With a State-Owned Bank, the Borrower Is Servant to the Lender
Ladies and gentlemen,
welcome to the Solari Report.
We are here to talk about sovereign banks,
state sovereign banks with Richard Warner,
a preeminent economist and banking expert
worldwide who studied banking systems and
started banks in many different places
and, is the author of a wonderful report,
Sovereign State Banks for Tennessee.
It’s up on Solari.
We are hoping his new reports for Florida
and Michigan will also be available, if not
with the publication shortly thereafter.
Richard, you’re doing great work.
We can’t thank you enough for joining us today.
Thank you for having me.
That’s a pleasure.
Always a pleasure to see you.
we’re going to talk, you and I had a wonderful
briefing with, on the Bank of North Dakota
with the former CEO, and then a wonderful
leader of the North Dakota Banking Association
and, And after the briefing, I was asked
by one of the people present, how do we
organize this so a governor’s office or
treasurer’s office could write legislation?
How, do we reorganize it?
And so I suggested that you and I have a
conversation and go through all the different
organizational issues and issues related
to function and other things that you would
need to envision when you’re working on.
On designing out a sovereign
state bank for your state.
So I, we’re going to walk through,
let me describe the areas.
We’re going to walk through ownership,
governance, audit and reporting,
culture, functions, deposit insurance,
economic benefits, risk, issues today.
and again, with the mind of, if you
were going to design a sovereign state
bank for a United, a US state, what
would the legislation have to embody?
What would you and the governor’s
office, the treasurer’s office, and the
legislators, also the treasurer’s and
controller’s office, what would you have
to think about, envision, and figure out?
so think of this as a
legislative design session.
and we’ll have links to your studies
and the, also the, Bank of North
Dakota’s, website, which is funny.
The more briefings they get asked to do,
Richard, I don’t know, I don’t know if
you noticed this, but the more detailed
their website gets about the functions.
it’s. It’s you can see they’re trying to get more up on the line. So they their briefings are shorter Anyway before we begin any anything you want to say as a way of introduction Yes, I think the first point and that is really for the legislators To realize and be aware of that and then with that mindset tackle all these issues is the fundamental Crucial fact and I think the single biggest list selling point, action point, why one needs to do this is the question of sovereignty.
It’s already written in Proverbs. we’re talking about several thousand years ago.
Proverbs 22, seven says the borrower is servant to the lender.
Now, Of course, politicians and political leaders are supposed to be servants of the sovereign people,
but not of the bankers. And if they don’t want to be, subject to somebody else, be servants to bankers, then we need, by definition, a sovereign bank. Because if you don’t have a sovereign bank, if a state doesn’t have one or several sovereign banks, there could be several, and the question should actually be, okay, how many not? Should we do it or not? It should be how many?
if you don’t have a sovereign bank or several, then the state will often have to borrow from others and become a servant to those lenders when really you’re supposed to be servant to the people, to the sovereign of the state. And that’s where, if you look at European history, that’s, and also U. S. history, that’s where things have gone wrong again and again. So it’s this understanding that,
banks have an important function. They create. The money, they literally create the money supply. Now, do you want to have sovereign bank? So the sovereigns can create money, or do you want to borrow money from others and become servants to others? That is the fundamental question. And so when people, once they realize that, that already should be a no brainer, just on that basis, without many of the, no, without the many other good reasons why you want to have this, that alone should be the key. point to convince them that we need this and only then can a state be sovereign. If you are a servant to others, then you can’t serve your people and the state can’t function. That’s in many countries and national, on a national level is actually a major problem. They can’t serve their people anymore, whether it’s developing countries or many European countries because they’re serving the bankers. Two issues. I would love to see this happen throughout Europe, throughout the world. Exactly. And the reason we’re talking about U. S. states right now is because this, the U. S. enjoys constitution. And under the constitution, the states have the power to do this, which they don’t necessarily right now in the E. U. Number one, But number two, the Fed is still a creature of Congress under the Constitution. The Fed has not been able to get rid of the Constitution yet. and that’s one of the reasons we work to preserve it. But that’s one of the reasons right now that we’re focused on the U. S. because the states do enjoy that power and can act absolutely now freely. yeah, so if, EU would break up, then You know, all bets change. I do want to say the reason this is coming up now, and I’m very glad you brought this up, because this is about sovereignty. It’s not, about money. It’s about sovereignty and the rule of law. So, there has been a balance of power in the Western world between the private bankers to control monetary policy and the, People’s representatives that control fiscal policy, and there is real effort now on the part of the central bankers to assert control of fiscal policy. And what we’re proposing is that you push back the other way and say, no, the people’s representatives assert control of fiscal policy, and they need a sovereign bank to do that. That’s right. And in fact, even because you mentioned fiscal policy, even fiscal policy, it’s, It’s an important point that often, is, forgotten or ignored. Fiscal policy is also dependent on the actions of the banking system, which actually determine whether fiscal policy will be effective economically or not. And so again, when you think, okay, at least there’s fiscal policy, we have budgets, the politicians are in charge, for good or bad. Okay. but the bankers are not involved, actually, that’s not true either, because even for current spending, even if it’s out of literally out of your tax money, so to speak,
the bankers decisions in aggregate, the banking system will still determine the effectiveness of fiscal policy, the fiscal multipliers, and actually, when you look at the last 30 years, there is an extraordinary phenomenon that’s been happening, And that’s being ignored by economists because they, don’t know the answer to the puzzle when it’s actually quite easy. What has happened is that the so called fiscal multipliers have fallen and fallen in fundamental economics. Which is, usually you do the basic Keynesian economics at university economics 101 in a recession. There’s the automatic fiscal stabilizer because your tax revenues go down and government expenditure goes up for unemployment benefits in a recession. So automatically you’ve got more fiscal expansion, which is good because it.
alleviates the, the downturn and, makes it, less strong, less pronounced. And then the, the argument is that fiscal expenditure, government spending has a fiscal multiplier. So that 1 spend will have more than 1 effect on GDP. that’s no longer true. The multipliers in the past were high. There were multipliers, and it’s simply. Fiscal spending compared to GDP. What’s the result on GDP, the Marshall spending on GDP growth, the change in GDP, and it used to be, sometimes two, sometimes 1. 8, but in the last decades, it’s gone down 1. 7, 1. 5, 1. 2, 1. 1, and for the last decade or so it’s less than one, that means there is not even a multiplier. There’s actually a fiscal compression going on so that when you have fiscal spending, the effect on growth is negative. Wow. that’s quite, that’s big news, but they don’t want to talk about it because they have no idea why this is happening. It’s a big. Oh, I can tell, you why it’s happened. I know why it’s happening. It’s the banking system. It’s the monetization through the banking system. Double the fiscal spending in 2020, that has a big impact, but it’s a one off and now we’re back to the less than one fiscal multiplier. but also, so, I’m looking at it from the, ground. If you look at the last, literally since World War II, every year the money is spent more and more to produce control and top down control as opposed to economic optimization. And so you’re throttling, and destroying. That is the other thing that the actual spending pattern. Has become more wasteful. There’s also the military spending as there’s a form of wasteful spending because that’s not, contributing or has positive long term effects. especially destructive spending and then, yeah, control measures. The big one and, you see it when you drive around America, but the big one and it’s reason the. The food and health issues are so front and center right now, you are spending a fortune to poison your population, a poison population doesn’t get anything done, so it’s, the productivity is to me. There’s nothing more important than the productivity issue in an economy. And, if the government money gets a bigger and bigger market share, but is constantly focused on destroying productivity, ain’t no way out of that. So anyway, this is why this is exactly why we need state legislatures to assert sovereignty That’s right, because then also the state legislature has more power over even the degree of effectiveness of any spending and even there’s the spending pattern as such but let’s say here’s investment spending where we agree in general. This should be stimulating for the, for GDP. But even then, it does depend on the actions of the monetary side of the banking system. And by having a sovereign bank that can ensure, always at least 100 percent effectiveness, of that spending. So never to have a negative fiscal multiplier, which I think is in the, interest of the taxpayer, if we’re even doing government spending, look at the national debt, we don’t want it to be wasted on that level, of course, there’s the other question of what is actually spent on and, so that’s fine, but, also once it is already decided to be fiscal investment spending, then, the degree of effectiveness of that will still depend on the monetary sector. Okay. And that’s unnecessary to be dependent there. So it’s fair to say all these issues are coming to a head. We’re in that time. Okay, let’s dive in, because the first issue I want to talk about is who owns the bank. and clearly, I believe that ownership by the state is the ideal situation, because, Again, if you’re going to be sovereign, the sovereign needs to own, but we have seen states and Tennessee is one where there are serious constitutional issues to be able to, have the state own it. And so it is possible to put together something along the New York Fed model, which is it’s owned by the bankers. but it’s dedicated to servicing the state As a sovereign, and the state is deeply involved in oversight and, reporting and auditing and, gets a piece of the profits.
there’s a hybrid model that can work if it’s constitutionally not possible. Is that fair to say? Yes, I think so. I think so, which is why I started with the sovereign point, because basically the legislature, the politicians need to understand how important it is. And then any obstacle on the way, we have to find work arounds. That’s how important it is. And so if it can’t be done directly with direct ownership, there’s ways of getting hybrid ownership or control at least. Indirectly, and it can be structured, but with that in mind that ultimately it is a sovereign prerogative, which is why I was actually shocked to see that some United States have had these clauses put into their state level constitution that they’re not allowed to own a bank. who put this in? Think about it. Very suspicious. Nobody on the state level would put this in because it’s like saying, okay, certain things we tell ourselves, we restrict ourselves, we tell ourselves we’re not allowed to do. Why would anyone do that on a state level? Nobody. It clearly comes from outside the state. Somebody saying, Oh, you guys, you better not do X, Y, Z, put it in your constitution. So how that happens actually might be an interesting question. Who proposed this? it’s very strange. and unnatural. So one of the things in North Dakota, and I should say, many states used to have sovereign state banks and everyone has canceled and shut down their sovereign state bank, except for Bank of North Dakota. and I pointed out when we did the briefing, Truth in Accounting just published their new study of all the states and who has the strongest finances, North Dakota was number one. And. As far as I’m concerned, if you look at the history, that’s absolutely related to the fact that it’s the one that has a sovereign state bank. Interestingly enough, Tennessee was number two. Tennessee needs a sovereign state bank. Anyway, but, so There is definitely a relationship between, this, but we have seen throughout history, many of the states have had it before. And it’s worth going back and looking at the history. If you’re, if your state is interested in doing one, it’s very helpful politically to say, we used to have one. And the guy who kept his is much better off than we are. They really had to fight, not only did they have to fight the evil empire, but they had to fight being branded as Bolsheviks, as revolutionaries, as socialists, as communists. And really, they’re just simply farmers who wanted a fair shake. The Bank of North Dakota’s roots are planted in the early years of settlement and the out of state big businesses that manipulated the local economy. The thing that we know about farming is it’s an industry where you have very little control. You have the weather, which you’ve got no control over. You have the banking interests and the costs of interest itself, which you’ve got no control over. You’ve got the grain elevators and the railroad, which you’ve got no control over. They were still competing on an international market even then, which they had no control over. The prices that they got for the grain and the cost of their seed, they had no control over. And so the idea that they could take control over some of these questions that affected their livelihood, was, it was a fabulous idea as far as those farmers were concerned. By 1915, North Dakota was ready for revolt. Sometimes politics are led by charismatic leaders. And you had in A. C. Townley, a charismatic leader, someone who knew how to organize, someone who had been a Socialist Party organizer, but had been fired by the Socialist Party in North Dakota, who decided that, this is still a good idea. Townley’s plan was simple. To break the control of out of state big business, North Dakota would control its own economy. By creating industries that would be owned, not by big businesses, but by the state. The League’s program, I would call it state capitalism, actually. It was the idea of the state intervening to actually help, not just save, but help evolve the existing type of capitalism into something that was more competitive with the outside economy, which would be corporate capitalism. So you had an organizer? who knew how to speak the language of farmers. You had banks that were playing into the hands of the argument. You had farmers whose crops had failed for the last couple of years, so they didn’t have anything on hand. Everything aligned at one time in one place, which made it possible. In 1916, after only a year of organizing, the League swept into power. In 1918, it engineered a political landslide. Now the League had the power to implement its industrial program. There were three bills that the legislature in 1919 passed. The one created an industrial commission, which included the governor, the attorney general, and the secretary of agriculture and labor, at that time, which is what he was known, to run the bank. That was the industrial commission. Those three elected officers were going to run the industries. At that time, all three of those officers, of course, were non partisan leaguers. So the first bill created an industrial commission. The second bill created the industries itself, created the Bank of North Dakota, and allocated funds, start up funds, we would call it today, to the bank. And then the legislation also allowed for the creation of the state owned mill and elevator. The third bill allowed the state to sell bonds to the tune of around 12 million. to fund the industries. And those three bills were introduced in January and were signed into law in February. they had less than two months. They had passed those three bills and Bank of North Dakota was on its way. So one of the things I wanted to bring up, and we’ll get into it later, is one of the sovereignty and ownership issues is not just of the bank itself, but the actual hardware systems it runs on.
what we’ve seen around the world as, we’ve had more and more disasters and electrical systems go down or satellite systems go down. One of the issues that keeps coming up is whose hardware and software are you transacting your transactions on? And can they use that to hiccup or control you? So there’s a new book I’m reading and I’ll get a review of it up before the end of the year called Underground Empire. I don’t know whether you’ve seen it or not. Tell me more. Yeah, it’s about the hardware systems and how the U. S. for decades built out the, basically the cabling under the ocean, the satellites in the skies, but build out the hardware infrastructure for telecommunications and financial payment systems, and then suddenly woke up and realized, okay, we can use this to control and are using literally their control of the hardware to control Global financial transactions and policies through the, through their operational control anyway. And so 1 of the issues you have to grapple with, and we’ve been grappling with some states is okay. How, if you’re highly dependent on payment systems that have legal jurisdiction or ownership and control outside the state, how do you start to create resiliency? How do you start to create options? So that’s not a point of control. Exactly. And of course,
the good thing is, as soon as people realize how important that is within a state, then you can build a state level infrastructure because it doesn’t make sense then to route everything off around the world or once around the world and therefore have lots of other people participate and give them control, partial or full control. It doesn’t make sense. So by actually focusing on states. And the state level activity, you can build something that’s much more resilient and is not reliant on these outside forces. And that should be a priority. Yes, I couldn’t agree more. Okay, so let’s talk about governance. in North Dakota, we have. it’s called the Industrial Commission. So it’s the governor, the ag secretary, because agriculture loans is so important in North Dakota, and then the attorney general who are on this three person governing board. And then you have an advisory board, of people who are Basically appointed by the governor, but, you’re looking for certain profiles of people from different parts of the community. and they’re an advisory board. They meet once a month and provide many of the functions of what we would normally think of as a board. And then you have, beneath the board, you have the management and the leadership. So you’ve got three layers, governing and managing. and I think the first question that has to be asked in, if you’re going to design legislation is, who are the political officials that you need involved? do you need the governor? Do you need the treasurer? Do you need the controller? Do you need agriculture? Another, the equivalent of a commerce department. Who do you need in the governing board? And, who, how that system is going to work. So that’s the first thing that needs to be. Decided and part of that decision, I think, because so many states are looking at doing a bullion depository, does that governing board govern both the bullion depository and the state bank, or are they separate boards? Got any thoughts on that? Yes. I think one has to think of the long run, the long term future, and always keep in mind. The issue of resilience to attacks, interference, attempts to undermine and dismember the system. In fact, actually, we should look at, Catherine, those states, you mentioned there were quite a few states that also had a state bank, but they essentially discontinued them. I think we should do case studies of that as well. Because I’m sure that will show, if we look into exactly how this happened, that will reveal who are the players. And also how do they do it? And of course in the end they get the locals to agree and so on and this But there will have been outside forces at work and that will be quite interesting to see So we and we can learn also what they’re likely to do once we succeed in some of the states actually Set up additional, state level, sovereign banks. These mechanisms will come back into play. I’m sure So we have to make it resilient against that, and that is in favor of, having the bullion reserve in a way separate just institutionally, because the fundamental principle of resilience is decentralization. So whenever possible, you don’t have a centralized pyramid, you have a decentralized system that is. collaborating. And then if one is attacked, you still have the other, so if somebody brings down, a resolution comes up, okay, and then gets a majority to discontinue the state bank, you still have the, bullion reserve. So by creating more entities, we make it harder to take, them all down. So here’s the question, because I would definitely have the management separate and the advisory board separate because they’re very different functions, very different skills, very different experience. At the same time, the political governing board, if you have two separate boards, then there’s a divide and conquer. True. We have to be aware of that. We don’t want arguments and so on. Also, the other thing is. There can be really, of course, there are, scale economies and synergies if you have things together. one should try to find a fusion of that. For instance, one could have the, so the, so the, the gold bullion reserve separate, but it needs service providers and it asks the state bank to be the service provider for almost everything, that sort of thing. So that even if they shoot down the state bank and it’s going to be closed, you still have the separate structure and then the bullion reserve could work with other institutions or set up another institution, and in fact, by having separate entities, one could already put in place within their founding documents, the ability to turn those into a future state bank, if needed, one thing I would point out, Could become a state bank, if for example, That’s something, somebody wants to close down and succeed in closing on the state bank, the bullion reserve becomes the next state bank, or,
basically, there’s a situation where you need to, to expand. into state banking, all the decisions made what we need actually in state banks going so well, we can have another one, then the boolean reserve can be expanded into a state bank, the second one. even if you have the, political governing board separate, because you will want to involve in precious metals, people you might not involve in the state bank. You’re still going to have the governor AG and a treasurer are going to need to be involved in all three, in both. So, there’s going to be, even if you don’t have the same governing political board, you’re going to have a lot of crossover between the two boards. and that’s a, to me, that’s good. You need that. Okay, so, one of the most important, it is important to point out the governor appoints the advisory board, but it’s important in legislation to stipulate what kinds of people you want. So you want certain people from the business community, certain people from the banking community. If ag loans are important, certain people from the farming community. And so I think it’s very possible in legislation to envision. the categories you want people in and leave room for other, because there’s always an addition. And I think that’s part of bringing the constituencies together who help you create this new entity, because you want. North Dakota is defined by extraordinarily positive relationship between the banking community and the, state banking community in the state. and they’ve done a very good job of the state bank, not encroaching on the private sector at all, but simply supporting the private sector. And, when you design the legislation, you want to have those conversations with the constituents that you’re hopefully going to be supporting through the back. So I just wanted to point that out. Yeah, absolutely. Okay.
let’s talk about audit and reporting because to me, one of the things that you need, if this is going to produce the conditions of sovereignty is you need to be very clear in legislation about, there will be an independent auditor who picks the independent auditor. Is it the bank? With the approval of the treasurer, or is it the treasurer with the approval of the bank? It seems to me you need a joint agreement. And then you need very clear reporting from the bank to, from the auditor to the advisory board to the political board or group to the legislature and to the offices at the, State, which are coordinating and working with the bank. So there needs to be a very healthy feedback loop set up in a law describing how the disclosure is going to work. And of course, it’s all going to be very public. The financials are going to be available to the public. Yes, exactly. And of course, also one can, one can again, check with North Dakota, how they’ve handled this. So both in the legislation, but also in practice and get some feedback. Because they’ve been doing it for a century, and I’m sure they’re quite familiar with various, issues with interplay of different,
political positions and institutional offices.
One of the most important things that when you talk to the folks from North Dakota, they stress again and again, and I know it’s true from having spent time in North Dakota, is the reason the bank was successful is because of their culture. And what they keep saying is, if you do this in a place that doesn’t have our culture, it’s not going to work. Yes. No, that’s an interesting point. And I need to. I want to show you something, one second. It’s a map of Europe. Can you see that? Yeah. And you look at Germany, so what is this map? This map shows the US states with the highest percentage of population from which European country. So when you go to, to Britain, Utah comes up. So the majority of people from a European country, the top European country for Utah is Britain. Go to Germany. What does it say? So it’s North Dakota. So that means the majority, European ethnic origin. in North Dakota is German, and so most Germans are in North Dakota, and also actually Norway, right, further north. So it’s this Isn’t that remarkable? German connection. Yeah, exactly. And, of course, Germany is the source of this decentralized banking system. You know that, all the East Asian high growth economies poppied, Japan got it from Germany, and then everyone else got it from Japan, Korea, Taiwan, China, Singapore, they got it from Japan, Japan got it from Germany, and I’m sure if we look into who is farmers who are saying we need a state bank, I’m sure this is already a century ago, they were a bit closer to their roots in Germany, and they must have been aware of how powerful it is to have your own local banks. I’m sure that’s, that was a know how and knowledge transfer and input from Germany. once I saw this, I thought, okay. Isn’t that fascinating? Because they’re saying the culture, what is your culture? And of course they want to make it as unique as possible. And actually, there is a German connection. Come on. That is perhaps your culture. So we are talking about the same thing. So whenever they talk about culture, they made it sound as if, it’s so unique. Nobody’s like North Dakota. And of course, in some sense, that’s true. For every place, we’re all unique. In fact, each person is unique, all creators are unique. But, there are clearly, culturally, common features that we can link places and people to. And I think that’s an important link, and there is a direct link to knowledge of decentralized banking.
when you, when you read the report for the Sovereign Bank for Tennessee and you read the success of Germany and its banking system, and I hate to bring this up because we’re coming into Christmas, Richard. I would also say as it applies to banking, it also applies to Christmas meals and dinner. The culinary tradition of Christmas was basically created by the Germans. That’s true. It was, That they brought even to Britain, it was Prince Albert, Victoria’s husband, Queen Victoria’s husband. she was German herself, she’d been born in Britain, whereas he came straight from Germany and he introduced in Britain, all the Christmas trees and all that, all the dramatic things. And he also introduced a whole lot of the decentralization ideas. and was very interested in and concerned about poverty, and, schooling, introduced schools. He became a bit of a social reformer, Prince Albert. So what happens? Oh, he died suddenly, very young.
Because that sort of thing, I guess has not remained popular among the elites, established elites in Britain. So sad. And of course she was devastated and she built all these monuments to her, beloved Prince Albert. But, if you look at him, he was just very German and that’s not so popular in Britain. Okay, but I do think it’s very important to understand if you look at the history of the Bank of North Dakota, the culture has really, if you look at the history, we’re going to talk about functions, but they’ve slowly and steadily. evolve functions and the legislature has asked them to do things or they have asked the legislature to do things or the bankers have asked. And as time went by and the needs of the economy and the people changed, they evolved and changed together with it. And it happened because there is a culture that it’s extremely conservative, but very caring about particularly their farmers, their industry, their businesses, and. one of the stories that we heard from the former CEO is how they had stepped in during a particularly bad time in the commodities markets to make loans, through the local institutions that literally had no interest for two years and were really, helping save farmers. And they said, we depended on the local institutions to know which farmers would be here in five years. essentially a character loan. And in fact, in five years, all the loans have been bought back by the banks. No defaults. They took no losses because the banks know who You know, the banks know the character and the economics of the local farmers, and then there’s trust going from the local banks to the Bank of North Dakota, and so the whole thing works. But it works because you have a very careful, conservative culture that cares about its people.
it’s not a culture that produces speculative bubbles. Exactly. So in that sense, yes, culture, we entirely agree. and it’s a culture one can learn from. Therefore, we, we, can learn these lessons and other states will also benefit. I would say it is a very German culture, until the EU happened. The EU seems to have changed. Some of the things that we’re able to do at the Bank of North Dakota are just incredible. new industries that we’ve helped develop. we’re at the forefront of every major economic initiative, whether it’s Cirrus, or ethanol plants, or helping the, farm economy. It’s responding to our needs across the state and the ability to have an impact and to have a positive impact on the state. And to really help fulfill the mission of the administration as they work forward in looking at the vision for the state of North Dakota and working with the legislature to fulfill their vision for where the state should be going. So it’s, being an impact player in the state of North Dakota. that’s It’s going to be our course for as long as I can see. It’s very interesting that despite the fact that there have been some attempts over the years to sell the bank in North Dakota or to abolish it, that the bank has really worked to serve its own niche in the North Dakota economy. I always tell our staff that when you are an organization of one, it’s pretty easy to become extinct. Our mission has been consistent, that we are here to encourage and promote agriculture, commerce, and industry. I don’t think we can ever get too far away from that. What we can do is be more diligent in how we deliver those services, and to make sure that, we are always market driven, and that we’re able to react to it.
An important part of economic development is, as we have, as our people come forward with creative ideas, and try to do things, in almost every case, financing is part of the equation. That creates more jobs and more opportunities. That’s what the Bank of North Dakota does, and it needs to continue to be an important part of our growth and development. I think that’s The fact that it has matured into the kind of bank that it is really shows why it does serve a purpose, even though it is, some argue, a socialist institution. Now, that might seem unusual, but, and it is, but it really does underline how hard the bank works to be a part of the state of North Dakota, of the economic development, That we see, for the state of North Dakota, and it is a part of the infrastructure, it is a part of the history and tradition of North Dakota, and is really a full partner in the state of North Dakota.
It’s an amazing part of history. It really is an amazing part of history. I think the industrial program and the effort by the Nonpartisan League really was a, Wake Up Call, both for the state saying they could have some control over the economic destiny, as well as Wake Up Call for the interests, if you will, the grain and railroad and banking interests that they couldn’t take for granted. The people of North Dakota, or the industry of North Dakota. we’ve got a lot to be proud of in this state, and we should be. And the bank is just one of those institutions that we can be proud of. Both for creating it. As well as managing it, as well as we have. It’s pretty phenomenal. I think the people of North Dakota still believe a lot in themselves. And the Bank of North Dakota is a manifestation of that. It is, by golly, we think we ought to control our own destiny, and one of the ways we can do that is to own our own bank. Okay, so let’s talk about functions. And this is really where it gets pretty interesting. When you write legislation, obviously you can’t write culture, but you can describe functions. And, and right now, if a state does not have a sovereign state bank, you’ve got a treasurer, a controller, reserve funds and pension funds that are doing these functions or some of these functions now and one of the things you want to, decide is how does the bank interact with those functions and you want to make sure the people doing those functions find the bank to be supportive and not You know, trying to take functions away or replace functions. So you have to think those things through with those different offices. Is that fair to say? I would say so. Absolutely. Yes. And what the state of North Dakota has said is, it doesn’t matter who does them as long as everybody’s happy with how it’s getting done. Exactly. Precisely. And as you said, With transparency, this being quite visible. This is a public institution. there comes automatic, accountability. It’s a local institution. It’s accountable to locals. and of course, in a way, there is still flexibility for certain details that we don’t need to. I think that’s something to keep in mind, not everything has to be set in stone. If something turns out to be better this in this way, then of course things can be, amended, as long as the principle remains unchanged, every state needs at least one sovereign bank, and needs to be in charge and control of its bank. As a warning here, my experience in the UK has been that. Where people also listened to me early on and, and then there were actually politicians and government, officials saying, yes, okay, let’s have some more state bank. And literally there were initiatives to set up, the British business bank that was done by Sir Vince Cable, who was backing me in my banking projects and, he even joined the board of my, bank project company and so on. he was secretary of state for business. So he did the British business bank. Then they set up a, there’s two more types of banks. I think one is considered the green bank for sustainable investment, and another one, but all of them had the fundamental flaw, and that’s where you see immediately there was interference to try to distort things to the extent that it become useless. They weren’t actually banks. They literally didn’t have a banking license. They didn’t have banking functions. They’re just banks by name. They’re just government institutions, another fund, and they were funded from like a budget tax money every year, and they would spend the money. There’s, it was, they were not banks. It’s a joke. So under the law, they will allow you to call it a bank when it’s not a bank? Wow. It’s the government. The government can do anything. But normally, you’re right, that is for any financial legislation, you’re not allowed to Call something a bank if it’s not a bank. in Britain, if the government does something and they wanted this by name only, but not in reality, so they’re not banks. and so that was, these projects were undermined basically too early. They hired people from the city of London that had been senior bankers at large banks, and of course they knew what they were about to do, namely make sure these are not real banks. And so there, and so that’s one thing to keep in mind. So as long as we have the fundamentals firmly decided, there should be real banks that have real bank functions. but of course, as we, discussed, and as everyone knows, they will be banks mainly of the state and of the other banks, the customer side is, it’s not retail normally. there can be always small exceptions here and there, fundamentally, the state and the other banks are the main customers, and they can join in consortiums. It would, join in, in, in large lending, to back up the small local banks. When the loan is too big, then of course you would join and therefore also the local company or the local pharma would become your customer, but the principle is that, and so it shouldn’t be changed. the core function is running the state’s bank accounts. Exactly. You are, Instead of the state keeping its deposits in all the big New York Fed member banks or, other large private banks, you’re keeping your deposits in the state bank. They are running your bank accounts, and that means they are controlling the data about what your bank account is doing. Exactly. And that’s an important point, the data angle. We should Keep emphasizing because increasingly, that’s where a lot of the interference and then also control, happens, but also, essentially the leakage of data to and being sold to third parties. In Europe, again, this very worrying developments happened there. the European Commission produced, when was it? It was like 10 years ago, a bit more than 10 years ago, suddenly a new directive. They always come from nowhere because European parliament has no powers. It’s just the rubber stamp parliament. So all legislation comes from the European Commission, unelected. They’re the public bureau of this. European, Soviet Union. Union had parliament, but no power to table any laws. Just like in Europe. So European Commission had this new directive called PSD two and this PSD two directive, it sounds very technical and digital this and digital that. It is actually, to put it very simply, what this is about. because one thing the banks have been quite good at in the past for the last two, three hundred years in Europe is they have not sold our private information to third parties. They’ve not done that in some countries. It’s in the legislation. There’s bank secrecy. They’re supposed to keep that data secret. They certainly can’t give it to anyone else. And they have not done that. They’ve even been very modest about using it themselves to market their services to us. banks have been actually surprisingly good at that. they’re not used, they haven’t used what, to anyone coming from Google or Amazon is like, wow, you’ve got all this data on all these people. why aren’t you utilizing, exploiting it to sell them stuff they don’t need? so we, it’s actually, we should be grateful. The banks have been quite good on that point. And then that means, of course, in Europe, majority are small banks, local banks, and they haven’t done that. So PSD2 is about totally ripping that out. From the banking system and forcing banks to pass our private information on our transactions to third parties Namely, this whole new so called fintech sector, which was government developed in order to compete against the banks. Because the plan since around 2008, 2009 has been to dissemble, dismember the banking system and target all the many functions banks do by having separate digital service providers for each function compete with banks. The biggest obstacle being people don’t want that. So they’re not going to actually. use these alternative, service providers. And that’s why the European Commission created this law, and it works the following way. So if you’re on your phone, and you find, you get an ad, or you somehow, somebody sends you a link to something, oh, new service provider, oh, that sounds interesting, watch what you click. So you click this, oh, to go further, you have to agree to the terms and conditions, watch out. Don’t agree. But of course, we all know we have, if you want to move on with something and see, you have to agree. And then you probably made to even click that confirm that you’ve read it because nobody reads it. So they force us to lie daily, right? With all these. That’s enough. So if some fintech company has you now agree to their terms and conditions, according to this PSD2, they now have your permission to go to your bank and get all the information on you and all of your transactions, all your history, and the bank has to now give it to you. That applies to all European banks, PSD2. Very insidious. So these guys can now use your information to sell you stuff and also compete against your bank, driving your bank out of business. very much. but that data can also be used to implement a social credit system. Anything. Absolutely. Anything. Social credit system, control systems, basically it becomes, something that can be passed on to anyone. and so it’s really insidious. So where was the debate about these laws? Of course, there’s no debate. This is Europe, EU, it’s a dictatorship and they just enforce that. Nobody wants this. And if people realize what this is, nobody would agree, but there’s no discussion, no debate, no vote on it. it gets back to this issue of hardware and software. Precisely. The hardware software issue is, just starting to be understood. It’s just beginning to be understood, and as it is understood, the whole legal issue of is my data owned by me, or can it just be taken and used against me? To use to control me, to, and to take my assets. So it’s, going up, up, Okay. So, function number one, you run the state bank accounts. Now we’ll get into it later, but that means deposit insurance. The bank of North Dakota, the state provides the deposit insurance, not the FDIC. They are completely independent and free of the FDIC. Now, their major deposits are the state deposits. So that’s not taking necessary a lot of risk, but it is an issue in legislation that needs to be dealt with. You are going. That’s right. And I think it’s an important point. now, I suspect it’s a point that will be used by, opponents and enemies of these proposals to have state banks. And they will say, they will try to scare legislator, Oh, but you’re not, you don’t get, FDIC deposit insurance and your, customers don’t get this insurance. there’s some important things to remember then as counter argument number one, the FDIC is an amazing track record. In closing down United States banks in America, that’s his job. It’s real job is to close down banks and it’s closed down dozens and dozens, hundreds of healthy banks. And it’s not even secret healthy banks, because initially think, okay, they closed down banks that are completely failed and in trouble. No. They can close down and they have closed down many healthy banks. In fact, there’s a whole study by the Fed because you see when a bank is in trouble, then it also economically, it acts differently. And so as a sort of economic side of the study, the idea was what happens when you close down the bank? if you close down the bank, that’s in trouble. Maybe the effect is not large anyway. We want to have data on when you close down a healthy bank. Oh, where can we get it? FDIC, they’ve done it many times. And of course the conclusion was if you close down healthy banks, significant negative impact on the local economy, which only economists could be surprised by. But that was the finding. So the FDIC has a record in closing down banks. And there’s very little recourse. So that’s already reason number one why you don’t want to be part of this FDIC system. Secondly, when it comes to actual deposit insurance, if you want to have your own system, you can run your own deposit insurance system. In Germany, the cooperative bank, have had and still have their own deposit insurance system. And the savings banks, they had their own, have had their own deposit insurance system. Then the EU came in and said, Oh, we need a European deposit insurance system. And then they forced the savings banks and the corporate banks in Germany to participate in that system as well and make contributions, even though they have their own systems. There’s now two, double the Pulse insurance system. They were forced to join, they didn’t want to join, they had to. and they were wise in not wanting to join, but they had no choice, sadly. It’s the power of the EU. really, you don’t want to be part of this FDIC system. It’s easy to run your own if you want to have a formal, Deposit insurance system. one can actually run one and that will be my recommendation as the next stage. And we haven’t discussed this yet, as you, point out the list of advantages of having a state bank, we must add this in particular, when we talk to the state chartered banks, the state level banks in the states of Florida, Michigan, Tennessee, wherever. that the plan is to have our own state level deposit insurance system, allowing all the banks to leave the FDIC umbrella. Of course, there may be, and we have to look at the legal framework, one of the conditions for them to be allowed to leave the FDIC, but it’s quite clear that one of the conditions will be that there’s an alternative deposit insurance system, which somebody has created, but we should create them on a state level and the state bank and the state can be part of this and they can be better funded. because you, you fund from, contributions. And if you run your bank, according to particular principles, mainly have bank credit for productive business investment, it’s the soundest banking system, no banking crisis, right? But it argues again for the importance of a conservative culture, exactly, a very conservative culture. And that’s why, but if you have the right lending pattern, you just won’t get into trouble. it’s, if you break lending into three types, bank credit for consumption, bank credit for asset purchases, bank credit for productive business investment. The latter is the type of bank credit that’s sound and never has in history resulted in a banking crisis. Whereas the others create inflation, they create asset inflation, banking crises. And that’s usually the problem. So if we introduce principles where the state bank encourages all the state level to state charter banks to also lend more and mostly, for productive business investment, we know we’re de risking the system, which will be very important. and then the German deposit insurance of the corporative banks. 200 years old and the savings banks around 200 years old. They never needed state money and no depositor. And these are, these were in the past where thousands of banks, no depositor ever lost any money and no state money was ever injected. There were some situations where occasionally there’s some issue with a local bank, but they could always sort it out themselves. They never needed to save money. And that, of course, is a great advantage that you’re not dependent on this interference from, outside. So in this case, from the federal, federal level interference should be avoided. But I would argue if you’re, starting a new state bank, you want to be, obviously for the state deposits, you’re not going to worry about it. You don’t need FDIC, but if, you add banks in the state to your insurance program, you want to have very tight underwriting and you want to do that on an evolutionary basis, certainly not a big basis. Exactly. The one thing I do want to point out is that the As a technical matter, the Bank of North Dakota will take a retail deposit, so any, citizen of North Dakota, any resident can deposit, but they have to drive to Helena to do There’s no electronic banking. And so, as a political matter, you’re not saying, no, we won’t take your deposit. I think it’s sensible because. you want to have a bit of optionality. There may be situations where it turns out that’s actually very useful or to help a particular company that needs help or help the local small bank. that is a needed arrangement. It should be possible, but why not? you never want to restrict your abilities and capacity. But they’re, very adamant. They do not want to compete. Yes, exactly. That’s, clear. They’re there to support banks and credit unions. They are not there to, yeah. So we’ve discussed deposits. And again, if you want to read more about how the Bank of North Dakota does it, just check out their website. But let’s, I want to talk about loans and then services. If you look at the history of, the Bank of North Dakota, they, have four areas of loans. They’re doing agriculture because it’s so important in North Dakota, infrastructure loans. business loans and student loans. And then there are a variety of what we might call cats and dogs of programs that have come up, or they’ve responded to a special need or the legislature, it’s either the banking community or the bank or the legislature has responded to a special need. So let me talk through, because they have a very interesting Loan book, of course, agriculture is the big one. And, one of the people, when we met with them pointed out that on average total deposits in community banks and credit union is 30%, but in North Dakota, it’s 83%. And it strikes me that one of the reasons that may be happening is, they try and work completely through the local banks. So, they want the local banks taking positions. But they are there as a backstop, and they are there to do the loans that either the local banks won’t do, or as a participation, or even in some urgent situations, they’ve bought loans off the small banks books. So if you, look at what happened to Silicon Valley Bank, if there had been someone to buy their loan portfolio off their book, in that kind of liquidity situation, they may have been better. But, so their ag loans, their infrastructure loans, which they will do directly with the municipality, and then their business loans. again, they like to work through the local banks and then student loans, but only for students who are in North Dakota or resident of North Dakota. So it’s very North Dakota centric. it makes perfect sense and that’s, the whole purpose, isn’t it? so yes, that’s, that’s the model where you support the local, banks chartered in North Dakota. and businesses, communities through them, and you’re a backstop, and so essentially, it, it also reduces the ability of the federal centrally planned organizations to interfere in your, state. and, of course, we see that in other places, and you mentioned Silicon Valley Bank, and that really was quite a shocking,
Event because when you go through it, it’s, it really looks quite strongly like an orchestrated takedown of the bank that is unnecessary until the spotlight should be on the regulators, but what are the media doing? They’re still in the same mode that they were put into after 2008 or the big banks and the banks are bad. And no one else is, it’s just the bankers fault. Actually the bankers have to do what the regulators tell them and they have always done. And, it’s when the regulators don’t do their job or give the wrong incentives, that’s when we get these crises. But the journalists have been extremely bad in ever questioning the regulators, whether it’s after the 2008 crisis or, something like Silicon Valley bank, where was the federal reserve? It only came in as lend of last resort after the FDIC had closed the bank. but J. P. Morgan was staying open 24 7 according to the reports. they’re the second, they and Citibank are the largest banks in the New York Fed, and they’re staying 24 7 trying to poach the deposits. While, while Peter Thiel and other people are calling everybody and telling them to get their money out, JP Morgan is staying open to make sure that they can suck up all the deposits. So it looks to me like the New York fed was running them. exactly. the other thing is that the Silicon Valley bank had joined the fed now pilot program. And as a result, was no longer able to stop the flood of money going out because it was in the fed now system. They had delegated that to the Fed, not realizing that the Fed would use it against them. And, normally you can just stop the outflow, win a bit of time. and that wasn’t possible because of that FedNow system. But already previously, that the management was doing some strange things. and I’ve seen it in the UK where, a small savings bank was taken down and it was really with collusion of the management colluding with the regulators.
that’s what it looks like at least. so in this case, step number one or event number one was there was an outflow of deposits. Now that happens, it was fairly large, I think more than a billion, already in the previous year, 2022. And what’s the management response? Normally bank management response by raising deposits. That’s what they should have done. They didn’t. They decided, Oh, we’ve lost deposit.
what can we do? And of course the, the FDIC had been going around already with this chart of this picture of the so called hidden losses in the banking system, which are merely valuation losses when interest rates rise, whenever interest rates rise. And the asset, since we use, net present value discounting by using interest rates to discount. The value of assets, of course, asset values in theory have gone down, but banks don’t have to mark them, to market,
and so that was really, so the FDIC was already marketing the idea that there’s a problem in the U. S. banking system, which is very biased information. They also didn’t point out that when rates go up, the liability side of banks. Goes down in value as well. Therefore, banks are hedged, you know They have a long book the assets and they have a short book the liabilities It’s a hedge fund that doesn’t have to mark the market, which is quite a stable system Really if you don’t right you do the wrong thing, but then so bank management decided. Oh, let’s Sell some of the US Treasuries at a loss And really just doesn’t make any sense. Why would you want to book losses? But it’s almost to prove the point that the FDIC was trying to make. Oh, there’s a problem in the banking system, which is not true. These are mostly treasuries and you hold them to maturity. Never, is there going to be a problem? so Silicon Valley bank realized these losses quite unnecessarily. They should have instead used them as collateral to borrow from the Fed, for instance. the, now the, Fed has a bank funding program that will do that. Only now. I thought, the Fed was created in 1913 for that purpose. Oh, but it was in 2024 that they came up with this plan. Now we have a plan. No, it was in 2023. They did it in 2023, the bank funding program. It’s a joke because of course the Fed could have always done that. They don’t just, they can do anything. They don’t need to even call it a new name and a new program. And when they want to, they do things, without even announcing a new program. But I, think this is why you want to state bank, because if you look at the loan book of the Bank of North Dakota, and then the services, what they’re doing. for example, they offer collateral valuation services at the request of the Banking Association and the small banks. And they, they also offer correspondent services, international wire transfers. Exactly. And that’s, again, That’s again, an important function that a state bank can and should fulfill. It’s actually a function that if you had the right central bank, the central bank would also do for them. But the Fed refuses to do that. Same as the Bank of England refuses to be the correspondent bank. in Germany, the Bundesbank, which has always been publicly owned,
always has acted as a correspondent bank for any bank, even foreign banks. And I believe, what this does is the small rural banks can stay in business. Exactly. Exactly. Because they have, the bank, they have a sovereign state bank that can provide those functions that they can’t provide economically. Exactly. And you’ve seen that. Yeah. Exactly. And this makes perfect sense. So then you see what is the real objective. It’s revealing itself. because if the bigger central, more central bank. either the Fed or the, State Bank of North Dakota,
has the objective to support the banking system, it would offer these services, but if the goal actually is to get rid of small banks, then you would not offer it. And that’s right. Reveal preference. That’s what we see. The Fed doesn’t offer this. The Bank of England doesn’t offer it, but the, Bank of North Dakota does offer it. Because they that is their purpose. They actually want to support the smaller bank, but I want to come back because we’re going to get to economic benefits. I want to get back to this number that the total deposits and community banks and credit units is 30 percent but in North Dakota, it’s 83%. If you read your. your paper on Sovereign State Bank for Tennessee, and then Florida and Michigan as soon as we get it up,
what you realize is that the health of the economy depends on all of these small banks. In other words, and you make the case you can get growth with no inflation. And if you look at the difference between 30 percent and 80%. 3%. There’s a reason that the North Dakota economy, remember during the bailouts when, and, the financial crisis, he, the, I think it was the head of the banking community said that, North Dakota was in a recession for a week. But that I’m assuming that is part of the extraordinary economic health of North Dakota. Exactly. And it was the same in Germany, the, small local banks, which in Germany are 80 percent of all the banks, a small local bank. they increased lending to small firms cause they realized, Oh, the big banks are, in a credit crunch and in trouble with all their speculative international transactions. so we’ll step up lending and they did and there was no, maybe a week, but maybe there wasn’t even a week of recession in Germany because the majority of people work for small firms, dependent on small banks, small local banks for their funding. and that’s, how it works. And so the economy was, very stable in Germany. Your problem was that some banks had bought fraudulent paper from the Americans. Yes. The bigger ones, the Landesbanken, which are bigger banks. Yeah. and, if you look into the background of that, you just see how the whole thing was a set up as well there, so the, it was a way for the U S financial crisis to be exported. And it really was part of this plan to take down a. A vassal competitor, because, they, it was literally flogged to, to Lunderspangen after the EU had interfered and said, Oh, these Lunderspangen, we’re going to pass some directives in the EU Brussels, which is under us influence is the political arm of NATO.
that’s the Lunderspangen state banks have to change their business model. They have to be more commercial. They have to, behave very differently. and that’s when the Bear Stearns and whatever, Morgan Stanley, Toxic Waste, high grade credit, structured, structured credit, product salespeople came up and sold them this stuff from America, which turned into toxic waste. My theory is that, Obama got the Nobel Peace Prize because he bought back all the crap that America had sold to Europe. He got the taxpayer to go along with it. So let me come back, because you saw an effort in the last 20 years to get the banks, particularly the small banks. to adopt sophisticated underwriting and compliance systems that would integrate them into, software that’s leading us into a social credit system. And what that did was it basically stopped banks from doing character loans. And if you, listen to the history of the Bank of North Dakota and the, small banks they’re servicing, they are doing character loans. And I suspect one of the reasons the system can still do that is because the Bank of North Dakota is there and it’s not in the FDIC system. So they can’t squeeze them into, the sneaky evolution of social credit systems with complex software. That’s right. That’s right. Yes. I met a local savings bank. CEO in Germany, a small local bank. And he told me that, at least 40 percent of his loans, business loans are character loans. Without any collateral because he knows these firms very well and they, they’ve been known to them for decades. if you look at the U. S. regulator push, what it does is it stops the character loans. It forces more money into the investment portfolio buying long treasuries, which of course gets slammed if you raise interest rates. But it also causes the banks to spend a fortune. On expensive software that can provide all this data to the yeah, exactly to the centralizers. That’s right. These are all tricks to centralize, exactly. It’s all a digital invasion. And somehow, I believe they’ve, probably avoided some of that. Okay, one of the things if you look at their loan book is, occasionally the legislature, so the profits are rolling out of the bank and, ultimately go, the, state gets dividends. but the legislature can create low interest rate loans. for a particular purpose, one is, school construction, where the bank will make lower interest rate loans to schools to construct new school facilities, and either the legislature can provide appropriations for that, or they can have the bank do it, but then it comes out of the profits that create dividends for them. So one way or not another, the legislature is funding it, but occasionally that happens as well. And I think if you start, if, somebody is looking at doing legislation, you want the legislature and the bank to have the flexibility subject to the approval of the legislature and subject to the approval of both, the sort of political oversight board and the board that has all the bankers and business people on it. Exactly. Yeah. Yeah. If you, listen to their history, they’ve been very responsive to what, their local banks need. And so something happens and it generates an interest and that interest flows into the, both the legislature and the banking community. And then it comes to the bank and then together they respond. And I think that’s why the culture issue is so important. Because it’s not, a response to, okay, let’s go make money using, state credit. It’s a response to the small business people in schools, the municipalities, the farmers have a need. How do we respond in a way which is financially responsible? Precisely. I think that’s very well put. And you’re absolutely right. that is the true culture that they were referring to, which, which is, of course, the culture also that we have in the German operative and local savings bank networks. it’s responding to the need and always looking beyond. And it’s not about. Let’s make money as the number one priority and then forget about everything else. it’s number one is what is the need? What can we do? Banking can do a lot to help under all sorts of circumstances. How do we need to structure it so that it is properly done? And workable, and also is not going to make us losses, and there are so many different things you will do if you have this different sequence and order of priorities, isn’t it? but it’s, the thing I think has been successful for them, they’re focused on productive activities. So how do kids get an education? How do we have schools that are functional and work? How do we grow a crop? How do we, as a state, produce and export crops? How do we, how did the business community thrive and how do we protect the banking community so that they’re functional and solvent, including small banks?
I, we did a great interview with you on plunder capitalism and we, went through case studies of how the central bankers move in and wreck an economy so you can pick up assets cheap. And to me, austerity by the ECB and the German banks was, and the, French banks was really, a way to plunder Southern Europe. So, how does the state bank stop that kind of plunder game going on? Yes. as you said, the culture, so really it’s the, decision makers having in mind the original goal. What is the goal? We want to make sure that North Dakota is a strong economy in the long run.
Businesses have what they need. There will be sufficient investment in productive things. education needs to be supported and so on so it’s really this, the priorities, the decision makers have that in mind and then use the power of banking and the power of having a state bank to get behind these objectives. And then it’s quite natural. And if and of course, at the same time, they are professionals and they know the banking business, so that you make sure you’re not going to make losses. but these are your real objectives. You are actually essentially a development bank. That is developing and securing, the long term future of the state in all its dimensions, so you have a much bigger remit, really, and not just, oh, let’s, make money, or, how can we, maximize next quarter’s profits or something, it’s absolutely not their priority. but if you do this well, and in the long run, if you have this different remit, you will find that the state bank will be financially sound and will be profitable And everyone else’s as well, Its primary function has always been a depository institution for political entities, counties, the state owned institutions. That is still the main source of its deposit base. So that role has not changed over the history of the bank, but over on the lending side, that is especially what has changed. First one on page, on the first page is to, continue to be the primary facilitator for loan participations with North Dakota banks. Since the 1960s, the student loan program and then the commercial lending programs and the agricultural lending programs and even the entrepreneur and new business, that’s more of a venture capital function. Now all of that has been allowed under the original legislation that was passed back in, So it seems that no one’s had to go back and invent this institution. All of its powers were created then after a period of penance, of course, for the sins of the 1920s. And it probably has paid for those sins, I would say. It’s now, rediscovering its original potential. The Bank of North Dakota has grown and changed many times, but it has not strayed from the original plan laid down by the Nonpartisan League. they behave like a bank, but with an economic development mission, which is the neat thing about the Bank of North Dakota. That’s, still part of that old NPL route that was put down in 1919, and I think way back then, I think it was really the intent of legislators who created the Bank of North Dakota to create a bank that would help agriculture and commerce and industry and help the development of those sectors of our economy. There may have been a time when the bank drifted from that, but I think it’s there today. My view of what the bank should be doing, I came to the bank with an idea. I would encapsulate it in saying the Development Bank of North Dakota. My view of banks is that they are to lend money. To people, whether it’s to start a business, to buy or expand their farm or ranch, to buy a home, to get a school, whatever it is, that a bank is successful if it does a good job of lending in its community. That helps the community grow and prosper. That’s what makes the bank grow and prosper. that’s my philosophy of banking, When I came to the Bank of North Dakota, the total loan portfolio in 1993 was 200 million dollars. When I left there seven years later, it was 1. 2 billion dollars. That’s a billion dollars over that time frame that we invested in North Dakota farms and businesses and homes and students and all those kind of things. Ultimately, and its reason for being, is to serve the citizens as the development bank. Help. invest money in North Dakota so that they can grow businesses and farms and build homes and get an education. to grow it.
and, starting a bank where the treasurer’s office does a lot of those functions, so the Bank of North Dakota has approximately 180 employees. If the treasurer is doing a lot of those functions and you want to leave them in the treasurer, then you can start very small. Yes.
Now, let me turn to economic benefits and risk issues. To me, one of the risk issues is states generally have rules about compensation and personnel. And it seems to me, if you want to attract people in the banking industry and are competitive in the banking industry, you may want to have a separate compensation schedule. Have you ever looked or thought about that?
that may be the case. But, when I had this issue, and in fact it was, posed to us by the UK financial regulators in a formal meeting, they said, oh, we look at your projections for your community bank proposal and, the breakdown of the costs. We see that you have very modest salaries for your senior and top executive. And and yes, we said yes, they, are modest, but, we’re confident we can hire people for these and then soon enough, we got a letter saying, hire those people, i. e. we don’t believe you, see if we can hire them. Of course, at the same time, by hiring them, they were increasing, the regulators were increasing our costs because it was still pre licensed. And the earlier you get the whole, senior executive team in place and the C suite, it costs really going to go up and you run out of money quicker. So that may also have been an angle, but they wanted to see whether we can do it. And I recruited in Germany. It’s absolutely no problem. Tons of applicants. They all thought this is an exciting idea. Start a German style local bank in the UK. Oh, that’d be great. do that for a few years, get the experience. But then it was quite exciting, but also at the same time, the ECB is forcing the community banks in Germany to merge. So you do have actually room. There are people that are essentially, they feel they’re more superfluous, and maybe they are being, asked to leave because of all these mergers of community banks now happening under ECB, European Central Bank pressure. In any case, We managed to hire the top suites, senior executives, no problem. And then there are no bonuses, just standard salaries, considered by UK standards, extremely modest. It was not a problem. And so these are people that are trained bankers, but highly motivated. With these objectives that we discussed in mind, that’s really who they are. They are always looking at the bigger picture and they realize banking contributes to society a lot. If you do the right type of banking, it’s a fantastic contribution to society because you are allocating resources. It’s a, if you look at a really successful community bank, the people who run it, it’s a really fun job because they’re very intertwined with the community and they see what’s going on. They learn a lot, they are a, an, an absolutely fantastic local resource on not only financial literacy, but what’s going on in the, they really understand the local economy. What are the trends? What’s, happening? What, absolutely. And, so the local bankers that, once, once you do this job, you realize your role. And I think it’s very satisfying as a job because You you, there’s a need, you’re responding to the need, you’re helping, but at the same time, it’s, more than that. You’re actually, an integral part, maybe even a catalyst for all sorts of positive developments, new developments, always funding, also new, innovations, technologies, and, all the various developments.
you can see how people are motivated. Yeah, if you look, if you go through Bank of North Dakota’s website and their loan book and their loan, as I said, the more we ask them for briefings, the more they put up on their website. But if you look at all the projects they’re dealing with, it’s a fantastic and highly complex portfolio of projects that are very interesting and I think very satisfying because they’re all so fundamentally productive. Exactly. Exactly. Exactly. Yeah. Yeah. So it, in Germany, they, this has been, I think, realized by those people working in the corporative banks and savings banks already for the last 150 to 200 years. So they’ve established actually training centers. There’s, there’s even a university, which is owned by the cooperative sector. Yeah. And. the senior executives, they go on regular training programs, actually also junior, all levels. but if you want to be, in a leading function in the bank, then there’s a certain program you have to do. And,
and they all speak very highly of this. So I’m, sure there’s part of this, training is this realization that, you are contributing. Important things for society and then in places where you don’t have that it’s a very stark contrast, you know The economy will perform differently If i’m going to start a state bank richard, how do I capitalize it? Do I need an appropriation from the legislature to get it going or to capitalize it or? I think yes, but the important thing to realize is it may be easier to get the money than you think because You I mean, we have to look at the details, how this is done, but often,
there’s different resources you can use and the, chief financial officers would, know this. The part of the resources that are very fought over and therefore very competitive and very difficult. And also politically, there’s lots of opponents with different emphasis is the budget. So the money should not come from the budget. It should be possible to use the money from other state sources, such as what is called reserves or what is called capital expenditure, long term investment that is not from the budget. there are such resources, and that’s really what it is. So you make it an investment from the reserves. Exactly. An investment from the reserves. And in fact, it should be part of the, there’s reserve management. so the finance director, would know about this because there’s people focusing on that and they can, buy bonds and stocks, whatever, and, invest outside the state. But of course, usually they will have a bit of a bend. We want to support the state also with these investments. And certainly this is the case here. And so it should come from their long term reserve management and investment. and this is a profitable investment. So right. And you could set it up if you, wanted it to be, not permanent, you didn’t want an equity investment. You could set it up as a preferred stock or as a debenture and just pay it out, over time. and of course, once the bank is set up, it can start making loans and just creating money out of thin air. exactly. This is the other thing that’s often neglected when you analyze these. That by having more local banks and having a state bank, you are literally adding to productive capacity. and, you are creating new money that is used to put that productive capacity in place, which is why it’s noninflationary. And you get growth and prosperity and job creation. So there’s, there’s no downside. there’s, what’s there not to
it seems to me, if you’re trying to write the authorities for a bank, both what loans it can make and what services it can make, You’re going to need, you’re going to need to make very clear the intention is to support and not compete with the private sector, but you’re going to have to set up the advisory board and the board so that you have sufficient over oversight and direction. that you can leave a lot of flexibility to the bank and the bank management, subject to the review and input from the advisory board and the approval of the commission. And that means over time, the board, the advisory board and the legislature and the bank are going to evolve together. And I come back to what we keep hearing. That’s why the culture is so important. Yes. Yeah, I agree. I agree, right? because as somebody who’s cleaned up a lot of financial fraud, so I cleaned up a lot of fraud from the SNL crisis in the eighties and the culture was the opposite and oh, the mess they made.
okay, so, there, so let’s talk about a couple of risk issues. To me, the biggest risk issue is the Bank of North Dakota is totally dependent on the Fed wire. So even though you might not have the FDIC in there or the regulators in there asking you to do all sorts of social credit compliance, you are dependent on, the central banks Electronic wire system and, and I don’t know anything about the telecommunications in the state, but you’re probably dependent on telecommunications providers outside the state. And so 1 of the issues that’s coming up more and more these days, not just in banking, but in many functions is if our digital. digital, assets and digital transactions, operate on an electronic system. Do we need legal and operational independence in those systems within a state? Now, I believe the answer is yes, but that’s a big new scope of work to contemplate for a legislature.
Yes, that’s true.
that’s true. I would agree with that.
yeah, it’s, essentially if you can create. The, I would say the basic framework of a local alternative system that you could switch on quickly if there’s a problem with the Fed wire, and that would be good planning and, in everyone’s interests now because it’s local on the state level, it should be possible to set up something. and also the advantage of. Local banking and local banking relationships is that you can fall back to basic analog records, right? they apparently they had their own cat, so they, had their own check clearing system before they went fully on the fed wire is my impression from listening to them. And, it’s really funny because when you talk to a banker, they can’t conceptualize that there would be a problem with the Fed wire. But to me, the Fed, fast payment system Fed now is voluntary. If it should become non voluntary, then I envision a day when it could come that the Fed system is a problem. Absolutely. Absolutely. you’ve seen the Feds. Motives and actions and often they’ve been anti bank and anti small bank and then situations can arise where the FED’s actions will be a problem and it, will be a lifeline to small banks if you have an alternative system and as the state bank, it will be an ideal location to, to operate that. Right now, the Fed is under the jurisdiction of Congress and subject to the Constitution, and, we’re just about to publish a new series by John Titus, and he’s absolutely of the belief that the Fed wants freedom from the Constitution and congressional oversight. And if that day should come, I do not want to be dependent on the Fedwire. I’ll just be really, I like resiliency because if you look at the disasters, if you look at what’s happened around the world, I’ll never forget. I don’t know if you saw this, the governor of New Zealand, of the central bank in New Zealand gave a press conference after the cyclone a couple years ago. And he said, thank God we had cash. and John and I on money and markets said, I guess he didn’t get the memo.
And the Norwegian central bank has just come out and said, we’ve been moving the cashless and now we’re going to reverse that because we’re looking at what’s happening in these disasters. And we don’t want to be You know, we don’t want to be dependent on electricity and have the whole system go down. Yeah. Yeah. Yeah. Absolutely. I’ve seen it recently at, at a university. I was giving lecture and suddenly there’s a power cut and in that part of town, in Europe, it seems to happen. And then because they’d gone already cashless, that’s the end. you can’t pay. I took the students to the local pub across the road, because we had to leave the building because nothing worked, and, fire, security, they all said, no, you have to now leave. But I wanted to finish the lecture, so I went to the pub and the pub asked, if you’ve got cash, that’s fine. So I had some cash and that was it. So if when there are crises, if you don’t have cash, you’ve got a problem. So cash is the system that, that we already have, but we should make sure we don’t lose. We’re on the verge of losing it otherwise. but then also by having local banks and having a system and with a state bank in the background, you can actually set up, from scratch, even financial instruments. You can even go back to something as simple as the tally stick system ’cause it’s forgery proof. That tally just wooden sticks. with notches, and you split them, forgery proof, the bank keeps one, the other one circulates, and so on, all writing records and signature, two signatures, that these systems are workable on a local, face to face basis. And that’s really what money is, you don’t need anything else. So even the cash one could produce, just a permissory note, even written in hand by the bank manager, We’ll do the job. You can always clear by pony express, if you have to. So I wanted to bring up two ideas, one that you introduced to me and one that I love and, that could or could not involve the bank, a state bank. One is, the treasury department has a,
a capacity called treasury direct where retail investors can go to the treasury website and just buy treasury securities direct from the treasury. I don’t know, having been an investment advisor for 10 years, I don’t know an investor in a well capitalized and, financially solvent state who wouldn’t love a North Dakota direct or a Tennessee direct where they can go to the treasurer’s office or the state bank and buy state bonds or even bank bonds directly and, not have to put the money in a Wall Street brokerage firm. They feel much more, that’s real custodian diversification to put. And so I just want to put a plug in for a state direct bonding capacity. And that if a treasurer’s office not doing it, it’s something that the state bank could do as an independent agency. The second thing is you introduced me to the idea of selling bonds to the local banks. And I had never thought of that, and it’s it’s such a great idea, if you could explain that. Yes, of course.
what has happened, of course, is the opposite. That basically, centralization of everything, and then you have Wall Street and, the underwriters involved in fundraising, but, you can completely change the economic and macroeconomic impact of fiscal policy, government spending, by changing the funding in a very small way by moving from,
from the standard bond issuance To getting the treasury to borrow. Ideally, actually the best is if you also change the, formal construct from a bond, which is tradable to a non tradable loan contract, because then you have the advantage that. The banks don’t have to market loans don’t have to be marked to market. so you can’t get, for example, speculative attacks if the Wall Street speculators decide to attack a state’s bonds. they can, if they’re tradable, they can short sell them. They can, do all these things to manipulate the price and create a crisis situation, as happened many times. We had in Europe 2010 11 sovereign debt crisis. and this is where I, I went around to, Spain, to Greece, explaining to the, treasuries. the finance ministries and debt management offices will stop issuing these bonds. You’re putting your Yourself into the hands of these speculators that are attacking you and the interest rates were crazy There were you know double digit percentages and for portugal for ireland They were already more than 20 percent for spain for greece They were already I don’t know 30 40 50 percent shooting up in this crisis situation So it doesn’t make sense to borrow And the bond market, you don’t have to because during that crisis, the interest rate on prime, the prime rate, for prime customers to borrow from banks stayed at 4%. Also in Greece and Portugal, it never really shot up more than 4%. So the treasury, the government. Debt management office should just borrow from their own banks. And the same is true in the United States on a state level. And the banks can just create the money out of there. They are creating the money. Exactly. Now, of course, that’s the magic key. Why, where this is not just sensible because you’re not giving your opponents the powder to shoot at you,
by, having these tradable bonds, which is really advantaged by having a long contract, but. It’s also new money creation. So then you’re literally monetizing fiscal spending. Now, as long as your government expenditure is used for useful things, paying salaries, supporting education, building roads and bridges, these are all productive things. This is not inflationary. It’s actually contributing to the functioning of the economy. So you’ve got more purchasing power, but you’re contributing to the function of the economy. You therefore will have contributed to the creation of goods and services. And so there’s no inflationary pressure from that. You are actually getting non inflationary real growth. From this and job creation, right? And you’re providing a stable income to your local banks That as well exactly and that also was my argument when you know, spain Greece, sovereign debt crisis the banks are in trouble the states are in trouble because you’re doing it the wrong way if instead the government borrowed from local banks The banks have the best business with the best customer the state they can grow out of their problems by having revenues, they’re creating money, the economy will expand, transactions increase, turnover increases, tax revenues increase, so therefore the debt to GDP and the deficit GDP ratios improve because the deficit and the debt are not rising anymore, they’re going down. And the GDP is going up.
you you’re helping everyone, you’re solving all the problems. And that’s the way out. And so actually, it’s a phenomenon that we’ve seen in the last 30 years, namely, that government spending, that’s true on national and state level and everywhere. The effectiveness of government spending and actually a positive effect on the economy. so simply measured by GDP effect, for example, has gone down significantly in the last 30 years, down and down. And we used to be taught in introductory economics, the fiscal multiplier Keynesian in this very simple idea, but, an interesting one that where the government spends, there’s multiplier effects. We’re told. Now there used to be actually such a multiplier, it was maybe around two or two point something then it went down to one point something but in the last 20 years In most countries in the world, it’s now less than one. Economists still talk about a fiscal multiplier, but there isn’t one. There’s a fiscal compressor, there’s a fiscal, reducer, not a multiplier. So why has fiscal policy become so ineffective? And that’s because economists never understood the banking system. The degree of fiscal policy effectiveness is a function of The degree to which the banking system is funding this through credit creation, because you can only have growth if there’s bank credit creation. That’s the system we have. And in the past where we had more banks, smaller banks, local banks, all types of activities, there was a higher.
coverage through credit creation and that’s gone down because, the banks are underwriting for productive function, whereas the government money, I, have to tell you the, government money is like financial methadone destroying the culture. Yeah, I know. And of course, yeah, exactly. And there’s all sorts of, bad things happening in fraud and money disappearing and so that’s also happening. And of course, that’s another reason why there’s policy ineffectiveness. but just the banking factor, the coverage from banks seems to be, sufficient to explain a big part of this drop in the fiscal multiplier and the effectiveness of fiscal policy. we can immediately increase fiscal policy effectiveness. The, stimulus you get out of this, the, positive GDP effect you get from government spending by funding it from, through borrowing from banks through loan contracts. but what we’re contemplating for the legislation is the ability of the bank to serve. A sort of syndication or underwriting capacity for the state exactly that we want to be able to do that. Absolutely. Okay. That makes perfect sense. And then it’d be very easy to also structure it so that the, community banks and the local banks chartered in the state take up well, as much as they want. Essentially to them, it’ll be a very attractive option and they will be interested in doing that and it will be part of their portfolio.
So one of the questions, it’s been very interesting for me because when you talk to the North Dakota Banking Association, so we had a wonderful conversation with the fellow who runs the North Dakota Banking. You see such a warm relationship between the banks and the. Bank of North Dakota. Whereas in Tennessee, when we brought up the idea of a sovereign state bank, the bankers are, the hair goes up and they’re like, and there’s a real fear of government getting, competing with the banks. Whereas if you look at North Dakota, it’s the opposite. They’re there to protect the banks, to support the banks and to not compete with them. One of the, for many years I’ve been very, negative about the idea of local public banks. So Ellen Brown, who’s a, I consider a colleague and a friend, I’m like, no, Because the idea of government credit coming in and competing with a local community bank or credit union to me is the death of the economy. but a wholesale bank at the state level that’s supporting all the local banks, that to me, that’s, a very different, a wholesale public bank dedicated to a thriving local bank community is a very different kettle of fish. Because it is. It’s in line with the key principle here and that is decentralization, the principle of decentralization is a very important one, still completely underestimated and a lot of people not recognizing it’s important. Any human organization, any human activity where, people have to work together benefits. By having a decentralized structure as opposed to a centralized structure. That’s my experience is also result of my research on this problem. And so that’s we have to keep in mind. Okay. So, risk issues, any other risk issues we should bring up about, again, I’m, thinking of, people in the governor’s or the treasurer or the comptroller’s office who, are writing legislation or people on the finance committee or other committees that the legislature writing legislation, any, anything else you would advise them on how to organize this. I think what we’re saying is we want a fair amount of flexibility,
between, the state and the, board of the bank. To craft the details of what they do and how they do it and when they do it and evolve it over time. Is that fair to say? Yes, I think so. It should be flexible. and therefore, you don’t want to prescribe every, single detail. keep it simple, keep it short, and have leeway for, all the institutions to grow together. As long as the fundamental principles and this, the principle and particularly of supporting local banks, that is that, should be spelled out and then people should live that. And as long as that is in place, with a few key principles in place, then I think it can be very general. In, other, clauses, I think should, stay in general.
Now, we haven’t talked much about credit unions, and I’m assuming, in North Dakota, they support both the banks and credit unions. There are some states where the, there’s a lot of tension between the credit unions and the banks because credit unions are coming in and buying up banks. So one thing, if, those tensions are in your state, it’s one of the things you’re going to have to think through, but it’s very much state by state jurisdiction. It’s, a fundamental question. what, actually is the difference between a bank and a credit union? It does depend on the country. And, I’m not sure in the U. S. But there is much difference. I know that in the UK, credit unions are very different from banks. They’ve been kept by legislation, the city of London’s influence, from banking, particularly banking to businesses. So they’re essentially not allowed to lend to firms. They’re only allowed to lend to individuals. And so that’s kept them extremely small, but I think that’s different in other countries. in the U S. I would have thought they’re more or less, they are like a local community bank, it would be interesting to actually compare and see is there any difference left because then it’s just a name and, maybe some kind of tradition, but credit unions. I would have thought in America have this tradition of looking at the community and having a bit of a community focus. They’re much more of a bank for individuals as opposed to a bank for business. Okay, so if that angle is there, then we have to be careful because it’s, very important for local banks, community banks. To lend to businesses that is in fact should be the core function and if credit unions don’t want to do that Or are not allowed to do that. It’s a problem because then you know, if you’re just involved in consumer credit That’s not even productive Of course, some of the consumer loans are used by people for business investment, whether, that was the official intention or not. And that’s a good thing actually. because the money creation function should be linked to productive activities, a contribution to society and to the economy. and therefore business lending is the best form of lending is also the least risky form of lending, right? there have been problems when there’s too much consumer lending, right? And there have been tons of problems and banking crises when banks lend to purchase ownership right assets, whether real estate property or anything, financial assets doesn’t matter. That creates asset inflation. Consumer credit creates consumer price inflation, but business lending for business investment creates growth without inflation, without problems, without crises. There’s never been a banking crisis due to too much Lending to small firms for business investment, right? That’s an excellent point. So one of the things I last, in 2024, I read two excellent books on private equity. One is Plunder by Brendan Bellew and the other is by Gretchen, Morgenstern and, Morgenson and, Josh, I think it’s Joshua Rosner, and also using plunder in the title anyway, but two excellent books. And one of the things it helps you do is step back and look at a state, both the state government and state pension fund and reserves. And you realize they are finance because so much of the alternative investment to private equity has come from the state and governmental pension funds. And you realize. They are paying, they are investing in a group of firms who are destroying their tax base. I know this happens a lot, sadly. And you’re paying pirates to come destroy your economy. Why are you doing that? Exactly. Exactly. that’s the other thing, coming back to the earlier point that one should, fund the capital for the creation of a state bank, off budget from other sources, such as, capital, expenditure or reserve management. And of course, then they’re also the state level pension fund, and they should be invited to also invest because it’s in their interest in the long run. And there would. use the state level money for something that’s good for the state and for all the people who are going to get a pension there, See, I would, some of the Scandinavian countries have done this, but if I was the governor of a state, I would also set up a commission to look at the entire state economy and say, where are we putting our resources, whether it’s our equity investment or our debt investment or using our credit? And what is the relationship between where our money’s going and what’s happening in the economy? And what you’ll discover is this process of centralization, whether it’s through the private equity firms or through the federal government or through the central bank, you’re basically participating in the destruction of your own economy. And that has to be turned around and you can’t, to a certain extent, yes, I can do a bank and I can do this and I can do that, but it really needs a complete, rethinking. of how you’re going to deploy capital, because in fact, we’re coming into a period of unbelievable change. And there are amazing opportunities. they’re just amazing opportunities to take new technology, for example, in agriculture. I’m in North Dakota. I don’t know if you’ve seen the laser weeder yet. But you got a group of guys out, I think they’re in Seattle, who created a new piece of equipment that can destroy weeds with lasers, no pesticides. Now, I don’t know what the environmental impact, but let’s just assume it turns out to be okay. So you’re avoiding pesticides and manual labor for weeding. you got a machine that will weed without the pesticides, imagine the opportunity to bring that to your, if you can make it economic, so we have this explosion of new technology, that creates all these really exciting fundamental business and industry opportunities, maybe we should deploy our capital in that way. Instead of on plunder. Exactly. Absolutely. Absolutely. Yes. essentially, these are developments in the past where. We’re really the New York bankers and centralizers managed to get into the States and more or less corrupt what was going on there and distort asset allocation and change their focus. And I think it’s also when these things happen that they wrote strange clauses into the constitution, like of Tennessee that, oh, you’re not allowed to own a bank. Why not? I’ll tell you what scares me. I’ve seen, I will go in to look at a state pension fund. I went in to look at the California funds because I was doing a story on money and markets and the drop in liquid investment for alternative investment is frightening and it’s particularly frightening because if you get a rough patch in the economy and the only thing you can sell is your liquid investments, you have no liquidity for the all the private equity investments. You could see, literally the entire pension fund be a prisoner of private equity. It’s unbelievable. And I just watched a presentation by one of the heads. It’s the largest private equity firm. And we’re going to tear this apart on the next equity overview on the Salier report, talking about why private bonds are just as liquid as public bonds and, basically they’re proposing to move in. and replace big pension fund portfolios with their private bonding. So now we’re talking about even further drops in liquidity. to me,
I, think, if I was the governor, what I would do, I would also have a commission to look at the whole shebang. Exactly. The whole shebang is getting picked over and played the patsy again and again Tennessee has all of its pension fund with one custodian. Way outside the state.
I, would not sleep at night. Exactly. That’s very risky. Exactly. So I think that the time has come for states to say, okay, how do we step back and make sure our capital is being deployed so that the state is successful as possible in the long run? Scandinavian countries have done it. Other countries have done it. There’s no reason why a U S state can’t do that. Anyway, that’s exactly that’s my pitch. Okay. Yes, and that’s a good one to summarize the whole discussion because There is so much states can do right and they need to look after their responsibility look after the people in the state And that means they actually have the responsibility to do this. it would be they would be You know not doing their jobs if they’re not actually now saying okay What are the resources in the states? On the state level. Are we deploying them properly? And what should we be doing? And I think it includes setting up a state bank that is backing all the state chartered local banks and small banks and therefore all the businesses and most employment is with small firms. And they’re dependent on the local banks. That’s the reality. So that’s really the responsible, the responsibility. And I think with recent years where,
states have taken very different policies, it’s, I think more people are thinking about this one has to, go back to the basics and make sure that. Yeah. The state, governance is actually taking care of the key priorities for the state.
Okay. Richard, walk us again through how we find your website, your sub stack, and I know what’s going to happen. We’re going to have a whole lot of people listening to this and saying, how do I find and connect with Richard? And I know you’re a terribly busy man, but, walk us through how we connect with you. All right. subscribe to my substack. There’s a new one coming out hopefully today. that’s r weer substack.com or richard werner r weer substack.com. otherwise also follow me on Twitter. I’ve got, scientific econ, and the second one is Professor Werner. There’s a third one, Dr. Richard Werner
, accounts. and Telegram. follow me on Telegram. Telegram account. and, there is a, for the academic work, I’ve got a website called professorwerner. org, which has all the, academic, journal articles and, also the book references. My book, Princes of the Yen. Is that quantum publishers. com Amazon threw it out?
it’s my number one in the, central banking space, the it’s my number one recommendation. So it doesn’t surprise me that Amazon threw it out.
and otherwise, there’s also a website called, Richard Werner. org where I try to link it all together and, have, Further links and ways to get in touch.
yeah, I think that’s a summary. Okay. Okay. I know, we got you to come to Tennessee and you met with some of the legislators and leaders and it was very productive, so I hope we can get you back. It was a great experience. I’d love to do that again. Yes. Yeah. and you got a, you got shooting practice in Appalachia, right? Exactly. In the, on the ranch of, San Isidro. and it was great. It was good. Yeah, they’re wonderful people. Yeah, and it wasn’t a bad shot. I think they were impressed.
Okay, ladies and gentlemen, thank you for joining us on the Solaire Report. You have a wonderful day and Richard again. Thank you. Thanks so much. Great talking to you. Thank you for having me.
it’s. It’s you can see they’re trying to get more up on the line. So they their briefings are shorter Anyway before we begin any anything you want to say as a way of introduction Yes, I think the first point and that is really for the legislators To realize and be aware of that and then with that mindset tackle all these issues is the fundamental Crucial fact and I think the single biggest list selling point, action point, why one needs to do this is the question of sovereignty.
It’s already written in Proverbs. we’re talking about several thousand years ago.
Proverbs 22, seven says the borrower is servant to the lender.
Now, Of course, politicians and political leaders are supposed to be servants of the sovereign people,
but not of the bankers. And if they don’t want to be, subject to somebody else, be servants to bankers, then we need, by definition, a sovereign bank. Because if you don’t have a sovereign bank, if a state doesn’t have one or several sovereign banks, there could be several, and the question should actually be, okay, how many not? Should we do it or not? It should be how many?
if you don’t have a sovereign bank or several, then the state will often have to borrow from others and become a servant to those lenders when really you’re supposed to be servant to the people, to the sovereign of the state. And that’s where, if you look at European history, that’s, and also U. S. history, that’s where things have gone wrong again and again. So it’s this understanding that,
banks have an important function. They create. The money, they literally create the money supply. Now, do you want to have sovereign bank? So the sovereigns can create money, or do you want to borrow money from others and become servants to others? That is the fundamental question. And so when people, once they realize that, that already should be a no brainer, just on that basis, without many of the, no, without the many other good reasons why you want to have this, that alone should be the key. point to convince them that we need this and only then can a state be sovereign. If you are a servant to others, then you can’t serve your people and the state can’t function. That’s in many countries and national, on a national level is actually a major problem. They can’t serve their people anymore, whether it’s developing countries or many European countries because they’re serving the bankers. Two issues. I would love to see this happen throughout Europe, throughout the world. Exactly. And the reason we’re talking about U. S. states right now is because this, the U. S. enjoys constitution. And under the constitution, the states have the power to do this, which they don’t necessarily right now in the E. U. Number one, But number two, the Fed is still a creature of Congress under the Constitution. The Fed has not been able to get rid of the Constitution yet. and that’s one of the reasons we work to preserve it. But that’s one of the reasons right now that we’re focused on the U. S. because the states do enjoy that power and can act absolutely now freely. yeah, so if, EU would break up, then You know, all bets change. I do want to say the reason this is coming up now, and I’m very glad you brought this up, because this is about sovereignty. It’s not, about money. It’s about sovereignty and the rule of law. So, there has been a balance of power in the Western world between the private bankers to control monetary policy and the, People’s representatives that control fiscal policy, and there is real effort now on the part of the central bankers to assert control of fiscal policy. And what we’re proposing is that you push back the other way and say, no, the people’s representatives assert control of fiscal policy, and they need a sovereign bank to do that. That’s right. And in fact, even because you mentioned fiscal policy, even fiscal policy, it’s, It’s an important point that often, is, forgotten or ignored. Fiscal policy is also dependent on the actions of the banking system, which actually determine whether fiscal policy will be effective economically or not. And so again, when you think, okay, at least there’s fiscal policy, we have budgets, the politicians are in charge, for good or bad. Okay. but the bankers are not involved, actually, that’s not true either, because even for current spending, even if it’s out of literally out of your tax money, so to speak,
the bankers decisions in aggregate, the banking system will still determine the effectiveness of fiscal policy, the fiscal multipliers, and actually, when you look at the last 30 years, there is an extraordinary phenomenon that’s been happening, And that’s being ignored by economists because they, don’t know the answer to the puzzle when it’s actually quite easy. What has happened is that the so called fiscal multipliers have fallen and fallen in fundamental economics. Which is, usually you do the basic Keynesian economics at university economics 101 in a recession. There’s the automatic fiscal stabilizer because your tax revenues go down and government expenditure goes up for unemployment benefits in a recession. So automatically you’ve got more fiscal expansion, which is good because it.
alleviates the, the downturn and, makes it, less strong, less pronounced. And then the, the argument is that fiscal expenditure, government spending has a fiscal multiplier. So that 1 spend will have more than 1 effect on GDP. that’s no longer true. The multipliers in the past were high. There were multipliers, and it’s simply. Fiscal spending compared to GDP. What’s the result on GDP, the Marshall spending on GDP growth, the change in GDP, and it used to be, sometimes two, sometimes 1. 8, but in the last decades, it’s gone down 1. 7, 1. 5, 1. 2, 1. 1, and for the last decade or so it’s less than one, that means there is not even a multiplier. There’s actually a fiscal compression going on so that when you have fiscal spending, the effect on growth is negative. Wow. that’s quite, that’s big news, but they don’t want to talk about it because they have no idea why this is happening. It’s a big. Oh, I can tell, you why it’s happened. I know why it’s happening. It’s the banking system. It’s the monetization through the banking system. Double the fiscal spending in 2020, that has a big impact, but it’s a one off and now we’re back to the less than one fiscal multiplier. but also, so, I’m looking at it from the, ground. If you look at the last, literally since World War II, every year the money is spent more and more to produce control and top down control as opposed to economic optimization. And so you’re throttling, and destroying. That is the other thing that the actual spending pattern. Has become more wasteful. There’s also the military spending as there’s a form of wasteful spending because that’s not, contributing or has positive long term effects. especially destructive spending and then, yeah, control measures. The big one and, you see it when you drive around America, but the big one and it’s reason the. The food and health issues are so front and center right now, you are spending a fortune to poison your population, a poison population doesn’t get anything done, so it’s, the productivity is to me. There’s nothing more important than the productivity issue in an economy. And, if the government money gets a bigger and bigger market share, but is constantly focused on destroying productivity, ain’t no way out of that. So anyway, this is why this is exactly why we need state legislatures to assert sovereignty That’s right, because then also the state legislature has more power over even the degree of effectiveness of any spending and even there’s the spending pattern as such but let’s say here’s investment spending where we agree in general. This should be stimulating for the, for GDP. But even then, it does depend on the actions of the monetary side of the banking system. And by having a sovereign bank that can ensure, always at least 100 percent effectiveness, of that spending. So never to have a negative fiscal multiplier, which I think is in the, interest of the taxpayer, if we’re even doing government spending, look at the national debt, we don’t want it to be wasted on that level, of course, there’s the other question of what is actually spent on and, so that’s fine, but, also once it is already decided to be fiscal investment spending, then, the degree of effectiveness of that will still depend on the monetary sector. Okay. And that’s unnecessary to be dependent there. So it’s fair to say all these issues are coming to a head. We’re in that time. Okay, let’s dive in, because the first issue I want to talk about is who owns the bank. and clearly, I believe that ownership by the state is the ideal situation, because, Again, if you’re going to be sovereign, the sovereign needs to own, but we have seen states and Tennessee is one where there are serious constitutional issues to be able to, have the state own it. And so it is possible to put together something along the New York Fed model, which is it’s owned by the bankers. but it’s dedicated to servicing the state As a sovereign, and the state is deeply involved in oversight and, reporting and auditing and, gets a piece of the profits.
there’s a hybrid model that can work if it’s constitutionally not possible. Is that fair to say? Yes, I think so. I think so, which is why I started with the sovereign point, because basically the legislature, the politicians need to understand how important it is. And then any obstacle on the way, we have to find work arounds. That’s how important it is. And so if it can’t be done directly with direct ownership, there’s ways of getting hybrid ownership or control at least. Indirectly, and it can be structured, but with that in mind that ultimately it is a sovereign prerogative, which is why I was actually shocked to see that some United States have had these clauses put into their state level constitution that they’re not allowed to own a bank. who put this in? Think about it. Very suspicious. Nobody on the state level would put this in because it’s like saying, okay, certain things we tell ourselves, we restrict ourselves, we tell ourselves we’re not allowed to do. Why would anyone do that on a state level? Nobody. It clearly comes from outside the state. Somebody saying, Oh, you guys, you better not do X, Y, Z, put it in your constitution. So how that happens actually might be an interesting question. Who proposed this? it’s very strange. and unnatural. So one of the things in North Dakota, and I should say, many states used to have sovereign state banks and everyone has canceled and shut down their sovereign state bank, except for Bank of North Dakota. and I pointed out when we did the briefing, Truth in Accounting just published their new study of all the states and who has the strongest finances, North Dakota was number one. And. As far as I’m concerned, if you look at the history, that’s absolutely related to the fact that it’s the one that has a sovereign state bank. Interestingly enough, Tennessee was number two. Tennessee needs a sovereign state bank. Anyway, but, so There is definitely a relationship between, this, but we have seen throughout history, many of the states have had it before. And it’s worth going back and looking at the history. If you’re, if your state is interested in doing one, it’s very helpful politically to say, we used to have one. And the guy who kept his is much better off than we are. They really had to fight, not only did they have to fight the evil empire, but they had to fight being branded as Bolsheviks, as revolutionaries, as socialists, as communists. And really, they’re just simply farmers who wanted a fair shake. The Bank of North Dakota’s roots are planted in the early years of settlement and the out of state big businesses that manipulated the local economy. The thing that we know about farming is it’s an industry where you have very little control. You have the weather, which you’ve got no control over. You have the banking interests and the costs of interest itself, which you’ve got no control over. You’ve got the grain elevators and the railroad, which you’ve got no control over. They were still competing on an international market even then, which they had no control over. The prices that they got for the grain and the cost of their seed, they had no control over. And so the idea that they could take control over some of these questions that affected their livelihood, was, it was a fabulous idea as far as those farmers were concerned. By 1915, North Dakota was ready for revolt. Sometimes politics are led by charismatic leaders. And you had in A. C. Townley, a charismatic leader, someone who knew how to organize, someone who had been a Socialist Party organizer, but had been fired by the Socialist Party in North Dakota, who decided that, this is still a good idea. Townley’s plan was simple. To break the control of out of state big business, North Dakota would control its own economy. By creating industries that would be owned, not by big businesses, but by the state. The League’s program, I would call it state capitalism, actually. It was the idea of the state intervening to actually help, not just save, but help evolve the existing type of capitalism into something that was more competitive with the outside economy, which would be corporate capitalism. So you had an organizer? who knew how to speak the language of farmers. You had banks that were playing into the hands of the argument. You had farmers whose crops had failed for the last couple of years, so they didn’t have anything on hand. Everything aligned at one time in one place, which made it possible. In 1916, after only a year of organizing, the League swept into power. In 1918, it engineered a political landslide. Now the League had the power to implement its industrial program. There were three bills that the legislature in 1919 passed. The one created an industrial commission, which included the governor, the attorney general, and the secretary of agriculture and labor, at that time, which is what he was known, to run the bank. That was the industrial commission. Those three elected officers were going to run the industries. At that time, all three of those officers, of course, were non partisan leaguers. So the first bill created an industrial commission. The second bill created the industries itself, created the Bank of North Dakota, and allocated funds, start up funds, we would call it today, to the bank. And then the legislation also allowed for the creation of the state owned mill and elevator. The third bill allowed the state to sell bonds to the tune of around 12 million. to fund the industries. And those three bills were introduced in January and were signed into law in February. they had less than two months. They had passed those three bills and Bank of North Dakota was on its way. So one of the things I wanted to bring up, and we’ll get into it later, is one of the sovereignty and ownership issues is not just of the bank itself, but the actual hardware systems it runs on.
what we’ve seen around the world as, we’ve had more and more disasters and electrical systems go down or satellite systems go down. One of the issues that keeps coming up is whose hardware and software are you transacting your transactions on? And can they use that to hiccup or control you? So there’s a new book I’m reading and I’ll get a review of it up before the end of the year called Underground Empire. I don’t know whether you’ve seen it or not. Tell me more. Yeah, it’s about the hardware systems and how the U. S. for decades built out the, basically the cabling under the ocean, the satellites in the skies, but build out the hardware infrastructure for telecommunications and financial payment systems, and then suddenly woke up and realized, okay, we can use this to control and are using literally their control of the hardware to control Global financial transactions and policies through the, through their operational control anyway. And so 1 of the issues you have to grapple with, and we’ve been grappling with some states is okay. How, if you’re highly dependent on payment systems that have legal jurisdiction or ownership and control outside the state, how do you start to create resiliency? How do you start to create options? So that’s not a point of control. Exactly. And of course,
the good thing is, as soon as people realize how important that is within a state, then you can build a state level infrastructure because it doesn’t make sense then to route everything off around the world or once around the world and therefore have lots of other people participate and give them control, partial or full control. It doesn’t make sense. So by actually focusing on states. And the state level activity, you can build something that’s much more resilient and is not reliant on these outside forces. And that should be a priority. Yes, I couldn’t agree more. Okay, so let’s talk about governance. in North Dakota, we have. it’s called the Industrial Commission. So it’s the governor, the ag secretary, because agriculture loans is so important in North Dakota, and then the attorney general who are on this three person governing board. And then you have an advisory board, of people who are Basically appointed by the governor, but, you’re looking for certain profiles of people from different parts of the community. and they’re an advisory board. They meet once a month and provide many of the functions of what we would normally think of as a board. And then you have, beneath the board, you have the management and the leadership. So you’ve got three layers, governing and managing. and I think the first question that has to be asked in, if you’re going to design legislation is, who are the political officials that you need involved? do you need the governor? Do you need the treasurer? Do you need the controller? Do you need agriculture? Another, the equivalent of a commerce department. Who do you need in the governing board? And, who, how that system is going to work. So that’s the first thing that needs to be. Decided and part of that decision, I think, because so many states are looking at doing a bullion depository, does that governing board govern both the bullion depository and the state bank, or are they separate boards? Got any thoughts on that? Yes. I think one has to think of the long run, the long term future, and always keep in mind. The issue of resilience to attacks, interference, attempts to undermine and dismember the system. In fact, actually, we should look at, Catherine, those states, you mentioned there were quite a few states that also had a state bank, but they essentially discontinued them. I think we should do case studies of that as well. Because I’m sure that will show, if we look into exactly how this happened, that will reveal who are the players. And also how do they do it? And of course in the end they get the locals to agree and so on and this But there will have been outside forces at work and that will be quite interesting to see So we and we can learn also what they’re likely to do once we succeed in some of the states actually Set up additional, state level, sovereign banks. These mechanisms will come back into play. I’m sure So we have to make it resilient against that, and that is in favor of, having the bullion reserve in a way separate just institutionally, because the fundamental principle of resilience is decentralization. So whenever possible, you don’t have a centralized pyramid, you have a decentralized system that is. collaborating. And then if one is attacked, you still have the other, so if somebody brings down, a resolution comes up, okay, and then gets a majority to discontinue the state bank, you still have the, bullion reserve. So by creating more entities, we make it harder to take, them all down. So here’s the question, because I would definitely have the management separate and the advisory board separate because they’re very different functions, very different skills, very different experience. At the same time, the political governing board, if you have two separate boards, then there’s a divide and conquer. True. We have to be aware of that. We don’t want arguments and so on. Also, the other thing is. There can be really, of course, there are, scale economies and synergies if you have things together. one should try to find a fusion of that. For instance, one could have the, so the, so the, the gold bullion reserve separate, but it needs service providers and it asks the state bank to be the service provider for almost everything, that sort of thing. So that even if they shoot down the state bank and it’s going to be closed, you still have the separate structure and then the bullion reserve could work with other institutions or set up another institution, and in fact, by having separate entities, one could already put in place within their founding documents, the ability to turn those into a future state bank, if needed, one thing I would point out, Could become a state bank, if for example, That’s something, somebody wants to close down and succeed in closing on the state bank, the bullion reserve becomes the next state bank, or,
basically, there’s a situation where you need to, to expand. into state banking, all the decisions made what we need actually in state banks going so well, we can have another one, then the boolean reserve can be expanded into a state bank, the second one. even if you have the, political governing board separate, because you will want to involve in precious metals, people you might not involve in the state bank. You’re still going to have the governor AG and a treasurer are going to need to be involved in all three, in both. So, there’s going to be, even if you don’t have the same governing political board, you’re going to have a lot of crossover between the two boards. and that’s a, to me, that’s good. You need that. Okay, so, one of the most important, it is important to point out the governor appoints the advisory board, but it’s important in legislation to stipulate what kinds of people you want. So you want certain people from the business community, certain people from the banking community. If ag loans are important, certain people from the farming community. And so I think it’s very possible in legislation to envision. the categories you want people in and leave room for other, because there’s always an addition. And I think that’s part of bringing the constituencies together who help you create this new entity, because you want. North Dakota is defined by extraordinarily positive relationship between the banking community and the, state banking community in the state. and they’ve done a very good job of the state bank, not encroaching on the private sector at all, but simply supporting the private sector. And, when you design the legislation, you want to have those conversations with the constituents that you’re hopefully going to be supporting through the back. So I just wanted to point that out. Yeah, absolutely. Okay.
let’s talk about audit and reporting because to me, one of the things that you need, if this is going to produce the conditions of sovereignty is you need to be very clear in legislation about, there will be an independent auditor who picks the independent auditor. Is it the bank? With the approval of the treasurer, or is it the treasurer with the approval of the bank? It seems to me you need a joint agreement. And then you need very clear reporting from the bank to, from the auditor to the advisory board to the political board or group to the legislature and to the offices at the, State, which are coordinating and working with the bank. So there needs to be a very healthy feedback loop set up in a law describing how the disclosure is going to work. And of course, it’s all going to be very public. The financials are going to be available to the public. Yes, exactly. And of course, also one can, one can again, check with North Dakota, how they’ve handled this. So both in the legislation, but also in practice and get some feedback. Because they’ve been doing it for a century, and I’m sure they’re quite familiar with various, issues with interplay of different,
political positions and institutional offices.
One of the most important things that when you talk to the folks from North Dakota, they stress again and again, and I know it’s true from having spent time in North Dakota, is the reason the bank was successful is because of their culture. And what they keep saying is, if you do this in a place that doesn’t have our culture, it’s not going to work. Yes. No, that’s an interesting point. And I need to. I want to show you something, one second. It’s a map of Europe. Can you see that? Yeah. And you look at Germany, so what is this map? This map shows the US states with the highest percentage of population from which European country. So when you go to, to Britain, Utah comes up. So the majority of people from a European country, the top European country for Utah is Britain. Go to Germany. What does it say? So it’s North Dakota. So that means the majority, European ethnic origin. in North Dakota is German, and so most Germans are in North Dakota, and also actually Norway, right, further north. So it’s this Isn’t that remarkable? German connection. Yeah, exactly. And, of course, Germany is the source of this decentralized banking system. You know that, all the East Asian high growth economies poppied, Japan got it from Germany, and then everyone else got it from Japan, Korea, Taiwan, China, Singapore, they got it from Japan, Japan got it from Germany, and I’m sure if we look into who is farmers who are saying we need a state bank, I’m sure this is already a century ago, they were a bit closer to their roots in Germany, and they must have been aware of how powerful it is to have your own local banks. I’m sure that’s, that was a know how and knowledge transfer and input from Germany. once I saw this, I thought, okay. Isn’t that fascinating? Because they’re saying the culture, what is your culture? And of course they want to make it as unique as possible. And actually, there is a German connection. Come on. That is perhaps your culture. So we are talking about the same thing. So whenever they talk about culture, they made it sound as if, it’s so unique. Nobody’s like North Dakota. And of course, in some sense, that’s true. For every place, we’re all unique. In fact, each person is unique, all creators are unique. But, there are clearly, culturally, common features that we can link places and people to. And I think that’s an important link, and there is a direct link to knowledge of decentralized banking.
when you, when you read the report for the Sovereign Bank for Tennessee and you read the success of Germany and its banking system, and I hate to bring this up because we’re coming into Christmas, Richard. I would also say as it applies to banking, it also applies to Christmas meals and dinner. The culinary tradition of Christmas was basically created by the Germans. That’s true. It was, That they brought even to Britain, it was Prince Albert, Victoria’s husband, Queen Victoria’s husband. she was German herself, she’d been born in Britain, whereas he came straight from Germany and he introduced in Britain, all the Christmas trees and all that, all the dramatic things. And he also introduced a whole lot of the decentralization ideas. and was very interested in and concerned about poverty, and, schooling, introduced schools. He became a bit of a social reformer, Prince Albert. So what happens? Oh, he died suddenly, very young.
Because that sort of thing, I guess has not remained popular among the elites, established elites in Britain. So sad. And of course she was devastated and she built all these monuments to her, beloved Prince Albert. But, if you look at him, he was just very German and that’s not so popular in Britain. Okay, but I do think it’s very important to understand if you look at the history of the Bank of North Dakota, the culture has really, if you look at the history, we’re going to talk about functions, but they’ve slowly and steadily. evolve functions and the legislature has asked them to do things or they have asked the legislature to do things or the bankers have asked. And as time went by and the needs of the economy and the people changed, they evolved and changed together with it. And it happened because there is a culture that it’s extremely conservative, but very caring about particularly their farmers, their industry, their businesses, and. one of the stories that we heard from the former CEO is how they had stepped in during a particularly bad time in the commodities markets to make loans, through the local institutions that literally had no interest for two years and were really, helping save farmers. And they said, we depended on the local institutions to know which farmers would be here in five years. essentially a character loan. And in fact, in five years, all the loans have been bought back by the banks. No defaults. They took no losses because the banks know who You know, the banks know the character and the economics of the local farmers, and then there’s trust going from the local banks to the Bank of North Dakota, and so the whole thing works. But it works because you have a very careful, conservative culture that cares about its people.
it’s not a culture that produces speculative bubbles. Exactly. So in that sense, yes, culture, we entirely agree. and it’s a culture one can learn from. Therefore, we, we, can learn these lessons and other states will also benefit. I would say it is a very German culture, until the EU happened. The EU seems to have changed. Some of the things that we’re able to do at the Bank of North Dakota are just incredible. new industries that we’ve helped develop. we’re at the forefront of every major economic initiative, whether it’s Cirrus, or ethanol plants, or helping the, farm economy. It’s responding to our needs across the state and the ability to have an impact and to have a positive impact on the state. And to really help fulfill the mission of the administration as they work forward in looking at the vision for the state of North Dakota and working with the legislature to fulfill their vision for where the state should be going. So it’s, being an impact player in the state of North Dakota. that’s It’s going to be our course for as long as I can see. It’s very interesting that despite the fact that there have been some attempts over the years to sell the bank in North Dakota or to abolish it, that the bank has really worked to serve its own niche in the North Dakota economy. I always tell our staff that when you are an organization of one, it’s pretty easy to become extinct. Our mission has been consistent, that we are here to encourage and promote agriculture, commerce, and industry. I don’t think we can ever get too far away from that. What we can do is be more diligent in how we deliver those services, and to make sure that, we are always market driven, and that we’re able to react to it.
An important part of economic development is, as we have, as our people come forward with creative ideas, and try to do things, in almost every case, financing is part of the equation. That creates more jobs and more opportunities. That’s what the Bank of North Dakota does, and it needs to continue to be an important part of our growth and development. I think that’s The fact that it has matured into the kind of bank that it is really shows why it does serve a purpose, even though it is, some argue, a socialist institution. Now, that might seem unusual, but, and it is, but it really does underline how hard the bank works to be a part of the state of North Dakota, of the economic development, That we see, for the state of North Dakota, and it is a part of the infrastructure, it is a part of the history and tradition of North Dakota, and is really a full partner in the state of North Dakota.
It’s an amazing part of history. It really is an amazing part of history. I think the industrial program and the effort by the Nonpartisan League really was a, Wake Up Call, both for the state saying they could have some control over the economic destiny, as well as Wake Up Call for the interests, if you will, the grain and railroad and banking interests that they couldn’t take for granted. The people of North Dakota, or the industry of North Dakota. we’ve got a lot to be proud of in this state, and we should be. And the bank is just one of those institutions that we can be proud of. Both for creating it. As well as managing it, as well as we have. It’s pretty phenomenal. I think the people of North Dakota still believe a lot in themselves. And the Bank of North Dakota is a manifestation of that. It is, by golly, we think we ought to control our own destiny, and one of the ways we can do that is to own our own bank. Okay, so let’s talk about functions. And this is really where it gets pretty interesting. When you write legislation, obviously you can’t write culture, but you can describe functions. And, and right now, if a state does not have a sovereign state bank, you’ve got a treasurer, a controller, reserve funds and pension funds that are doing these functions or some of these functions now and one of the things you want to, decide is how does the bank interact with those functions and you want to make sure the people doing those functions find the bank to be supportive and not You know, trying to take functions away or replace functions. So you have to think those things through with those different offices. Is that fair to say? I would say so. Absolutely. Yes. And what the state of North Dakota has said is, it doesn’t matter who does them as long as everybody’s happy with how it’s getting done. Exactly. Precisely. And as you said, With transparency, this being quite visible. This is a public institution. there comes automatic, accountability. It’s a local institution. It’s accountable to locals. and of course, in a way, there is still flexibility for certain details that we don’t need to. I think that’s something to keep in mind, not everything has to be set in stone. If something turns out to be better this in this way, then of course things can be, amended, as long as the principle remains unchanged, every state needs at least one sovereign bank, and needs to be in charge and control of its bank. As a warning here, my experience in the UK has been that. Where people also listened to me early on and, and then there were actually politicians and government, officials saying, yes, okay, let’s have some more state bank. And literally there were initiatives to set up, the British business bank that was done by Sir Vince Cable, who was backing me in my banking projects and, he even joined the board of my, bank project company and so on. he was secretary of state for business. So he did the British business bank. Then they set up a, there’s two more types of banks. I think one is considered the green bank for sustainable investment, and another one, but all of them had the fundamental flaw, and that’s where you see immediately there was interference to try to distort things to the extent that it become useless. They weren’t actually banks. They literally didn’t have a banking license. They didn’t have banking functions. They’re just banks by name. They’re just government institutions, another fund, and they were funded from like a budget tax money every year, and they would spend the money. There’s, it was, they were not banks. It’s a joke. So under the law, they will allow you to call it a bank when it’s not a bank? Wow. It’s the government. The government can do anything. But normally, you’re right, that is for any financial legislation, you’re not allowed to Call something a bank if it’s not a bank. in Britain, if the government does something and they wanted this by name only, but not in reality, so they’re not banks. and so that was, these projects were undermined basically too early. They hired people from the city of London that had been senior bankers at large banks, and of course they knew what they were about to do, namely make sure these are not real banks. And so there, and so that’s one thing to keep in mind. So as long as we have the fundamentals firmly decided, there should be real banks that have real bank functions. but of course, as we, discussed, and as everyone knows, they will be banks mainly of the state and of the other banks, the customer side is, it’s not retail normally. there can be always small exceptions here and there, fundamentally, the state and the other banks are the main customers, and they can join in consortiums. It would, join in, in, in large lending, to back up the small local banks. When the loan is too big, then of course you would join and therefore also the local company or the local pharma would become your customer, but the principle is that, and so it shouldn’t be changed. the core function is running the state’s bank accounts. Exactly. You are, Instead of the state keeping its deposits in all the big New York Fed member banks or, other large private banks, you’re keeping your deposits in the state bank. They are running your bank accounts, and that means they are controlling the data about what your bank account is doing. Exactly. And that’s an important point, the data angle. We should Keep emphasizing because increasingly, that’s where a lot of the interference and then also control, happens, but also, essentially the leakage of data to and being sold to third parties. In Europe, again, this very worrying developments happened there. the European Commission produced, when was it? It was like 10 years ago, a bit more than 10 years ago, suddenly a new directive. They always come from nowhere because European parliament has no powers. It’s just the rubber stamp parliament. So all legislation comes from the European Commission, unelected. They’re the public bureau of this. European, Soviet Union. Union had parliament, but no power to table any laws. Just like in Europe. So European Commission had this new directive called PSD two and this PSD two directive, it sounds very technical and digital this and digital that. It is actually, to put it very simply, what this is about. because one thing the banks have been quite good at in the past for the last two, three hundred years in Europe is they have not sold our private information to third parties. They’ve not done that in some countries. It’s in the legislation. There’s bank secrecy. They’re supposed to keep that data secret. They certainly can’t give it to anyone else. And they have not done that. They’ve even been very modest about using it themselves to market their services to us. banks have been actually surprisingly good at that. they’re not used, they haven’t used what, to anyone coming from Google or Amazon is like, wow, you’ve got all this data on all these people. why aren’t you utilizing, exploiting it to sell them stuff they don’t need? so we, it’s actually, we should be grateful. The banks have been quite good on that point. And then that means, of course, in Europe, majority are small banks, local banks, and they haven’t done that. So PSD2 is about totally ripping that out. From the banking system and forcing banks to pass our private information on our transactions to third parties Namely, this whole new so called fintech sector, which was government developed in order to compete against the banks. Because the plan since around 2008, 2009 has been to dissemble, dismember the banking system and target all the many functions banks do by having separate digital service providers for each function compete with banks. The biggest obstacle being people don’t want that. So they’re not going to actually. use these alternative, service providers. And that’s why the European Commission created this law, and it works the following way. So if you’re on your phone, and you find, you get an ad, or you somehow, somebody sends you a link to something, oh, new service provider, oh, that sounds interesting, watch what you click. So you click this, oh, to go further, you have to agree to the terms and conditions, watch out. Don’t agree. But of course, we all know we have, if you want to move on with something and see, you have to agree. And then you probably made to even click that confirm that you’ve read it because nobody reads it. So they force us to lie daily, right? With all these. That’s enough. So if some fintech company has you now agree to their terms and conditions, according to this PSD2, they now have your permission to go to your bank and get all the information on you and all of your transactions, all your history, and the bank has to now give it to you. That applies to all European banks, PSD2. Very insidious. So these guys can now use your information to sell you stuff and also compete against your bank, driving your bank out of business. very much. but that data can also be used to implement a social credit system. Anything. Absolutely. Anything. Social credit system, control systems, basically it becomes, something that can be passed on to anyone. and so it’s really insidious. So where was the debate about these laws? Of course, there’s no debate. This is Europe, EU, it’s a dictatorship and they just enforce that. Nobody wants this. And if people realize what this is, nobody would agree, but there’s no discussion, no debate, no vote on it. it gets back to this issue of hardware and software. Precisely. The hardware software issue is, just starting to be understood. It’s just beginning to be understood, and as it is understood, the whole legal issue of is my data owned by me, or can it just be taken and used against me? To use to control me, to, and to take my assets. So it’s, going up, up, Okay. So, function number one, you run the state bank accounts. Now we’ll get into it later, but that means deposit insurance. The bank of North Dakota, the state provides the deposit insurance, not the FDIC. They are completely independent and free of the FDIC. Now, their major deposits are the state deposits. So that’s not taking necessary a lot of risk, but it is an issue in legislation that needs to be dealt with. You are going. That’s right. And I think it’s an important point. now, I suspect it’s a point that will be used by, opponents and enemies of these proposals to have state banks. And they will say, they will try to scare legislator, Oh, but you’re not, you don’t get, FDIC deposit insurance and your, customers don’t get this insurance. there’s some important things to remember then as counter argument number one, the FDIC is an amazing track record. In closing down United States banks in America, that’s his job. It’s real job is to close down banks and it’s closed down dozens and dozens, hundreds of healthy banks. And it’s not even secret healthy banks, because initially think, okay, they closed down banks that are completely failed and in trouble. No. They can close down and they have closed down many healthy banks. In fact, there’s a whole study by the Fed because you see when a bank is in trouble, then it also economically, it acts differently. And so as a sort of economic side of the study, the idea was what happens when you close down the bank? if you close down the bank, that’s in trouble. Maybe the effect is not large anyway. We want to have data on when you close down a healthy bank. Oh, where can we get it? FDIC, they’ve done it many times. And of course the conclusion was if you close down healthy banks, significant negative impact on the local economy, which only economists could be surprised by. But that was the finding. So the FDIC has a record in closing down banks. And there’s very little recourse. So that’s already reason number one why you don’t want to be part of this FDIC system. Secondly, when it comes to actual deposit insurance, if you want to have your own system, you can run your own deposit insurance system. In Germany, the cooperative bank, have had and still have their own deposit insurance system. And the savings banks, they had their own, have had their own deposit insurance system. Then the EU came in and said, Oh, we need a European deposit insurance system. And then they forced the savings banks and the corporate banks in Germany to participate in that system as well and make contributions, even though they have their own systems. There’s now two, double the Pulse insurance system. They were forced to join, they didn’t want to join, they had to. and they were wise in not wanting to join, but they had no choice, sadly. It’s the power of the EU. really, you don’t want to be part of this FDIC system. It’s easy to run your own if you want to have a formal, Deposit insurance system. one can actually run one and that will be my recommendation as the next stage. And we haven’t discussed this yet, as you, point out the list of advantages of having a state bank, we must add this in particular, when we talk to the state chartered banks, the state level banks in the states of Florida, Michigan, Tennessee, wherever. that the plan is to have our own state level deposit insurance system, allowing all the banks to leave the FDIC umbrella. Of course, there may be, and we have to look at the legal framework, one of the conditions for them to be allowed to leave the FDIC, but it’s quite clear that one of the conditions will be that there’s an alternative deposit insurance system, which somebody has created, but we should create them on a state level and the state bank and the state can be part of this and they can be better funded. because you, you fund from, contributions. And if you run your bank, according to particular principles, mainly have bank credit for productive business investment, it’s the soundest banking system, no banking crisis, right? But it argues again for the importance of a conservative culture, exactly, a very conservative culture. And that’s why, but if you have the right lending pattern, you just won’t get into trouble. it’s, if you break lending into three types, bank credit for consumption, bank credit for asset purchases, bank credit for productive business investment. The latter is the type of bank credit that’s sound and never has in history resulted in a banking crisis. Whereas the others create inflation, they create asset inflation, banking crises. And that’s usually the problem. So if we introduce principles where the state bank encourages all the state level to state charter banks to also lend more and mostly, for productive business investment, we know we’re de risking the system, which will be very important. and then the German deposit insurance of the corporative banks. 200 years old and the savings banks around 200 years old. They never needed state money and no depositor. And these are, these were in the past where thousands of banks, no depositor ever lost any money and no state money was ever injected. There were some situations where occasionally there’s some issue with a local bank, but they could always sort it out themselves. They never needed to save money. And that, of course, is a great advantage that you’re not dependent on this interference from, outside. So in this case, from the federal, federal level interference should be avoided. But I would argue if you’re, starting a new state bank, you want to be, obviously for the state deposits, you’re not going to worry about it. You don’t need FDIC, but if, you add banks in the state to your insurance program, you want to have very tight underwriting and you want to do that on an evolutionary basis, certainly not a big basis. Exactly. The one thing I do want to point out is that the As a technical matter, the Bank of North Dakota will take a retail deposit, so any, citizen of North Dakota, any resident can deposit, but they have to drive to Helena to do There’s no electronic banking. And so, as a political matter, you’re not saying, no, we won’t take your deposit. I think it’s sensible because. you want to have a bit of optionality. There may be situations where it turns out that’s actually very useful or to help a particular company that needs help or help the local small bank. that is a needed arrangement. It should be possible, but why not? you never want to restrict your abilities and capacity. But they’re, very adamant. They do not want to compete. Yes, exactly. That’s, clear. They’re there to support banks and credit unions. They are not there to, yeah. So we’ve discussed deposits. And again, if you want to read more about how the Bank of North Dakota does it, just check out their website. But let’s, I want to talk about loans and then services. If you look at the history of, the Bank of North Dakota, they, have four areas of loans. They’re doing agriculture because it’s so important in North Dakota, infrastructure loans. business loans and student loans. And then there are a variety of what we might call cats and dogs of programs that have come up, or they’ve responded to a special need or the legislature, it’s either the banking community or the bank or the legislature has responded to a special need. So let me talk through, because they have a very interesting Loan book, of course, agriculture is the big one. And, one of the people, when we met with them pointed out that on average total deposits in community banks and credit union is 30%, but in North Dakota, it’s 83%. And it strikes me that one of the reasons that may be happening is, they try and work completely through the local banks. So, they want the local banks taking positions. But they are there as a backstop, and they are there to do the loans that either the local banks won’t do, or as a participation, or even in some urgent situations, they’ve bought loans off the small banks books. So if you, look at what happened to Silicon Valley Bank, if there had been someone to buy their loan portfolio off their book, in that kind of liquidity situation, they may have been better. But, so their ag loans, their infrastructure loans, which they will do directly with the municipality, and then their business loans. again, they like to work through the local banks and then student loans, but only for students who are in North Dakota or resident of North Dakota. So it’s very North Dakota centric. it makes perfect sense and that’s, the whole purpose, isn’t it? so yes, that’s, that’s the model where you support the local, banks chartered in North Dakota. and businesses, communities through them, and you’re a backstop, and so essentially, it, it also reduces the ability of the federal centrally planned organizations to interfere in your, state. and, of course, we see that in other places, and you mentioned Silicon Valley Bank, and that really was quite a shocking,
Event because when you go through it, it’s, it really looks quite strongly like an orchestrated takedown of the bank that is unnecessary until the spotlight should be on the regulators, but what are the media doing? They’re still in the same mode that they were put into after 2008 or the big banks and the banks are bad. And no one else is, it’s just the bankers fault. Actually the bankers have to do what the regulators tell them and they have always done. And, it’s when the regulators don’t do their job or give the wrong incentives, that’s when we get these crises. But the journalists have been extremely bad in ever questioning the regulators, whether it’s after the 2008 crisis or, something like Silicon Valley bank, where was the federal reserve? It only came in as lend of last resort after the FDIC had closed the bank. but J. P. Morgan was staying open 24 7 according to the reports. they’re the second, they and Citibank are the largest banks in the New York Fed, and they’re staying 24 7 trying to poach the deposits. While, while Peter Thiel and other people are calling everybody and telling them to get their money out, JP Morgan is staying open to make sure that they can suck up all the deposits. So it looks to me like the New York fed was running them. exactly. the other thing is that the Silicon Valley bank had joined the fed now pilot program. And as a result, was no longer able to stop the flood of money going out because it was in the fed now system. They had delegated that to the Fed, not realizing that the Fed would use it against them. And, normally you can just stop the outflow, win a bit of time. and that wasn’t possible because of that FedNow system. But already previously, that the management was doing some strange things. and I’ve seen it in the UK where, a small savings bank was taken down and it was really with collusion of the management colluding with the regulators.
that’s what it looks like at least. so in this case, step number one or event number one was there was an outflow of deposits. Now that happens, it was fairly large, I think more than a billion, already in the previous year, 2022. And what’s the management response? Normally bank management response by raising deposits. That’s what they should have done. They didn’t. They decided, Oh, we’ve lost deposit.
what can we do? And of course the, the FDIC had been going around already with this chart of this picture of the so called hidden losses in the banking system, which are merely valuation losses when interest rates rise, whenever interest rates rise. And the asset, since we use, net present value discounting by using interest rates to discount. The value of assets, of course, asset values in theory have gone down, but banks don’t have to mark them, to market,
and so that was really, so the FDIC was already marketing the idea that there’s a problem in the U. S. banking system, which is very biased information. They also didn’t point out that when rates go up, the liability side of banks. Goes down in value as well. Therefore, banks are hedged, you know They have a long book the assets and they have a short book the liabilities It’s a hedge fund that doesn’t have to mark the market, which is quite a stable system Really if you don’t right you do the wrong thing, but then so bank management decided. Oh, let’s Sell some of the US Treasuries at a loss And really just doesn’t make any sense. Why would you want to book losses? But it’s almost to prove the point that the FDIC was trying to make. Oh, there’s a problem in the banking system, which is not true. These are mostly treasuries and you hold them to maturity. Never, is there going to be a problem? so Silicon Valley bank realized these losses quite unnecessarily. They should have instead used them as collateral to borrow from the Fed, for instance. the, now the, Fed has a bank funding program that will do that. Only now. I thought, the Fed was created in 1913 for that purpose. Oh, but it was in 2024 that they came up with this plan. Now we have a plan. No, it was in 2023. They did it in 2023, the bank funding program. It’s a joke because of course the Fed could have always done that. They don’t just, they can do anything. They don’t need to even call it a new name and a new program. And when they want to, they do things, without even announcing a new program. But I, think this is why you want to state bank, because if you look at the loan book of the Bank of North Dakota, and then the services, what they’re doing. for example, they offer collateral valuation services at the request of the Banking Association and the small banks. And they, they also offer correspondent services, international wire transfers. Exactly. And that’s, again, That’s again, an important function that a state bank can and should fulfill. It’s actually a function that if you had the right central bank, the central bank would also do for them. But the Fed refuses to do that. Same as the Bank of England refuses to be the correspondent bank. in Germany, the Bundesbank, which has always been publicly owned,
always has acted as a correspondent bank for any bank, even foreign banks. And I believe, what this does is the small rural banks can stay in business. Exactly. Exactly. Because they have, the bank, they have a sovereign state bank that can provide those functions that they can’t provide economically. Exactly. And you’ve seen that. Yeah. Exactly. And this makes perfect sense. So then you see what is the real objective. It’s revealing itself. because if the bigger central, more central bank. either the Fed or the, State Bank of North Dakota,
has the objective to support the banking system, it would offer these services, but if the goal actually is to get rid of small banks, then you would not offer it. And that’s right. Reveal preference. That’s what we see. The Fed doesn’t offer this. The Bank of England doesn’t offer it, but the, Bank of North Dakota does offer it. Because they that is their purpose. They actually want to support the smaller bank, but I want to come back because we’re going to get to economic benefits. I want to get back to this number that the total deposits and community banks and credit units is 30 percent but in North Dakota, it’s 83%. If you read your. your paper on Sovereign State Bank for Tennessee, and then Florida and Michigan as soon as we get it up,
what you realize is that the health of the economy depends on all of these small banks. In other words, and you make the case you can get growth with no inflation. And if you look at the difference between 30 percent and 80%. 3%. There’s a reason that the North Dakota economy, remember during the bailouts when, and, the financial crisis, he, the, I think it was the head of the banking community said that, North Dakota was in a recession for a week. But that I’m assuming that is part of the extraordinary economic health of North Dakota. Exactly. And it was the same in Germany, the, small local banks, which in Germany are 80 percent of all the banks, a small local bank. they increased lending to small firms cause they realized, Oh, the big banks are, in a credit crunch and in trouble with all their speculative international transactions. so we’ll step up lending and they did and there was no, maybe a week, but maybe there wasn’t even a week of recession in Germany because the majority of people work for small firms, dependent on small banks, small local banks for their funding. and that’s, how it works. And so the economy was, very stable in Germany. Your problem was that some banks had bought fraudulent paper from the Americans. Yes. The bigger ones, the Landesbanken, which are bigger banks. Yeah. and, if you look into the background of that, you just see how the whole thing was a set up as well there, so the, it was a way for the U S financial crisis to be exported. And it really was part of this plan to take down a. A vassal competitor, because, they, it was literally flogged to, to Lunderspangen after the EU had interfered and said, Oh, these Lunderspangen, we’re going to pass some directives in the EU Brussels, which is under us influence is the political arm of NATO.
that’s the Lunderspangen state banks have to change their business model. They have to be more commercial. They have to, behave very differently. and that’s when the Bear Stearns and whatever, Morgan Stanley, Toxic Waste, high grade credit, structured, structured credit, product salespeople came up and sold them this stuff from America, which turned into toxic waste. My theory is that, Obama got the Nobel Peace Prize because he bought back all the crap that America had sold to Europe. He got the taxpayer to go along with it. So let me come back, because you saw an effort in the last 20 years to get the banks, particularly the small banks. to adopt sophisticated underwriting and compliance systems that would integrate them into, software that’s leading us into a social credit system. And what that did was it basically stopped banks from doing character loans. And if you, listen to the history of the Bank of North Dakota and the, small banks they’re servicing, they are doing character loans. And I suspect one of the reasons the system can still do that is because the Bank of North Dakota is there and it’s not in the FDIC system. So they can’t squeeze them into, the sneaky evolution of social credit systems with complex software. That’s right. That’s right. Yes. I met a local savings bank. CEO in Germany, a small local bank. And he told me that, at least 40 percent of his loans, business loans are character loans. Without any collateral because he knows these firms very well and they, they’ve been known to them for decades. if you look at the U. S. regulator push, what it does is it stops the character loans. It forces more money into the investment portfolio buying long treasuries, which of course gets slammed if you raise interest rates. But it also causes the banks to spend a fortune. On expensive software that can provide all this data to the yeah, exactly to the centralizers. That’s right. These are all tricks to centralize, exactly. It’s all a digital invasion. And somehow, I believe they’ve, probably avoided some of that. Okay, one of the things if you look at their loan book is, occasionally the legislature, so the profits are rolling out of the bank and, ultimately go, the, state gets dividends. but the legislature can create low interest rate loans. for a particular purpose, one is, school construction, where the bank will make lower interest rate loans to schools to construct new school facilities, and either the legislature can provide appropriations for that, or they can have the bank do it, but then it comes out of the profits that create dividends for them. So one way or not another, the legislature is funding it, but occasionally that happens as well. And I think if you start, if, somebody is looking at doing legislation, you want the legislature and the bank to have the flexibility subject to the approval of the legislature and subject to the approval of both, the sort of political oversight board and the board that has all the bankers and business people on it. Exactly. Yeah. Yeah. If you, listen to their history, they’ve been very responsive to what, their local banks need. And so something happens and it generates an interest and that interest flows into the, both the legislature and the banking community. And then it comes to the bank and then together they respond. And I think that’s why the culture issue is so important. Because it’s not, a response to, okay, let’s go make money using, state credit. It’s a response to the small business people in schools, the municipalities, the farmers have a need. How do we respond in a way which is financially responsible? Precisely. I think that’s very well put. And you’re absolutely right. that is the true culture that they were referring to, which, which is, of course, the culture also that we have in the German operative and local savings bank networks. it’s responding to the need and always looking beyond. And it’s not about. Let’s make money as the number one priority and then forget about everything else. it’s number one is what is the need? What can we do? Banking can do a lot to help under all sorts of circumstances. How do we need to structure it so that it is properly done? And workable, and also is not going to make us losses, and there are so many different things you will do if you have this different sequence and order of priorities, isn’t it? but it’s, the thing I think has been successful for them, they’re focused on productive activities. So how do kids get an education? How do we have schools that are functional and work? How do we grow a crop? How do we, as a state, produce and export crops? How do we, how did the business community thrive and how do we protect the banking community so that they’re functional and solvent, including small banks?
I, we did a great interview with you on plunder capitalism and we, went through case studies of how the central bankers move in and wreck an economy so you can pick up assets cheap. And to me, austerity by the ECB and the German banks was, and the, French banks was really, a way to plunder Southern Europe. So, how does the state bank stop that kind of plunder game going on? Yes. as you said, the culture, so really it’s the, decision makers having in mind the original goal. What is the goal? We want to make sure that North Dakota is a strong economy in the long run.
Businesses have what they need. There will be sufficient investment in productive things. education needs to be supported and so on so it’s really this, the priorities, the decision makers have that in mind and then use the power of banking and the power of having a state bank to get behind these objectives. And then it’s quite natural. And if and of course, at the same time, they are professionals and they know the banking business, so that you make sure you’re not going to make losses. but these are your real objectives. You are actually essentially a development bank. That is developing and securing, the long term future of the state in all its dimensions, so you have a much bigger remit, really, and not just, oh, let’s, make money, or, how can we, maximize next quarter’s profits or something, it’s absolutely not their priority. but if you do this well, and in the long run, if you have this different remit, you will find that the state bank will be financially sound and will be profitable And everyone else’s as well, Its primary function has always been a depository institution for political entities, counties, the state owned institutions. That is still the main source of its deposit base. So that role has not changed over the history of the bank, but over on the lending side, that is especially what has changed. First one on page, on the first page is to, continue to be the primary facilitator for loan participations with North Dakota banks. Since the 1960s, the student loan program and then the commercial lending programs and the agricultural lending programs and even the entrepreneur and new business, that’s more of a venture capital function. Now all of that has been allowed under the original legislation that was passed back in, So it seems that no one’s had to go back and invent this institution. All of its powers were created then after a period of penance, of course, for the sins of the 1920s. And it probably has paid for those sins, I would say. It’s now, rediscovering its original potential. The Bank of North Dakota has grown and changed many times, but it has not strayed from the original plan laid down by the Nonpartisan League. they behave like a bank, but with an economic development mission, which is the neat thing about the Bank of North Dakota. That’s, still part of that old NPL route that was put down in 1919, and I think way back then, I think it was really the intent of legislators who created the Bank of North Dakota to create a bank that would help agriculture and commerce and industry and help the development of those sectors of our economy. There may have been a time when the bank drifted from that, but I think it’s there today. My view of what the bank should be doing, I came to the bank with an idea. I would encapsulate it in saying the Development Bank of North Dakota. My view of banks is that they are to lend money. To people, whether it’s to start a business, to buy or expand their farm or ranch, to buy a home, to get a school, whatever it is, that a bank is successful if it does a good job of lending in its community. That helps the community grow and prosper. That’s what makes the bank grow and prosper. that’s my philosophy of banking, When I came to the Bank of North Dakota, the total loan portfolio in 1993 was 200 million dollars. When I left there seven years later, it was 1. 2 billion dollars. That’s a billion dollars over that time frame that we invested in North Dakota farms and businesses and homes and students and all those kind of things. Ultimately, and its reason for being, is to serve the citizens as the development bank. Help. invest money in North Dakota so that they can grow businesses and farms and build homes and get an education. to grow it.
and, starting a bank where the treasurer’s office does a lot of those functions, so the Bank of North Dakota has approximately 180 employees. If the treasurer is doing a lot of those functions and you want to leave them in the treasurer, then you can start very small. Yes.
Now, let me turn to economic benefits and risk issues. To me, one of the risk issues is states generally have rules about compensation and personnel. And it seems to me, if you want to attract people in the banking industry and are competitive in the banking industry, you may want to have a separate compensation schedule. Have you ever looked or thought about that?
that may be the case. But, when I had this issue, and in fact it was, posed to us by the UK financial regulators in a formal meeting, they said, oh, we look at your projections for your community bank proposal and, the breakdown of the costs. We see that you have very modest salaries for your senior and top executive. And and yes, we said yes, they, are modest, but, we’re confident we can hire people for these and then soon enough, we got a letter saying, hire those people, i. e. we don’t believe you, see if we can hire them. Of course, at the same time, by hiring them, they were increasing, the regulators were increasing our costs because it was still pre licensed. And the earlier you get the whole, senior executive team in place and the C suite, it costs really going to go up and you run out of money quicker. So that may also have been an angle, but they wanted to see whether we can do it. And I recruited in Germany. It’s absolutely no problem. Tons of applicants. They all thought this is an exciting idea. Start a German style local bank in the UK. Oh, that’d be great. do that for a few years, get the experience. But then it was quite exciting, but also at the same time, the ECB is forcing the community banks in Germany to merge. So you do have actually room. There are people that are essentially, they feel they’re more superfluous, and maybe they are being, asked to leave because of all these mergers of community banks now happening under ECB, European Central Bank pressure. In any case, We managed to hire the top suites, senior executives, no problem. And then there are no bonuses, just standard salaries, considered by UK standards, extremely modest. It was not a problem. And so these are people that are trained bankers, but highly motivated. With these objectives that we discussed in mind, that’s really who they are. They are always looking at the bigger picture and they realize banking contributes to society a lot. If you do the right type of banking, it’s a fantastic contribution to society because you are allocating resources. It’s a, if you look at a really successful community bank, the people who run it, it’s a really fun job because they’re very intertwined with the community and they see what’s going on. They learn a lot, they are a, an, an absolutely fantastic local resource on not only financial literacy, but what’s going on in the, they really understand the local economy. What are the trends? What’s, happening? What, absolutely. And, so the local bankers that, once, once you do this job, you realize your role. And I think it’s very satisfying as a job because You you, there’s a need, you’re responding to the need, you’re helping, but at the same time, it’s, more than that. You’re actually, an integral part, maybe even a catalyst for all sorts of positive developments, new developments, always funding, also new, innovations, technologies, and, all the various developments.
you can see how people are motivated. Yeah, if you look, if you go through Bank of North Dakota’s website and their loan book and their loan, as I said, the more we ask them for briefings, the more they put up on their website. But if you look at all the projects they’re dealing with, it’s a fantastic and highly complex portfolio of projects that are very interesting and I think very satisfying because they’re all so fundamentally productive. Exactly. Exactly. Exactly. Yeah. Yeah. So it, in Germany, they, this has been, I think, realized by those people working in the corporative banks and savings banks already for the last 150 to 200 years. So they’ve established actually training centers. There’s, there’s even a university, which is owned by the cooperative sector. Yeah. And. the senior executives, they go on regular training programs, actually also junior, all levels. but if you want to be, in a leading function in the bank, then there’s a certain program you have to do. And,
and they all speak very highly of this. So I’m, sure there’s part of this, training is this realization that, you are contributing. Important things for society and then in places where you don’t have that it’s a very stark contrast, you know The economy will perform differently If i’m going to start a state bank richard, how do I capitalize it? Do I need an appropriation from the legislature to get it going or to capitalize it or? I think yes, but the important thing to realize is it may be easier to get the money than you think because You I mean, we have to look at the details, how this is done, but often,
there’s different resources you can use and the, chief financial officers would, know this. The part of the resources that are very fought over and therefore very competitive and very difficult. And also politically, there’s lots of opponents with different emphasis is the budget. So the money should not come from the budget. It should be possible to use the money from other state sources, such as what is called reserves or what is called capital expenditure, long term investment that is not from the budget. there are such resources, and that’s really what it is. So you make it an investment from the reserves. Exactly. An investment from the reserves. And in fact, it should be part of the, there’s reserve management. so the finance director, would know about this because there’s people focusing on that and they can, buy bonds and stocks, whatever, and, invest outside the state. But of course, usually they will have a bit of a bend. We want to support the state also with these investments. And certainly this is the case here. And so it should come from their long term reserve management and investment. and this is a profitable investment. So right. And you could set it up if you, wanted it to be, not permanent, you didn’t want an equity investment. You could set it up as a preferred stock or as a debenture and just pay it out, over time. and of course, once the bank is set up, it can start making loans and just creating money out of thin air. exactly. This is the other thing that’s often neglected when you analyze these. That by having more local banks and having a state bank, you are literally adding to productive capacity. and, you are creating new money that is used to put that productive capacity in place, which is why it’s noninflationary. And you get growth and prosperity and job creation. So there’s, there’s no downside. there’s, what’s there not to
it seems to me, if you’re trying to write the authorities for a bank, both what loans it can make and what services it can make, You’re going to need, you’re going to need to make very clear the intention is to support and not compete with the private sector, but you’re going to have to set up the advisory board and the board so that you have sufficient over oversight and direction. that you can leave a lot of flexibility to the bank and the bank management, subject to the review and input from the advisory board and the approval of the commission. And that means over time, the board, the advisory board and the legislature and the bank are going to evolve together. And I come back to what we keep hearing. That’s why the culture is so important. Yes. Yeah, I agree. I agree, right? because as somebody who’s cleaned up a lot of financial fraud, so I cleaned up a lot of fraud from the SNL crisis in the eighties and the culture was the opposite and oh, the mess they made.
okay, so, there, so let’s talk about a couple of risk issues. To me, the biggest risk issue is the Bank of North Dakota is totally dependent on the Fed wire. So even though you might not have the FDIC in there or the regulators in there asking you to do all sorts of social credit compliance, you are dependent on, the central banks Electronic wire system and, and I don’t know anything about the telecommunications in the state, but you’re probably dependent on telecommunications providers outside the state. And so 1 of the issues that’s coming up more and more these days, not just in banking, but in many functions is if our digital. digital, assets and digital transactions, operate on an electronic system. Do we need legal and operational independence in those systems within a state? Now, I believe the answer is yes, but that’s a big new scope of work to contemplate for a legislature.
Yes, that’s true.
that’s true. I would agree with that.
yeah, it’s, essentially if you can create. The, I would say the basic framework of a local alternative system that you could switch on quickly if there’s a problem with the Fed wire, and that would be good planning and, in everyone’s interests now because it’s local on the state level, it should be possible to set up something. and also the advantage of. Local banking and local banking relationships is that you can fall back to basic analog records, right? they apparently they had their own cat, so they, had their own check clearing system before they went fully on the fed wire is my impression from listening to them. And, it’s really funny because when you talk to a banker, they can’t conceptualize that there would be a problem with the Fed wire. But to me, the Fed, fast payment system Fed now is voluntary. If it should become non voluntary, then I envision a day when it could come that the Fed system is a problem. Absolutely. Absolutely. you’ve seen the Feds. Motives and actions and often they’ve been anti bank and anti small bank and then situations can arise where the FED’s actions will be a problem and it, will be a lifeline to small banks if you have an alternative system and as the state bank, it will be an ideal location to, to operate that. Right now, the Fed is under the jurisdiction of Congress and subject to the Constitution, and, we’re just about to publish a new series by John Titus, and he’s absolutely of the belief that the Fed wants freedom from the Constitution and congressional oversight. And if that day should come, I do not want to be dependent on the Fedwire. I’ll just be really, I like resiliency because if you look at the disasters, if you look at what’s happened around the world, I’ll never forget. I don’t know if you saw this, the governor of New Zealand, of the central bank in New Zealand gave a press conference after the cyclone a couple years ago. And he said, thank God we had cash. and John and I on money and markets said, I guess he didn’t get the memo.
And the Norwegian central bank has just come out and said, we’ve been moving the cashless and now we’re going to reverse that because we’re looking at what’s happening in these disasters. And we don’t want to be You know, we don’t want to be dependent on electricity and have the whole system go down. Yeah. Yeah. Yeah. Absolutely. I’ve seen it recently at, at a university. I was giving lecture and suddenly there’s a power cut and in that part of town, in Europe, it seems to happen. And then because they’d gone already cashless, that’s the end. you can’t pay. I took the students to the local pub across the road, because we had to leave the building because nothing worked, and, fire, security, they all said, no, you have to now leave. But I wanted to finish the lecture, so I went to the pub and the pub asked, if you’ve got cash, that’s fine. So I had some cash and that was it. So if when there are crises, if you don’t have cash, you’ve got a problem. So cash is the system that, that we already have, but we should make sure we don’t lose. We’re on the verge of losing it otherwise. but then also by having local banks and having a system and with a state bank in the background, you can actually set up, from scratch, even financial instruments. You can even go back to something as simple as the tally stick system ’cause it’s forgery proof. That tally just wooden sticks. with notches, and you split them, forgery proof, the bank keeps one, the other one circulates, and so on, all writing records and signature, two signatures, that these systems are workable on a local, face to face basis. And that’s really what money is, you don’t need anything else. So even the cash one could produce, just a permissory note, even written in hand by the bank manager, We’ll do the job. You can always clear by pony express, if you have to. So I wanted to bring up two ideas, one that you introduced to me and one that I love and, that could or could not involve the bank, a state bank. One is, the treasury department has a,
a capacity called treasury direct where retail investors can go to the treasury website and just buy treasury securities direct from the treasury. I don’t know, having been an investment advisor for 10 years, I don’t know an investor in a well capitalized and, financially solvent state who wouldn’t love a North Dakota direct or a Tennessee direct where they can go to the treasurer’s office or the state bank and buy state bonds or even bank bonds directly and, not have to put the money in a Wall Street brokerage firm. They feel much more, that’s real custodian diversification to put. And so I just want to put a plug in for a state direct bonding capacity. And that if a treasurer’s office not doing it, it’s something that the state bank could do as an independent agency. The second thing is you introduced me to the idea of selling bonds to the local banks. And I had never thought of that, and it’s it’s such a great idea, if you could explain that. Yes, of course.
what has happened, of course, is the opposite. That basically, centralization of everything, and then you have Wall Street and, the underwriters involved in fundraising, but, you can completely change the economic and macroeconomic impact of fiscal policy, government spending, by changing the funding in a very small way by moving from,
from the standard bond issuance To getting the treasury to borrow. Ideally, actually the best is if you also change the, formal construct from a bond, which is tradable to a non tradable loan contract, because then you have the advantage that. The banks don’t have to market loans don’t have to be marked to market. so you can’t get, for example, speculative attacks if the Wall Street speculators decide to attack a state’s bonds. they can, if they’re tradable, they can short sell them. They can, do all these things to manipulate the price and create a crisis situation, as happened many times. We had in Europe 2010 11 sovereign debt crisis. and this is where I, I went around to, Spain, to Greece, explaining to the, treasuries. the finance ministries and debt management offices will stop issuing these bonds. You’re putting your Yourself into the hands of these speculators that are attacking you and the interest rates were crazy There were you know double digit percentages and for portugal for ireland They were already more than 20 percent for spain for greece They were already I don’t know 30 40 50 percent shooting up in this crisis situation So it doesn’t make sense to borrow And the bond market, you don’t have to because during that crisis, the interest rate on prime, the prime rate, for prime customers to borrow from banks stayed at 4%. Also in Greece and Portugal, it never really shot up more than 4%. So the treasury, the government. Debt management office should just borrow from their own banks. And the same is true in the United States on a state level. And the banks can just create the money out of there. They are creating the money. Exactly. Now, of course, that’s the magic key. Why, where this is not just sensible because you’re not giving your opponents the powder to shoot at you,
by, having these tradable bonds, which is really advantaged by having a long contract, but. It’s also new money creation. So then you’re literally monetizing fiscal spending. Now, as long as your government expenditure is used for useful things, paying salaries, supporting education, building roads and bridges, these are all productive things. This is not inflationary. It’s actually contributing to the functioning of the economy. So you’ve got more purchasing power, but you’re contributing to the function of the economy. You therefore will have contributed to the creation of goods and services. And so there’s no inflationary pressure from that. You are actually getting non inflationary real growth. From this and job creation, right? And you’re providing a stable income to your local banks That as well exactly and that also was my argument when you know, spain Greece, sovereign debt crisis the banks are in trouble the states are in trouble because you’re doing it the wrong way if instead the government borrowed from local banks The banks have the best business with the best customer the state they can grow out of their problems by having revenues, they’re creating money, the economy will expand, transactions increase, turnover increases, tax revenues increase, so therefore the debt to GDP and the deficit GDP ratios improve because the deficit and the debt are not rising anymore, they’re going down. And the GDP is going up.
you you’re helping everyone, you’re solving all the problems. And that’s the way out. And so actually, it’s a phenomenon that we’ve seen in the last 30 years, namely, that government spending, that’s true on national and state level and everywhere. The effectiveness of government spending and actually a positive effect on the economy. so simply measured by GDP effect, for example, has gone down significantly in the last 30 years, down and down. And we used to be taught in introductory economics, the fiscal multiplier Keynesian in this very simple idea, but, an interesting one that where the government spends, there’s multiplier effects. We’re told. Now there used to be actually such a multiplier, it was maybe around two or two point something then it went down to one point something but in the last 20 years In most countries in the world, it’s now less than one. Economists still talk about a fiscal multiplier, but there isn’t one. There’s a fiscal compressor, there’s a fiscal, reducer, not a multiplier. So why has fiscal policy become so ineffective? And that’s because economists never understood the banking system. The degree of fiscal policy effectiveness is a function of The degree to which the banking system is funding this through credit creation, because you can only have growth if there’s bank credit creation. That’s the system we have. And in the past where we had more banks, smaller banks, local banks, all types of activities, there was a higher.
coverage through credit creation and that’s gone down because, the banks are underwriting for productive function, whereas the government money, I, have to tell you the, government money is like financial methadone destroying the culture. Yeah, I know. And of course, yeah, exactly. And there’s all sorts of, bad things happening in fraud and money disappearing and so that’s also happening. And of course, that’s another reason why there’s policy ineffectiveness. but just the banking factor, the coverage from banks seems to be, sufficient to explain a big part of this drop in the fiscal multiplier and the effectiveness of fiscal policy. we can immediately increase fiscal policy effectiveness. The, stimulus you get out of this, the, positive GDP effect you get from government spending by funding it from, through borrowing from banks through loan contracts. but what we’re contemplating for the legislation is the ability of the bank to serve. A sort of syndication or underwriting capacity for the state exactly that we want to be able to do that. Absolutely. Okay. That makes perfect sense. And then it’d be very easy to also structure it so that the, community banks and the local banks chartered in the state take up well, as much as they want. Essentially to them, it’ll be a very attractive option and they will be interested in doing that and it will be part of their portfolio.
So one of the questions, it’s been very interesting for me because when you talk to the North Dakota Banking Association, so we had a wonderful conversation with the fellow who runs the North Dakota Banking. You see such a warm relationship between the banks and the. Bank of North Dakota. Whereas in Tennessee, when we brought up the idea of a sovereign state bank, the bankers are, the hair goes up and they’re like, and there’s a real fear of government getting, competing with the banks. Whereas if you look at North Dakota, it’s the opposite. They’re there to protect the banks, to support the banks and to not compete with them. One of the, for many years I’ve been very, negative about the idea of local public banks. So Ellen Brown, who’s a, I consider a colleague and a friend, I’m like, no, Because the idea of government credit coming in and competing with a local community bank or credit union to me is the death of the economy. but a wholesale bank at the state level that’s supporting all the local banks, that to me, that’s, a very different, a wholesale public bank dedicated to a thriving local bank community is a very different kettle of fish. Because it is. It’s in line with the key principle here and that is decentralization, the principle of decentralization is a very important one, still completely underestimated and a lot of people not recognizing it’s important. Any human organization, any human activity where, people have to work together benefits. By having a decentralized structure as opposed to a centralized structure. That’s my experience is also result of my research on this problem. And so that’s we have to keep in mind. Okay. So, risk issues, any other risk issues we should bring up about, again, I’m, thinking of, people in the governor’s or the treasurer or the comptroller’s office who, are writing legislation or people on the finance committee or other committees that the legislature writing legislation, any, anything else you would advise them on how to organize this. I think what we’re saying is we want a fair amount of flexibility,
between, the state and the, board of the bank. To craft the details of what they do and how they do it and when they do it and evolve it over time. Is that fair to say? Yes, I think so. It should be flexible. and therefore, you don’t want to prescribe every, single detail. keep it simple, keep it short, and have leeway for, all the institutions to grow together. As long as the fundamental principles and this, the principle and particularly of supporting local banks, that is that, should be spelled out and then people should live that. And as long as that is in place, with a few key principles in place, then I think it can be very general. In, other, clauses, I think should, stay in general.
Now, we haven’t talked much about credit unions, and I’m assuming, in North Dakota, they support both the banks and credit unions. There are some states where the, there’s a lot of tension between the credit unions and the banks because credit unions are coming in and buying up banks. So one thing, if, those tensions are in your state, it’s one of the things you’re going to have to think through, but it’s very much state by state jurisdiction. It’s, a fundamental question. what, actually is the difference between a bank and a credit union? It does depend on the country. And, I’m not sure in the U. S. But there is much difference. I know that in the UK, credit unions are very different from banks. They’ve been kept by legislation, the city of London’s influence, from banking, particularly banking to businesses. So they’re essentially not allowed to lend to firms. They’re only allowed to lend to individuals. And so that’s kept them extremely small, but I think that’s different in other countries. in the U S. I would have thought they’re more or less, they are like a local community bank, it would be interesting to actually compare and see is there any difference left because then it’s just a name and, maybe some kind of tradition, but credit unions. I would have thought in America have this tradition of looking at the community and having a bit of a community focus. They’re much more of a bank for individuals as opposed to a bank for business. Okay, so if that angle is there, then we have to be careful because it’s, very important for local banks, community banks. To lend to businesses that is in fact should be the core function and if credit unions don’t want to do that Or are not allowed to do that. It’s a problem because then you know, if you’re just involved in consumer credit That’s not even productive Of course, some of the consumer loans are used by people for business investment, whether, that was the official intention or not. And that’s a good thing actually. because the money creation function should be linked to productive activities, a contribution to society and to the economy. and therefore business lending is the best form of lending is also the least risky form of lending, right? there have been problems when there’s too much consumer lending, right? And there have been tons of problems and banking crises when banks lend to purchase ownership right assets, whether real estate property or anything, financial assets doesn’t matter. That creates asset inflation. Consumer credit creates consumer price inflation, but business lending for business investment creates growth without inflation, without problems, without crises. There’s never been a banking crisis due to too much Lending to small firms for business investment, right? That’s an excellent point. So one of the things I last, in 2024, I read two excellent books on private equity. One is Plunder by Brendan Bellew and the other is by Gretchen, Morgenstern and, Morgenson and, Josh, I think it’s Joshua Rosner, and also using plunder in the title anyway, but two excellent books. And one of the things it helps you do is step back and look at a state, both the state government and state pension fund and reserves. And you realize they are finance because so much of the alternative investment to private equity has come from the state and governmental pension funds. And you realize. They are paying, they are investing in a group of firms who are destroying their tax base. I know this happens a lot, sadly. And you’re paying pirates to come destroy your economy. Why are you doing that? Exactly. Exactly. that’s the other thing, coming back to the earlier point that one should, fund the capital for the creation of a state bank, off budget from other sources, such as, capital, expenditure or reserve management. And of course, then they’re also the state level pension fund, and they should be invited to also invest because it’s in their interest in the long run. And there would. use the state level money for something that’s good for the state and for all the people who are going to get a pension there, See, I would, some of the Scandinavian countries have done this, but if I was the governor of a state, I would also set up a commission to look at the entire state economy and say, where are we putting our resources, whether it’s our equity investment or our debt investment or using our credit? And what is the relationship between where our money’s going and what’s happening in the economy? And what you’ll discover is this process of centralization, whether it’s through the private equity firms or through the federal government or through the central bank, you’re basically participating in the destruction of your own economy. And that has to be turned around and you can’t, to a certain extent, yes, I can do a bank and I can do this and I can do that, but it really needs a complete, rethinking. of how you’re going to deploy capital, because in fact, we’re coming into a period of unbelievable change. And there are amazing opportunities. they’re just amazing opportunities to take new technology, for example, in agriculture. I’m in North Dakota. I don’t know if you’ve seen the laser weeder yet. But you got a group of guys out, I think they’re in Seattle, who created a new piece of equipment that can destroy weeds with lasers, no pesticides. Now, I don’t know what the environmental impact, but let’s just assume it turns out to be okay. So you’re avoiding pesticides and manual labor for weeding. you got a machine that will weed without the pesticides, imagine the opportunity to bring that to your, if you can make it economic, so we have this explosion of new technology, that creates all these really exciting fundamental business and industry opportunities, maybe we should deploy our capital in that way. Instead of on plunder. Exactly. Absolutely. Absolutely. Yes. essentially, these are developments in the past where. We’re really the New York bankers and centralizers managed to get into the States and more or less corrupt what was going on there and distort asset allocation and change their focus. And I think it’s also when these things happen that they wrote strange clauses into the constitution, like of Tennessee that, oh, you’re not allowed to own a bank. Why not? I’ll tell you what scares me. I’ve seen, I will go in to look at a state pension fund. I went in to look at the California funds because I was doing a story on money and markets and the drop in liquid investment for alternative investment is frightening and it’s particularly frightening because if you get a rough patch in the economy and the only thing you can sell is your liquid investments, you have no liquidity for the all the private equity investments. You could see, literally the entire pension fund be a prisoner of private equity. It’s unbelievable. And I just watched a presentation by one of the heads. It’s the largest private equity firm. And we’re going to tear this apart on the next equity overview on the Salier report, talking about why private bonds are just as liquid as public bonds and, basically they’re proposing to move in. and replace big pension fund portfolios with their private bonding. So now we’re talking about even further drops in liquidity. to me,
I, think, if I was the governor, what I would do, I would also have a commission to look at the whole shebang. Exactly. The whole shebang is getting picked over and played the patsy again and again Tennessee has all of its pension fund with one custodian. Way outside the state.
I, would not sleep at night. Exactly. That’s very risky. Exactly. So I think that the time has come for states to say, okay, how do we step back and make sure our capital is being deployed so that the state is successful as possible in the long run? Scandinavian countries have done it. Other countries have done it. There’s no reason why a U S state can’t do that. Anyway, that’s exactly that’s my pitch. Okay. Yes, and that’s a good one to summarize the whole discussion because There is so much states can do right and they need to look after their responsibility look after the people in the state And that means they actually have the responsibility to do this. it would be they would be You know not doing their jobs if they’re not actually now saying okay What are the resources in the states? On the state level. Are we deploying them properly? And what should we be doing? And I think it includes setting up a state bank that is backing all the state chartered local banks and small banks and therefore all the businesses and most employment is with small firms. And they’re dependent on the local banks. That’s the reality. So that’s really the responsible, the responsibility. And I think with recent years where,
states have taken very different policies, it’s, I think more people are thinking about this one has to, go back to the basics and make sure that. Yeah. The state, governance is actually taking care of the key priorities for the state.
Okay. Richard, walk us again through how we find your website, your sub stack, and I know what’s going to happen. We’re going to have a whole lot of people listening to this and saying, how do I find and connect with Richard? And I know you’re a terribly busy man, but, walk us through how we connect with you. All right. subscribe to my substack. There’s a new one coming out hopefully today. that’s r weer substack.com or richard werner r weer substack.com. otherwise also follow me on Twitter. I’ve got, scientific econ, and the second one is Professor Werner. There’s a third one, Dr. Richard Werner
, accounts. and Telegram. follow me on Telegram. Telegram account. and, there is a, for the academic work, I’ve got a website called professorwerner. org, which has all the, academic, journal articles and, also the book references. My book, Princes of the Yen. Is that quantum publishers. com Amazon threw it out?
it’s my number one in the, central banking space, the it’s my number one recommendation. So it doesn’t surprise me that Amazon threw it out.
and otherwise, there’s also a website called, Richard Werner. org where I try to link it all together and, have, Further links and ways to get in touch.
yeah, I think that’s a summary. Okay. Okay. I know, we got you to come to Tennessee and you met with some of the legislators and leaders and it was very productive, so I hope we can get you back. It was a great experience. I’d love to do that again. Yes. Yeah. and you got a, you got shooting practice in Appalachia, right? Exactly. In the, on the ranch of, San Isidro. and it was great. It was good. Yeah, they’re wonderful people. Yeah, and it wasn’t a bad shot. I think they were impressed.
Okay, ladies and gentlemen, thank you for joining us on the Solaire Report. You have a wonderful day and Richard again. Thank you. Thanks so much. Great talking to you. Thank you for having me.
