AMA 46 – A Discussion of Our Monetary System and QE 2 with Ellen Brown

EllenBrownJoin Jason Hartman and returning guest, Ellen Brown, author of Web of Debt, for a discussion of the United States’ debt ceiling, QE2, inflation, as well as a brief explanation of how money came to equal debt. Ellen explains why the debt ceiling is unconstitutional, how the government is legally committed to paying its debts. She points out the contradiction that has been for more than 100 years, since WWI. The easing put into place at that time was only to be a temporary measure. For more information, listen at: www.JasonHartman.com. Ellen also talks about shadow banking causing the crisis by money being lent into existence, sleight of hand. The only real money are coins, which are one-tenth of the total money in circulation. Ellen also discusses QE2, where the government agreed to pay the interest on borrowed money in order to maintain control of the Federal Funds rate. She said there are a lot of reserve funds on the books in certain foreign banks, including bond dealers, that is just being held. Ellen also touches on the national debt, Glass-Steagall, and proposes state-owned banks as part of the solution, with the basic idea that we take care of our own, much the same way that Japan is reliant on their own Central Bank.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown’s eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.

Narrator: Welcome to the American Monetary Association’s podcast where we explore how monetary policy impacts the real lives of real people, and the action steps necessary to preserve wealth and enhance one’s lifestyle.

Jason Hartman: Welcome to the podcast for the American Monetary Association. This is your host, Jason Hartman, and this is a service of my private Foundation, the Jason Hartman Foundation. Today we have a great interview for you, so I think you’ll enjoy it. And comment on our website or our blogpost. We have a lot of resources there for you. And you can find that at AmericanMonetaryAssociation.org or the website for the foundation which is JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and other resources there.

Start of Interview with Ellen Brown

Jason Hartman: It’s my pleasure to welcome Ellen Brown to the show. She’s the author of Web of Debt and she is talking to us today from Basel, Switzerland. So we’re going to try to make the sound quality as good as possible. And if you’ve heard her on the show before, you’ve heard that she talks a lot about monetary and fiscal issues. And it’s going to be really interesting because we’re going to get her perspective a little bit from Europe and on the latest crises and things that are going on, talk about the debt ceiling, etcetera. Ellen, welcome, how are you?

Ellen Brown: Hi. Thanks, Jason, I’m fine.

Jason Hartman: Well, good. It’s good to have you up on the show. So, first of all, the most recent big fiasco in the news as far as monetary issues and fiscal issues is of course the debt ceiling. You say that the debt ceiling is unconstitutional. Tell us what you mean by that.

Ellen Brown: Well, it’s in the constitution that the government will pay all its debts or all its agreements, everything it’s already agreed to. And the debt ceiling involves a budget that has already been passed. So we’ve already agreed. We’re already committed to those things. It includes things like social security. These are legal agreements. And so that would be a violation of that constitutional amendment to impose a debt ceiling after the fact.

And we’ve had this debt ceiling contradiction for about 100 years. It had to do with World War I when we were attempting to persuade our creditors that we weren’t going to discontinue to finance things through debt. It was like this would be a temporary measure where we just issued these bonds.

And of course we did. We kept raising the debt ceiling periodically. And it’s always been assumed that we’d raise the debt ceiling. So that’s it, that it would be a breach of the president’s duty to actually pay on time. It’s a duty in the Constitution.

Jason Hartman: So, what do you think? With another increase in the debt ceiling, and we’ve had so many so far, and just the amount of easing and money printing out there, what are your thoughts about inflation and deflation? I mean, the deflationists say there’s still more deleveraging coming but maybe we’ve gone through the major share of it. The inflationists say the money printing is rampant and the future is very inflationary. And, frankly, I think the present is already pretty inflationary in so many things. What are your thoughts on inflation versus deflation?

Ellen Brown: Well, they’re two definitions that are inflation. One involves crisis and the other involves the size of the money supply and the money supply has actually shrunk. And the reason is that M3s, what they used to report up until 2007. . .

Jason Hartman: Right, that they stopped reporting now. That’s a little bit suspicious as a way to maybe hide inflation. But go ahead with what you’re saying.

Ellen Brown: Well, it included what’s called the shadow banking system. So it included the money market and the savings or the money of large institutional investors and they tended to put it in the money market. So the whole shadow banking system is the thing that collapsed in the fall of 2008. There was a freeze of the money market and that’s what precipitated this whole crisis. So that shrunk by $5 trillion and you can see it particularly in the housing crisis, if you consider that loans are an asset or they’re counted as an asset on the books of the banks. And the value of all these properties has shrunk. And, in that sense, the money supply has shrunk. So the fed has only put back 2 or 3 of that, 2 anyway. And so there’s still a large gap between the amount of money in circulation available for a trade compared to what was there in 2007 before we started to have all these problems.

Jason Hartman: That’s because what you’re saying is the credit supply has shrunk and money and circulation plus credit available I guess is maybe a way to look at it.

Ellen Brown: Virtually [00:05:00] coins.

Jason Hartman: Yeah, that goes into a more esoteric thing which I’d love for you to explain and the listeners have heard about that before, how money is debt. Do you want to maybe explain that real quickly? It’s pretty hard for people to get their head around that concept initially when they’re looking at this stuff.

Ellen Brown: Well, most people assume. You learn this in school and you see pictures of the bureau, of these printing presses running and their government’s printing presses. So you figure that the government prints the money. But that’s not really where our money comes from. It’s the Federal Reserve that authorizes the bureau of engraving and printing to print and it’s just these bills for I think now 6 cents a bill even if it’s a $100 bill or whatever it is.

So this is Federal Reserve money bank notes that goes back to the 19th century when bank notes were literally issued by individual banks and they had the name of the individual banks on it. In 1913, this Federal Reserve took over that process. So, instead of many banks issuing bank notes, you had one central bank issuing supposedly the currency of the country. But when the Fed issues the money, they don’t just hand it over to congress to do as they will. They lend it. So, all that money gets into the money supply in the form of a loan and basically lend it to banks as they need it.

And that still is only a small portion of the money supply. Most of the money supply is created by banks themselves, private banks, when they issue them. So, that’s another misconception. Most people think the banks are lending their deposit of money. But, in fact, they make this loan first. They made the loan whenever our creditworthy borrower walks in the door and they write the loan into the account of the borrower as a deposit. And when they need the deposit is when that borrower writes checks on his account that go into another bank or for some reason leaves the bank and then the checks have to clear. And they clear usually through the Federal Reserve which is just watching the money coming in and the money going out. At the end of the day, you have to have as much coming in as going out because the banks are always right at the margin. They always operate at the limit because they don’t want extra money sitting around doing nothing.

So to get that money to clear their checks, they typically borrow from other banks, so they borrow from their own depositors. But they’re still not actually lending the money they got from their depositors. All they’re doing is clearing the checks for them. I mean, they’re just making the books balanced because the money still belongs to the depositors. So, you’re double counting.

You never go to the bank and they say, sorry, we just lent your money out to Mr. Smith. Come back in 30 years. It’s always available for you and yet, supposedly, the deposits are backing the loans to their borrower. So what they’re doing is they’re drawing from this pool. There’s just a limited pool here and they’re using it. Under fractional reserve lending, you could make it grow by a factor of 10. So if you had a 10% reserve requirement you would have to hold back 10% of your deposits and you could lend out 90%. But meanwhile, the deposits always stay in the bank and yet you’re allowed to issue alone equal to 90% of your deposits. And then that loan would become a check, would go into another bank which would now have, say it was a $900 loan, now they can lend $8100 of that, holding back 10%. So that multiplies until $100 becomes $1000.

Jason Hartman: It’s unbelievable. The way to look at this is that money is lent into existence, right? Is that a fair way to say that? Money is lent into existence. I want listeners to remember that. Money is lent into existence – very, very important concept. And really it’s hard to get one’s head around that. It really is. You really have to think about the way that happens a bit. But that’s good explanation.

Ellen Brown: They don’t want us to get our heads around it. Just recently, Bernie Sanders, there was this $16 trillion audit. The audit showed there was $16 trillion dollars that had been advanced for the banks in short term loans in order to save them from the credit crisis. I guess that’s been advanced ever since 2007 but Ben Bernanke resisted and resisted and he said, no, people would lose confidence in their banks if they knew all these details.

Jason Hartman: If they knew the scam that is being portrayed, right?

Ellen Brown: If they saw how the sausage is made. The point is that the banks don’t have the money. They never have the money until after they make the loan, and then they scramble around and find it, they borrow it from some other bank. But it’s still a deposit in the other bank. They’re borrowing against these deposits basically or lending against these deposits. So it’s all sleight of hand.

Coins are created by the government and they’re issued outright. So they’re real money – I mean they’re debt-free money. But that’s only a billion dollars, it’s like 1/10,000th of the money supply. And then arguably the money that the feds has added by quantitative easing is interest-free money. I mean, they do lend it into the system but the fed didn’t borrow it to get that money.

Jason Hartman: Let’s talk about QE2 for a moment here. So, QE2, quantitative easing 2, not to be confused with Queen Elizabeth 2, the ship, because they refer to that as the QE2 also, so what is it and did it fail or did it work? I think it failed.

Ellen Brown: It did. But I think they do need a QE3. I mean, it was not a bad idea but the problem with QE2 was it was $600 billion that was supposedly for the purchase of long term government debt. But in the 1930s, there was a law passed that said that the Federal Reserve could not buy bonds directly from the government. Now, this is just a banker rouse as far as I can see it. It’s just to make sure that the banker middle men get in there. The justification was it would be too easy for Congress to just walk over to the fed and get the money. It’s right out there, just borrow it.

So, instead, the Fed has to borrow on the open market which means they have to borrow from the particular bond dealers – I think there’s 22 of them or there were 22 of them that allowed to sell bonds to the fed. 12 of these are now foreign banks. And they do it at a secret auction. So these foreign banks won the auction. Most of this money was sold to foreign banks because they had more incentive to get the money than the other banks. They had this problem in Europe for one thing. They have their own credit crisis. And they could do the cherry trade where they can just turn around and use this very cheap money for collateral for their own investment purposes. Anyway, somehow it wound up largely in foreign banks and it’s just sitting on their books.

I think the major mistake that the Fed made on that was that they agreed to pay interest on these excess reserves. So they’re now $1.6 trillion dollars in excess reserves sitting on the books of the banks, not doing anything. So that was a mistake. The reason the Fed paid the interest is to maintain control over the Fed funds rate which is so arcane and obscure, it’s really hard to even understand, let alone explain. But their theory is that they don’t have any other means of control, so they figure as long as they can control the interest rate of banks borrowing from each other, that’s the fed funds rate, then they still have some control over the money supply. But they don’t. They absolutely have no control over the money supply.

Anyway, the Fed funds rate, they don’t want it to go any lower than 0.25%. And so they figure if they pay interest like that themselves, then there’s no incentive for the banks to borrow from each other. But surely the Fed itself understands how the whole banking system works. They have to borrow from each other. That’s where you get your credit line.

So, you could argue there’s $1.6 trillion sitting in excess. If they’re sitting on the books of the banks, what do they need to borrow for? But the thing is, they’re only sitting on the books of particular banks, largely the foreign banks. So, the local banks, these are the ones who make the loans, cue local business. They cannot borrow cheaply from the other banks like they used to be able to.

That’s why all these businesses are having their credit lines prepped or turned into credit cards. The bank cannot do credit lines to a bunch of different businesses because they don’t know when these businesses are going to put in for a loan. They might all put in for loans at the same time, maybe around the fall when they’re preparing for Christmas or something, or farmers might need all at one time a lot of liquidity. So, if they can’t get the deposit to cover these loans that they’re going to make. They won’t make the loans. So it caused a credit freeze at the local level. Even though you’ve got plenty of excess reserves on the books of the banks, they’re not on the books of the right banks.

Jason Hartman: It’s interesting that you say that. So, which banks first of all? And is this what you call, Ellen, when you talk about the silent liquidity squeeze, why banks aren’t lending? Is that what that is? Is that what you’re referring to?

Ellen Brown: Yes. Somebody else is a money reform person and he’s a professor and he said “Well, they don’t need liquidity. They’ve got $1.6 trillion in excess reserves. But those are the reserves that are sitting on the books of the bond dealers, 600 billion of them anyway are sitting on the books of bond dealers that are these foreign banks. They’re not even US banks. They’re branches in The US and that’s why they’re part of that whole auction system. So they’re not letting it out of their tight little fists.

Jason Hartman: So you’re saying that regular maybe small to medium sized US banks, they don’t have liquidity. They do have a credit crisis if you will where they don’t have money to lend. People have been vilifying the banks for the last couple of years, last year and a half at least, saying “Why aren’t they lending? Why aren’t they lending?” The fed is pumping money into the system and the banks aren’t lending it. They’re just holding onto it. And that is really causing a problem, especially for small businesses in the real estate market. Do they not have the money? Is that what you’re saying?

Ellen Brown: There are banks and there are banks. The big Wall Street banks are flush and they’re doing fine. But they’re not using their money to make loans to local businesses. They have much more lucrative things they can do with it. Now that they can get this money at 0.2%…

Jason Hartman: They buy treasuries, right?

Ellen Brown: Yeah, that’s one thing they can do. It’s like 2 or 3 percent, they just keep this spread and it’s absolutely risk free money. Or they can use it to speculate commodities, etcetera, or you spread all kind of derivative things. They can use it for collateral. Even though it’s still sitting on their books, they use this money for collateral for their speculative investment. So, the local banks are the ones that are suffering and they’re the ones that have the arrangements with the local businesses.

If you want to get into it more, my particular solution, the thing we’re working on is state-owned banks. There’s one state in the whole country that does not have this problem.

Jason Hartman: North Dakota? Tell us about that.

Ellen Brown: Yeah, it’s the only state that owns its own bank. They’ve owned it since 1919. And the bank, the state-owned bank provides the liquidity for the local banks. The local bank deals with the customers. So the Bank of North Dakota does not compete with the local banks. They just help them out. But they’re like big brother to the local banks. So they provide liquidity. They provide guarantees. They help them out with their chapter requirements. They have a credit line directly to the government, so if North Dakota itself goes over budget, they can just tap up their credit line with their own bank. There are credit lines with the individual cities They do things like disaster relief. When they had a big flood, they just stepped in and they didn’t need FEMA. They didn’t need to wait for FEMA. They just stepped right in with their own money.

And we’ve talked to the now president of the Public Banking Institute. So, we’ve been just spreading information on this alternative which just seems to me like a no-brainer. It’s just worked out so well for the Bank of North Dakota.

Jason Hartman: There are intense power structures of course and entrenched people who are benefiting and entities that are benefiting from the system as it is. Who loses in that plan? That’s who won’t let it happen, right?

Ellen Brown: It’s a no-brainer for us but you’re right. There are big forces that we have to deal with. So that’s why I think it’s important for people to understand the basic concepts here. We need the people power. I’m from California and we’ve heard it rumored – I don’t know this for a fact – that Jerry Brown would be the favorite if he had a groundswell of popular support. Well, you’re not going to get the groundswell until people understand what we’re talking about here because their first reaction is oh what do we need another bank for or I don’t trust banks. It’s not the type of thing where you can go into the supermarket and set up a table and get signatures on a ballot or something. So that’s what we’re working on.

So we have 14 states that have builds of various sorts pending, builds for an actual bank or a feasibility study, so into the possibilities, etcetera. So, we’ve actually made quite a bit of progress considering we’re totally a volunteer organization.

Jason Hartman: Yeah, that’s great. I want to circle back to that subject of inflation and deflation. And you talked about when we look at the credit supply contracting but the money supply increasing, but yes of course the credit supply is the money supply, so I understand that – I’m just trying to segment the two. You said that $5 trillion was missing from the size of the money supply then?

Ellen Brown: It shrunk by that much, yeah.

Jason Hartman: Right. So, one of the things that the deflationists say, and I think it’s a ridiculous statement but they say it, they say things like, well, there is so much deleveraging that the government can’t print enough money to offset that and cause inflation. And I think that statement is just completely stupid on its face because the amount of money they can create – and print is an old-fashioned term, of course they don’t print all the money anymore, but that’s a metaphor I guess – they can create as much money as they want. There’s absolutely no limit to that whatsoever. Look at Hungary, look at the Weimar Republic, look at Zimbabwe. Money creation is completely infinite and unlimited in every way. Your thoughts on that?

Ellen Brown: Yeah. Well, in terms of the physical process, you don’t need to print. You just write it into an account which is what the fed does with most of the money they create.

Jason Hartman: It’s a couple clicks of a mouse.

Ellen Brown: QE1 was they bought up toxic assets. And there was an NPR. Two said employees were interviewed on how they did it. And they said, yeah, it was quite remarkable. That’s what they did. A click of a mouse and they created money to buy all these properties. They just found the properties they wanted and click, click, clicked and they had them. But what I like for an idea is the trillion dollar coin idea. The government itself is authorized to issue coins. It’s in the Constitution. The government “Shall have power to coin money and regulate the value thereof.”

It doesn’t say how big these coins are. So you can have 15 $1 trillion dollar coins and you’d have solved the federal debt problem. Most people will think that will be inflationary. But, here’s the thing, you’re not necessarily spending the coins but let’s just say you put them in the treasury’s bank account. So now the treasury has the money.

Jason Hartman: And these are physical coins? I’m trying to envision a trillion dollar coin.

Ellen Brown: Well, you do have a problem making change. But you don’t necessarily have to make change. That’s the thing.

Jason Hartman: It’s like your gold supply and the theoretical gold supply in Fort Knox is what it is. It’s a way to limit money creation and create monetary discipline, right? Is that what you’re talking about?

Ellen Brown: Well, if you used those coins to buy up all of the bonds that are out there, in other words you pay off the debt, you would not have increased the money supply because the bonds are actually part of the money supply. If you’ve got your money in bonds, how much money do you think you have? Like let’s say you have $5000 in bonds and some other money in stocks and some other money in cash and you look at your account. How much money do you have? You count those bonds as your money. That’s money that you have.

It’s no different from the deposits that are double-counted when they become loans. So the fact that the government has borrowed that money, it’s still your money. You can cash that out at any time and you would have the money. It’s part of the liquidity of the money supply. So you turn it into cash so that we acknowledge that what we’re talking about here is it’s not a debt. When the government does it, it’s not a debt. When the government issues it, it’s the credit of the people.

So these coins are just the same thing as a bond. In other words, a bond is an IOU, a Federal Reserve note is an IOU. A bank note was a promissory note. It was a note of the bank saying we owe you, we acknowledge that you have $1000 in the bank. We owe you $1000. So, it’s no different whether you call it a bond which is an IOU or you call it a Federal Reserve note which is an IOU. It just makes everybody feel better instead of all this running around in panic because how can we ever pay off a $15 trillion dollar debt. Well, of course we can’t pay it off. We don’t need to pay it off. We haven’t paid it off since 1835. And we’ve been doing well.

As the debt grows, the money supply grows. The debt is money supply. It’s a misconception. We should never have called it debt in the first place. That was something that Andrew Jackson did because they didn’t have gold and at that time nobody believed in anything but gold. And so they faked it. They made it look like they had gold they didn’t have by taking the limited amount of gold that they had. They put it in the first US bank – they set up this bank, put a limited amount of gold in it, and then the bank started issuing bank notes supposedly backed by gold. So it’s the same deal. They multiplied their money by a factor of 10 by making the gold be a backing for this paper instead of the gold itself being the money. But what it meant was that now the government was in debt for its own money basically. It had to borrow from the bank and owed the money back to the bank. So this debt just grows and grows and grows.

But what you could have done was just call it money in the first place which is what the American colonists did. They just issued the money. They issued it as colonial script and it works fine. It works better some places than others but properly that was fine.

Jason Hartman: Yeah, I hear what you’re saying there, but in the more simplistic form, and I’m calling the reserve banking system and fractional reserve lending and so forth, I’m gonna call that the more esoteric concept. But just in the more simplistic concept, we have at minimum a $60 to $75 trillion dollar obligation. The size of our economy is $12 trillion a year. We’re in a pickle, we’re in debt when you look at is as simplistic debt. You don’t think so?

Ellen Brown: I think we’re misperceiving what money is. What are those debts? First of all, you’re talking about social security that’s years away. When it comes, you know that 42% or something like that of the federal debt is owed to the federal government. You could wipe out half the debt by just voiding out the half that we owe to ourselves – that includes social security. Everybody says, well, the government already spends money. Well, of course they did. That’s what you do with bonds. You lend it to somebody else to use the money. But the government can always pay that money back because the government is or it should be the issuer of money. It’s a sovereign government and money is just the representation of an obligation owed. It’s a unit of value.

Basically we’re saying everybody who retires is guaranteed X amount of money when they retire. And so when they do retire, just give them the money. You can borrow it then. Right now those bonds are drawing what? At best they’re drawing 2% interest. They’re drawing very little. So just spend that money. Void out the bonds. Void out the 50% of the debt we owe to ourselves. And then when it comes due, then create the money or borrow it if you feel more comfortable borrowing. But you’re still just borrowing it against yourself.

The ideal model I would say is in Japan. Everybody thinks Japan is doing so poorly but Japan is actually doing very well because they owe that debt to themselves. And they owe it largely to their own central banks which is totally interest free and they owe it to the Japan post-bank which is also a government owned bank. It’s the largest depository bank in the world now. And the Japanese people are the savers who have their money in the Japan Postbank. So, again, they owe interest to their own banks. So, their own bank is not going to worry about credit ratings and do all these things that will drive the interest rate up and make them very vulnerable. They know that they have this very low interest that they have to pay on this debt. Even though their debt is 240% of their GDP they’re still getting along fine.

Jason Hartman: Really, Ellen, this is kind of shocking for me to hear this. I just want to make sure I’m clear on this. People talk about Japan’s lost decade which is really almost 2 decades now. Do you disagree with that when you look at Japan’s real estate market, you look at its situation? I think it’s largely caused by demographics in the fact that Japanese people just aren’t having kids. But that’s sort of another issue. I just want to talk about it from a monetary and fiscal standpoint in terms of their markets and economy and prosperity. Do you think they’re okay, really?

Ellen Brown: Well, in 1988, they were the world’s largest predators. Their banks were taking over and they were our largest predators and that’s when the banks [00:30:25] international settlement imposed Basel I which is the first chapter requirement. I wrote an article on this – I quoted sources. It was apparently done to get the Japanese banks, to bring them down to size. So the chapter requirement was raised to 8% and the Japanese banks were thinly capitalized. And this broke the banks. And the banks went bankrupt. They were nationalized even though they didn’t call it that. Then the stock market broke and collapsed. We were also responsible for that. We talked them into setting it up the way they did. So that all happened and it would be external banking system that was responsible for that.

So the Japanese just laid low after that. First of all, they’re not aiming for growth. They’re a small country, they’re aiming for lifestyle. They have a very good social security system, they have a very good educational system. They have all these things that make for a secure life. And as Hazel Henderson argues, we don’t value GDP right. We only count GDP in things that you sell. And we don’t count the things that the government makes.

The things that the government makes are lifestyle things. The government pays your social security and health care. All these benefits that the government pays for aren’t counted in GDP but they should be because they’re definitely something that improves our quality of life. We count in GDP weapons that we sell abroad, really horrible things that don’t improve our quality of life at all. As long it’s a sale it counts.

Jason Hartman: Ellen, I gotta tell you, that is a fascinating perspective. It really is. I see what you’re saying. The part where maybe I take issue with you and I just kind of want to understand where you’re coming from is that personally I’m just not a fan of government. I don’t think the government really makes much of anything. I know we need it but I’d like to keep it real small and real lean. And I just look at the government as something that sucks money out of the private economy, takes a giant handling fee and gives a little bit of it back. Do you disagree with that? You probably do it sounds like.

Ellen Brown: Yeah, I probably do. The government we have is corrupt. It’s been taken over by big banks and big corporations.

Jason Hartman: It’s a corporatocracy. It’s fascist in a way. People on the right keep talking about socialism and I definitely see their point, but it’s more like corporate fascism in a way. And it’s big corporate fascism because the people on the left, they’re okay with big government, the people on the right are okay with big business, but I think they’re both wrong. I’m not okay with either one.

Ellen Brown: But that’s not properly set up. A government could be very good and useful. Here in Switzerland for example, they have public banks, publically owned banks. Or say France, I actually think France has a very nice lifestyle. They have a lot more days off than we do. They have very good health care provided by the government. There are ways to work it so that it’s quite good and I think the Japanese do it well. It’s sort of patriarchal. . .

Jason Hartman: It’s patriarchal. It’s totally insular. Try and come and be an outsider in Japan and do business there. It’s impossible. It’s just a very different society over there. And I’ve been to Japan only one time but I loved my visit there. The people are so polite and it’s a really nice place. But it’s very insular. That’s the word I would really give it. It’s cut off from the outside world in a lot of ways.

Ellen Brown: Yeah. Going back to North Dakota, which I think is a little like Japan, they take care of their own. We’ve had contact with some people who are consultants for the Public Banking Institute who work for the Bank of North Dakota and we had a conference call last week. The man we were talking to, he’s just talking about where do they get the money to fund this infrastructure and stuff? And then says “Well, there are a lot of funds that have money sitting around, so we just borrow from those funds” like rainy funds or whatever. He’s not even thinking about it would be so difficult to do that in California. You’d have to pass laws and everybody would say no, no, that was for the forestry or whatever.

Jason Hartman: And all the special interests would come in.

Ellen Brown: But Vegas is one big family. I’m like, well, look, we got the money. It’s sitting over here. It’s not doing anything so let’s use that. And so they have this separate entity in the government that its business is to fund infrastructure I think. And he said of course you know it’s only two guys in there in the Bank of North Dakota. They’re in the building in the Bank of North Dakota.

So they’re all sitting there and walking across the hall and supporting each other like we need a guarantee so that we don’t have to deal with chapter requirements. Sure we’ll do that for you. So, I don’t think they even realize how very common sense their approach is. They don’t realize how good the thing is that they have because they don’t realize how bad it is everywhere else.

Jason Hartman: Very interesting. The North Dakota model is of great interest to me. I don’t know that much about it but I think it’s fascinating what they do. One more thing I’d like to just ask you, Ellen, before we go, and I appreciate you talking to us from such a long distance, you probably have some opinions about Glass-Steagall. And I just wanted to get your take on that before we go if I could, if you have any thoughts about Glass-Steagall.

Ellen Brown: Well, they should reinstate it if they could.

Jason Hartman: What would that do for us?

Ellen Brown: We’ve been through all this stuff in the 30s and they set up rules to prevent all the disasters that now we’re going through again. We’ve already done this once – we’re repeating history. In 1937, they went into all this deficit reduction and then that caused another depression. We’re doing the same thing they did in the 30s. Hopefully, we won’t have to have World War III in order to give out of it.

Jason Hartman: Ellen, give the listeners your websites. You’ve got two different websites: Web of Debt, which is the title of your book that I originally knew you for and then about the public banking. Give out those two websites if you would.

Ellen Brown: Okay, WebofDebt.com and that’s my book, Web of Debt. And I actually have 11 books but that’s the one that’s most relevant right now. And PublicBankingInstitute.org.

Jason Hartman: PublicBankingInstitute.org. You can find out what Ellen’s up to there and thanks so much for being on the show today, Ellen. We’ll talk to you soon.

Ellen Brown: Okay, bye.

Narrator: The American Monetary Association is a nonprofit venture funded by The Jason Hartman Foundation which is dedicated to educating people about the practical effects of monetary policy and government actions on inflation, deflation and personal freedom. Our goal is to help people prosper in the midst of uncertain economic times. This show is produced by The Jason Hartman Foundation, all rights reserved. For publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected] Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate professional if you require individualized advice. Opinions of guests are their own and the host is acting on behalf of The Jason Hartman Foundation exclusively.

The American Monetary Association Team

Transcribed by Ralph

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