Always depreciate to access.’ That means at least 25 percent, often a third when a basic structural adjustment is needed.”

This Week In Money by Greg Coleridge helps you understand the history of economics. Get TWIM delivered directly to your email inbox for free.